Introducing the gold standard

While gold has long been a bastion for investors seeking stability in turbulent times, Polish investors are only now getting the opportunity to make use of the security that investing in gold offers.

Raiffeisen Bank Polska began offering the physical trade of the precious metal last week, meaning investors can walk into the bank's investment office with their eyes on the glittering ore, and walk out the same day with their very own bar (or bars) of gold. Of course, with prices flirting with a 25-year high of $550 (zł.2,076) per ounce, bank officials say that they're only looking to attract more wealthy investors at the moment.

"This is not an investment for everybody," says the chief dealer at Raiffeisen Bank Polska's department of money management, Andrzej Romanowicz. "I would like to find big clients, buying at least 20 ounces in one shot."

But for those clients who can afford it, gold offers a security not found in the currency or equity markets. "Compared to other products [such as currencies and equities], gold is not volatile," says Romanowicz. He says gold is "just something which you can really rely on."

However, Raiffeisen's offer doesn't include the possibility to trade gold electronically. "We are not involved in sophisticated transactions, just gold products like coins and bars," says Romanowicz. "We are trading in a physical form. If you wish to buy gold you need to come to our premises and buy it at the cash desk. You get it immediately."

However, with the price of gold so high, many analysts are expecting the gold bubble to burst, or at least drop in price. So has Raiffeisen chosen the right time to make its offer to the public?

"I'm not trying to analyze the price of gold in a short-term scenario. I think to look at the gold prices you should look at it for two years," says Romanowicz, and he expects his clients to do the same. "Buying gold you have to establish a much longer time horizon [than with deposits or currency]." In two years, he expects gold to be worth more than it is today.

Still, demand for gold in Poland is low. It is estimated that less than one percent of families in Poland hold gold assets - aside from jewelry - whereas in Austria, Romanowicz estimates it's so popular that an average family holds between five and fifteen percent of its assets in gold.

"Years ago, in each Polish family you would find a kind of gold. Not jewels only, but also coins and bars. This is typically Polish," Romanowicz says, adding that it is his long-term goal to create this type of market.

"I started trading gold last week and after a few days I'm really surprised by the [high] number of transactions and the volume," he says. "I expect that after three or four months, I will be able to talk about kilograms per day. This is my ambition at the moment."