Gold’s Rise and the Shift to Alternatives

With the price of gold continuing its long-term upward trajectory, investors are increasingly exploring alternative precious metals. Gold has proven itself over the past 25 years as a reliable hedge against inflation and a safe haven in times of crisis, delivering a staggering price increase of over 1,000%. However, this very success has made gold investment less accessible for many, prompting a growing interest in other metals. But can these alternatives truly rival gold in terms of security and long-term value?

Is It Too Late to Invest in Gold?

Despite its high price, gold remains a key component in many investment portfolios. Financial experts continue to view it as a low-risk asset class, comparable to cash or government bonds. In Germany, it carries the added benefits of being VAT-exempt, highly valuable in compact form, and supported by a well-established dealer network.

Still, with prices nearing €3,000 per ounce, timing becomes a critical question. Long-term investors remain drawn to gold’s crisis resilience and inflation protection, yet financial advisors caution against allocating too much of one’s portfolio to it. The common guideline is to limit gold investments to 10–15% of total assets, even for such a traditionally stable option.

Those looking to diversify their portfolio may find promising returns in alternative precious metals, some of which are beginning to outperform gold itself.

Global Demand for Gold on the Rise

According to the World Gold Council, global demand for gold rose by 3% year-on-year in the second quarter of 2025, reaching 1,249 tonnes. This increase was largely driven by a surge in investments in gold-backed exchange-traded funds (ETFs), which saw a strong second consecutive quarter. There was also renewed interest in gold bars and coins, though central bank purchases declined compared to the previous year. While demand for gold jewellery fell slightly in volume, its total value continued to rise.

The rise in demand follows significant gains in gold prices since 2023. Although the market has stabilised slightly, gold remains expensive, trading at around $3,330 per ounce (31.1 grams).

Germany Ranks Among Top Global Buyers

Demand for physical gold — particularly bars and coins — grew by 11% in the second quarter compared to the same period last year, reaching 306.8 tonnes. The first half of 2025 saw the highest global demand for these forms of gold since 2013.

Regionally, the trends varied considerably. In the United States, demand for physical gold fell sharply by 53% to 8.8 tonnes. Meanwhile, Europe — especially Germany — saw a strong resurgence. German investors purchased 10.9 tonnes in Q2, reversing the previous year’s net sale of 2 tonnes. As a result, Germany now ranks fifth globally among the countries buying the most gold, behind China, India, Turkey, and Iran.

Geopolitical Uncertainty Driving German Demand

Krish Gopaul, an analyst at the World Gold Council, told the Frankfurter Allgemeine Zeitung that Germany’s strong appetite for gold bars and coins can be attributed to growing geopolitical and economic uncertainty. He noted two distinct effects of U.S. trade policy on the global gold market: short-term unpredictability due to shifting tariffs, and a more volatile long-term outlook for economic growth and inflation.

These factors are pushing investors back into safer assets such as physical gold and ETFs. In contrast to Europe, demand for gold as an investment in the U.S. dropped significantly in the second quarter. Gopaul suggested that U.S. tariffs on some physical gold imports may have influenced this trend, but more likely, investors were capitalising on profits due to the high market price.

ETF-Based Gold Investments Recovering

While physical gold purchases dropped in the U.S., the situation for gold-based financial products has reversed course. In the same quarter last year, ETFs and similar products recorded outflows totalling 7.1 tonnes. This year, however, the trend has turned around, indicating a renewed appetite among investors for gold-linked securities — many of which are managed by U.S.-based firms.

As the market adapts to a changing economic and geopolitical environment, gold — along with a broader basket of precious metals — continues to play a vital role in global investment strategies.