Entrepreneurs Who Sold Their Business Invest the Most in Gold

In mid-October, the price of gold reached $4,380 per ounce, a record. Since then, it has fallen slightly, but analysts believe we are not even close to the levels that this precious metal can reach. It is a common belief that when the price of gold rises, a crisis is looming, making it an ideal reason to discuss the gold market with Loris Dessardo, the founder of Auro Domus, a company from Opatija specializing in trading precious metals. We are having the conversation in the Zagreb office under the new brand Goldman Graff, in a space where, as they note, they receive clients who invest larger amounts in investment gold. A minimum investment of €15,000 is the ‘entry ticket’ for a slightly different collaboration experience. On the table, while we talk, are gold coins and gold bars worth the price of a mid-range car, around €55,000. This is classic investment gold, which, as Dessardo says, they have purchased from clients, as well as gold that the company has bought or ordered from mints or refineries.

– In mints, coins or bars are minted from existing gold, and refineries are primarily companies that deal with the production of gold from primary raw materials, from ore, but also from recycled gold, scrap gold, gold from industry and jewelry. In mints and certified refineries, we buy gold, which we import to Croatia and sell to our clients as investment gold.

What is the standard of that investment gold?

– To obtain pure gold, according to the London Bullion Market Association (LBMA) standard, a chemical purity of gold of four nines 999.9 is required. In addition, this standard stipulates that all of us who are part of that association must have ‘Responsible Gold’, which means that the gold is not only pure but also ‘clean’ in terms of origin. This ethical purity means that the gold is produced or sourced legally, responsibly, in conflict-free zones, and through intermediaries who do not finance wars, corruption, and crime. And we, the companies that buy gold, are an important cog in this story because we buy scrap gold, which we then further process, thereby, among other things, preserving the environment. ESG in the gold business started long before in other industries.

About ten years ago, the public somewhat criticized you for exporting a lot of domestic gold, for selling off family legacies for a pittance… What is the situation now?

– The opposite. Now we import far more gold than we export. Annually, we import between five and ten tons of investment gold. According to a very rough estimate, I would say that in Croatia, in recent years, investment and scrap gold worth around €300 million has been purchased from clients. Auro Domus will import around €200 million worth of gold this year alone, and my estimate is that nearly €1 billion worth of investment gold will be sold in Croatia this year.

How much of the purchased gold has been exported from Croatia over the years?

– More than that, these are indeed some new trends.

Who is selling gold in the purchase offices today? What are the trends?

– From 2010 to 2020, people most often sold gold because they needed money for a deposit on an apartment, for replacing white goods, renovating an apartment, repaying loans, or due to rising loan installments in Swiss francs. Today, people sell gold also because it is a rational decision. Holding value in scrap gold or jewelry no longer makes much sense when value can be preserved in investment gold or other forms of investment.

What is the profile of those who buy investment gold from you?

– The profile of buyers has changed and is still changing. When we started selling investment gold on July 1, 2013, when we joined the EU, and when investment gold was exempt from VAT, there was still no awareness about investing, about preserving some liquid assets in investment gold. In those first years, in the first six months, we made sales that today we might do in a single day. Today, gold is an investment class.

So who exactly invests in this investment class?

– The largest amounts, reaching tens of millions of euros in individual transactions, are invested by entrepreneurs who have sold their business. As the domestic market develops and becomes interesting to a large number of funds, there is also a significant number of M&A transactions, which means that business founders, upon selling their business, have acquired a lot of capital, and they no longer invest that capital only traditionally in real estate but diversify it, thus investing in gold as well. We see that those who have some independent activity, such as lawyers, dentists, or architects, are also investing in gold. Among larger clients, there are also managers who have income at an international level and invest excess capital in various assets, including gold. And there are all the other citizens whose standard of living has clearly risen, so they think about the future and about investing capital with as little risk as possible, which constitutes the largest share, investing between €5,000 and €50,000.

How do changes in the price of gold affect a business like yours?

– All price changes are good for us and have a positive effect on business, both in bull and bear markets; the only thing that is not good is stagnation. If the price is extremely stable, then the volumes in gold start to decrease. For example, in developed markets, in markets that have a longer tradition of investing or saving in investment gold, we have a different situation than in Croatia. When the price falls, there, sales volumes are significantly higher because buyers see an opportunity in that. Our market is young, and the situation is reversed here. When gold prices rise and break records, the sales volumes are the largest.

How do you explain that?

– A lack of financial literacy.

How has gold as an investment class changed over the long term?

– If we look at a 50-year period, investing in the S&P 500 has yielded significantly higher returns than gold – every dollar invested is worth more than $200, while in gold it would be worth about $30. However, in the last 25 years, the relationship has changed: gold has increased more than 14 times, while the S&P 500 has increased about six times, so a dollar invested in gold has yielded a higher return. Thus, gold has become one of the biggest winners of the recent period. Today, the S&P 500 is around 7,000 points, gold is approximately $4,000, and analysts estimate that an ounce could reach $7,000.

Institutional players do not buy gold from you. How do you interpret the actions of the Croatian National Bank regarding gold, first the sell-off in the 90s, and then the sudden awareness a few years ago after a reprimand from the ECB…

– The sale of gold reserves in the 90s was justified; I do not question that. I question why the Croatian National Bank did not start investing in gold earlier. If it had invested in the long term, it would have been cheaper. It did not have to wait for the ECB to determine that we must have 15 percent of foreign reserves in gold… In the reserves of central banks, gold has surpassed the euro and now has the largest share after the dollar. Germany has more than 70 percent of its foreign reserves in gold, America even more, around 75 percent, and China only ten percent. This means that China, in its dedollarization strategy, as well as other BRICS countries, will soon start investing more aggressively in gold. Many developing countries will follow suit.

We are talking about the market and how all these trends affect the price of gold, but we have not touched on the business results of Auro Domus. How did the decline in revenue and loss occur last year?

– There was no decline; rather, there was a reorganization of the business and consolidation. If you look only at Auro Domus d.o.o., the company that started 15 years ago, it has a decrease in revenue; however, in the meantime, we have organized ourselves into a group of companies united in a family holding because Auro Domus today operates as several companies in several markets: in Croatia, Slovenia, and Bulgaria. Along with the parent brand Auro Domus, we have also been present through the brand Goldman Graff, with which we entered the Slovenian market. Here, the consolidated results indicate both revenue and profit growth, with €55 million in 2021, revenues have practically doubled to €105 million in 2022, and, consolidated, remained at the same level in 2023, after which they increased to €113 million in 2024. This year is our most successful in history as we have already achieved revenues exceeding €200 million, and by the end of the year, we expect around €250 million in revenue. Profit has been positive throughout all periods, with the exception of 2024 when we used business results to invest in research and development and expansion into foreign markets.

Why Goldman Graff?

– We launched Goldman Graff as a separate company to step into the Slovenian market and test certain innovations for which we did not want to ‘risk’ the parent brand Auro Domus. According to the largest market research on gold to date, with over 1,600 respondents across Croatia, Auro Domus is the most recognizable and positively rated brand in the market in our country. Goldman Graff started ‘freed’ from that perception, primarily focused on the wealthiest clients in Croatia, on creating a new story in Slovenia, and on developing and researching new technologies. We invested significant funds in developing digital tools, opening flagship offices in one of the busiest locations in Ljubljana, and in an office in Zagreb. Simply put, we wanted to see how the market would react to such an approach. When we saw that the reactions were very positive, we applied them to the entire network, including Auro Domus, where we transferred the omnichannel approach to business through digital tools. Over the past year, we have also been preparing for further expansion; we are now present in Croatia, Slovenia, and Bulgaria, with partners next year, and we plan to enter Romania, Poland, and Spain, and fully consolidate next year.

Are you not interested in the ‘region’?

– No, because we do not want to operate outside the EU. Within the EU, there is legal certainty and a clearly defined regulatory framework, which is extremely important for investment gold. Since we operate with refineries in the LBMA system, we must track the origin of every gram of gold. All the gold we sell today, like that from Argor Heraeus, has a clearly established origin. This is important to us, and outside the EU, let’s be honest, the legal situation is not equally clear. This may change with the entry of those countries into the EU, but until then, they are not our focus.

How challenging has it been to digitize gold sales?

– Very challenging; it is a work in progress. In the last three years, we have invested significant funds; we also have an application where the purchase of gold and portfolio overview is available. This is the first version, 1.0, and we will upgrade it quarterly. Recently, we launched the possibility of online appointments via video link on our webshop, so clients no longer have to come to the office and finalize purchases independently. They can connect with our advisor online. This is also the first such service on the market.

I read somewhere that you conducted research to discover what the biggest barrier to investing in gold is for our citizens and that you found that the problem was – storage.

– Yes, banks in their safes do not actually offer the possibility of storing value like money or gold, but exclusively documentation, as such items cannot be insured. Clients often have problems with insuring gold in their own homes, which is why we offered a storage service in our safes. We have individual safes and shared storage, and the safes are insured up to one million euros per compartment. Each client can rent a safe for an indefinite period and insure it up to that amount with Croatia osiguranje. This is a unique service on the market.

How do you manage financing orders when gold is not available on the market, and you have to offer it?

– This is extremely demanding, especially when the price of gold is rising. It is a challenge for all market participants because the cost of financing increases, and limits for hedging are also a problem. To fix the price, you need to have certain hedging limits with banks, refineries, or mints. Fortunately, we have the understanding of mints, which adjust those limits, but the process is still demanding. An additional problem is that banks in Croatia do not have developed products for this business. In other countries, you can finance in gold and hedge in gold. Here, you can only get a loan in euros, which carries currency and price risk. Italy, for example, has a developed gold market because it has refineries and a huge jewelry industry. There, producers borrow gold from banks and return it in gold. We do not have that here, so we are at a disadvantage.

What does the future hold? What are the plans?

– In the future, we plan to offer the market some new products that exist in developed markets but are still absent in Croatia, leaving citizens deprived of them. For example, loans based on gold.

How would that work?

– Today, if you have a bar of 250 grams or a kilogram of gold worth around €110,000 and want to buy real estate, no bank in Croatia will accept that gold as collateral, even though its market value is completely clear. It is a commodity with high liquidity and collectability, often safer than real estate, yet banks still do not accept it. What we plan to offer is the possibility for the client to temporarily sell us gold, for us to hedge that price for the period they need, and then to repurchase it at the same, pre-fixed price, regardless of whether the price of gold has risen or fallen by 30 percent in the meantime. Thus, the client does not take on the risk. This is just one of the services that do not currently exist in Croatia. Our goal is to offer all financial services that can be done with physical gold in developed countries.

Will you only stay with gold?

– We will not. We are also working on options in silver and other precious metals, but there are legislative and tax barriers that need to be resolved. Our goal is to offer those metals as well, but regulations and rules need to be updated. In the future, this will certainly be available.