Degussa – Trading, Museum, and Restaurant – Gold in all its facets

Degussa 
Trading, Museum, and Restaurant
Gold in all its facets

 

2011 marked the start of a new era in precious metal trading in Europe. Degussa Goldhandel GmbH, which was founded then, began operating. Since then, the company has risen to become the biggest player and the market leader among precious metal firms not affiliated with banks.

Located in Frankfurts upscale Westend neighbourhood, in the heart of the citys financial district, Degussa occupies a complex of three buildings. A classicist villa is home to some of the companys administrative functions and a meeting room, the Golden Room (Goldener Saal”)”, which meets the visitors expectations in full. It is where Degussa receives important business partners and guests. Right next door, in a historically designated stately home dating to the second half of the 19th century, there is a true gem of a museum tucked away. Degussas Goldkammer Frankfurt opened its doors in May 2019 as one of Europes most modern museums. Designed, planned, and constructed in just four years, the museum holds a series of spectacular underground tunnels and rooms where visitors can experience the many facets of gold.

A museum of art and cultural history in one, Goldkammer aims to inform, astonish, and delight curious members of the public, art enthusiasts, and children and teens in particular. Unique and precious exhibits tell the story of this fascinating element from its origins in space to its importance as a status symbol in various cultures and its use as a means of payment. The exhibition is supplemented by a large number of videos and animations surrounding and explaining the exhibits, which invite visitors to go on a thrilling voyage of discovery through the intimately sized treasure chambers. Along the way, there are animated displays offering exciting insights into the exhibitscultural and historical contexts. The museums final and largest exhibition room is especially impressive, featuring vast LED walls and a display of 300 gold bars from the world-renowned Rothschild Collection.

 

Rothschild Collection in Degussa Museum Goldkammer in Frankfurt.
The more than 300 gold bars on display come from the largest collection in the world, commonly known as the Rothschild Collection. The Goldkammer presents part of this collection, which consists of 1,084 bars from 145 manufacturers in 35 countries. ©Hubertus Hamm. All rights by Goldkammer Frankfurt GmbH, Goldkammer.de

 

Goldkammer won the 2020 German Lighting Design Award (Deutscher Lichtdesign-Preis) for its lighting architecture. The state-of-the-art museum wowed the judges with its light installations, which are tailored to specific themes and create the right atmosphere to showcase the various exhibits in gold.

Degussa also rents out the Rothschild Collection exhibition space as a venue for exclusive events held amid the impressive and varied bars on display. The room can be booked for business or private occasions. The buildings upper level is home to the Aureus restaurant, café, and bar, which features fine dining and has made its way onto the lists of Frankfurts best restaurants after just one year. Right next door is the local Degussa branch location, where clients can find everything do with buying and selling precious metals in the form of Degussa bars and bullion coins. There are also an extensive numismatic area, safe deposit boxes deep underground, secure storage facilities, and numerous other Degussa services available.

 

  
Thracian Cobra Fibula, Black Sea area, 5th Century B.C.
Fibulae first appeared in the Bronze Age in the 2nd millennium BC. Snakes regularly strip their old skin. They are therefore believed to have rejuvenating, healing powers and are held to be capable of escaping the grip of death. Top-class gold is said to strengthen the protective powers of this Thracian fibula. ©Hubertus Hamm.
All rights by Goldkammer Frankfurt GmbH, Goldkammer.de

 

THE DEGUSSA BRAND

Degussa, which is known all over the world, has a long history. The municipal precious metals refinery was founded back in 1843, eventually giving rise to what was known as the Deutsche Gold- und Silber-Scheideanstalt.The name fell into disuse for precious metal trading for some time, until the current owners acquired the rights to the brand and revived the original Degussa focus and spirit. All of Degussas activities are based on a simple, clear understanding of the utility of precious metals as stores of value and a form of investment for clients. Physical gold in particular has been synonymous with lasting value and substance for more than 3,000 years.

At Degussa, private and institutional investors can choose from a wide range of bars and coins made of gold, silver, platinum, palladium, and other metals.

Degussa has the largest network of branch locations in Europe, with ten retail locations in Germany and additional branches in Geneva, Zurich, London, and Madrid at present. Beyond that, there is also a Degussa online shop for those wishing to buy and sell 24/7 gold and silver. The companys annual sales revenue has been rising ever since it was founded. Degussa posted more than 2 billion euros in sales revenue in 2019 and will very likely meet and exceed this benchmark in 2020.

 

GOLD AS A SECURE INVESTMENT

 More and more people in Europe and around the world are looking for a relatively low-risk investment that transcends financial policy uncertainties and geopolitical crises, especially these days – and to many, gold is the very best solution.

Markus Krall, CEO of Degussa Goldhandel: In times of black swans, global risks, and vast uncertainty, gold is increasingly becoming the stabilising standard of international economic and currency relations.

Gold is traditionally viewed as a long-term way to secure ones wealth that will never lose all its value. Unlike paper money, central banks cannot print gold at will, and it has been recognised as a means of payment all over the world for thousands of years. Degussa offers a full range of gold bars in all standard sizes, all of them with maximum purity. The production companies are certified by internationally recognised trading organizations such as the London Bullion Market Association (LBMA). Coins are also offered in all the major weights. Degussas professional, reputable range of products and services makes the company not just the largest bank-independent gold dealer in Europe, but also the most versatile, reputable, and reliable on the market.

 

   Gold bar production: Large gold bars are made by casting ingots in a mould and usually impressed with the manufacturer’s name, weight, and the fineness or purity. © All rights by Degussa Goldhandel GmbH

 

The Management

The Management of Degussa is made up of Dr Markus Krall (CEO), Markus Ragg (COO), and Markus Weiss (CFO). Dr Markus Krall, who holds a doctorate in economics, has headed the firm since 2019. Before that, he worked as a risk consultant in the financial industry, so he knows this sector like few others. His previous career included positions at Allianz, Converium, McKinsey, and Oliver Wyman. Before joining Degussa, Markus Weiss worked at KPMG and Porsche Automobil Holding. Markus Ragg spent before his promotion to COO many years in Munich, developing one of Degussas most successful locations.

 

  

Goldkammer exterior view at night. The extensively renovated mansion that houses the Goldkammer Frankfurt is located at Kettenhofweg 27 in the heart of the Frankfurt’s Westend district. The building is listed as a historic monument.
©Hubertus Hamm. All rights by Goldkammer Frankfurt GmbH, Goldkammer.de

 

 

Lessons from the gold standard period 


Macroeconomic challenges ahead
 

It is indisputable that the world-wide corona pandemic poses a tremendous challenge to the economic and societal model of the Western world as we know it today. In particular, the political decision in many countries to bring the economic system to a standstill has come with colossal costs in terms of lost output, mass unemployment, and capital destruction. In fact, the politically dictated lockdown triggered the worst economic slump and mass unemployment ever recorded in the Post-WW II era.

According to the IMF, world gross domestic product (GDP) is likely to drop by 5 percent in 2020 against last year, and return to a positive 5.4 per cent growth rate in 2021. The advanced economies will be hit hardest, with GDP to fall 8 per cent, while GDP of the emerging economies is expected to show a less severe 3 per cent contraction. However, one of the most pressing questions clearly is this: Will the corona pandemic experience have a lasting impact on the international division of labour and if so, how?   

The international division of labour is at the heart of the world economys material prosperity: It increases the output per unit of labour expended; and it makes also possible the production of goods and services which couldnt be produced by the isolated actions of self-sufficient nations.

Free trade and the free movement of capital are indispensable elements for the advancement of material prosperity for the people around the globe. That said, a clear risk to the cyclical recovery as well as future economic growth would be firms cutting back on foreign investment. 

Another risk factor is related to potential instabilities as far as the international monetary architecture is concerned. In an effort to fend off the economic slump and support the financial system, governments and their central banks have rolled out rescue packages of unprecedented size and scope.

Government debt is rising strongly. At the same time, central banks have slashed interest rates basically to zero and strongly increase the money supply. While such a policy might support the economic and financial system in the short-term, it must raise inflation and instability concerns further down the road.

 

The importance of free trade, peace, and sound money 

From an economic viewpoint, reliable, non-inflationary money the universally accepted means of exchange is indispensable for economic prosperity. The reason is this: Human civilization is founded on the division of labour. And it is the use of money that allows taking advantage of the productive potential of the division of labour to the greatest extent possible. This is actually a lesson that can be drawn from the experience made in the last quarter of the 19th century. 

 Back then gold served as money; and it was basically chosen as the global currency. Gold money was used in, for instance, the United States of America, Great Britain, Germany, France, Russia, Austria, Japan, Switzerland, and many other countries; exceptions were China and Mexico, which were on a silver standard. Under the gold standard, the currencies like, say, the US dollar of pound Sterling were merely names for a definite weight of gold. It is fair to say that gold served as a truly global currency. All the countries using gold money were closely integrated as far goods and capital markets were concerned.    

The use of gold money contributed greatly to the expansion of world trade and the prosperity of the people. Gold money provided businesses with a reliable means for calculation and exchange, thereby supporting investment, international trade, and peaceful relations among people. Against this backdrop it shouldnt come as a surprise that the human catastrophe of World War I was made possible only when governments put an end to the redeemability of their monies into gold and started issuing unbacked paper money. 

 

Lessons from the gold standard period

A sustainable recovery of the world economic system from the lockdown crisis requires in particular a functioning division of labour and free trade on an international scale, and it also needs to be backed up by stable monetary affairs. To this end, it might be advisable to revisit, and learn from, the experience made with the gold standard. It would become quite obvious that sound money must meet a number of requirements. Mos important: It must be scarce; it must not be increased by political expediency. It is in this sense that modern monetary thinking has good reason to make peace with gold

For todays international monetary system is at variance with the lessons of the gold standard period which, as should be stressed, was highly conducive to economic prosperity and peaceful cooperation nationally and internationally. Of course, even the gold standard is certainly not a perfect or ideal standard. But the truth is that there is hardly such a thing as perfection as far as human affairs are concerned. And nobody is in a position to provide us with a monetary standard that is more satisfactory than the gold standard. The gold standard was the world standard of the age of increasing welfare, liberty, and economic and political democracy.  If people wish the world economic system to return to these achievements and accomplishments, they must realign their monetary system to the age-old and time tested principles of the gold money standard.

Dr. Thorsten Polleit, Chief Economist Degussa

 

Degussa Bullion Bars and Coins. Investing in precious metals in all its facets: The traditional Degussa gold, silver, platinum and palladium bullion bars in different weights and bullion coins from the official mints in South Africa, Canada and Australia.
© All rights by Degussa Goldhandel GmbH

 

 

A gold standard would promote global cooperation and growth

Interview with Dr. Markus Krall, CEO Degussa Goldhandel for Diplomatic World: three questions about the global gold market

 

What do you see as the most important trends and drivers in the global gold market?

According to our observations, the gold market currently focuses on two things in particular: general macroeconomic trends, meaning the development of the global economy amid the financial crisis and the coronavirus crisis, and second, the aspect of security for investors. The situation right now is marked by heavy deflationary pressure, which has been accelerated by the coronavirus lockdown, but is ultimately rooted in the zero-interest policies that have hollowed out the real economy due to zombification of companies in combination with low interest rates, and the banking system due to worsening balance sheet quality.

All that is now being further exacerbated by the decoupling of global supply chains, which has caused a sharp slowdown in production around the world. This depressing tension in the economy leads to a deflationary element, which central banks are countering right now by printing money on a massive scale. The expansion of the central bank money supply is actually unprecedented in the modern era. As long as central banks keep printing money at these levels and using it for government or other stimulation packages, we expect demand for gold to remain very high because this is driving expectations of inflation. Ultimately, we also believe inflation will inevitably result from these policies, so the demand for gold can definitely be viewed as a rational response by investors.

   

Where are Degussas main suppliers of the physical gold market located?

 The main suppliers of the physical gold market are currently located in South Africa, North America, and Australia, but the producers around the world are definitely distributed differently. We see China, South America, and especially Russia, playing an important role there. Russia is one of the largest producers of gold, for example, but it has had restrictive export policies in place so far with the aim of using gold to back and strengthen its own currency and make it able to withstand a crisis. Right now, our firm is mainly supplied by the mints in North America, South Africa, and Australia, of course. Beyond that, we are supplied by the refineries, about two-thirds of which are based in Ticino, in Switzerland. But we are always looking for new sources that might interest us, and we plan to expand our procurement base there. We view Eurasia as very interesting in that regard as well. 

  

Is gold political?

Yes, gold is definitely political in a very positive meaning because the question of whether we have a gold standard or a paper money standard is crucial to the design and construction of international relations. In general, we can say that under a gold standard system like the one we had in the 19th century, international cooperation, globalisation, and trade generally trace a strong growth path. A gold standard also keeps governments from going too far in terms of the ratio of public sector spending to GDP, central planning, or militarisation. This is because there is a limit to how much debt states can rack up and how much they can finance themselves through taxation in this system.

In a paper money system, on the other hand, governments can get much more involved in economic activity, and they tend to spend a lot more on defence. The 20th century showed that the big wars were actually only possible to finance with a paper money system in the first place, so you might say gold is political – in the sense that it promotes peace. A gold standard is a system that promotes peace, which a paper money standard more likely does not.

 

 

Degussa CEO Markus Krall since 2019, the acknowledged economist Markus Krall is in charge of Europe’s leading precious metals trader. © Markus Krall