The latest out of Europe indicates that gold bullion demand is surging in France as well. The demand for physical metal is rising sharply in every corner of the globe.

With today's troublesome news on UBS, I am sure the line-ups at Swiss bullion dealers will be lengthening as well.

Regards - VHF

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October 16, 2008, 5:48:54 AM

UBS Metals Daily

Author: John Reade

Paris gold changers busy as crisis spooks savers

A few steps away from the Paris stock exchange and its see-sawing share prices, gold changers have seen a sharp rise in the number of customers walking in the door in search of profits or just of a safe haven. The narrow Rue Vivienne, just off the stock exchange square, houses a dozen gold changers who all say business has intensified since the global financial crisis started dominating the headlines, spooking investors big and small. "It's almost doubled. Lots of people have lost faith in the financial system. Gold is a safe haven and over the long term, the price is going to rise," said Serge Siauvaud, busy behind the counter of his Saint Marc shop on the Rue Vivienne. Among the customers, Philippe Dupont, 58, found comfort in the tangible yellow metal from the uncertainties of financial markets and their complicated instruments. "Older generations like gold because it's concrete. You can hold it in your hand. It's reassuring at a time when it's obvious we're all going to suffer from the effects of the crisis," he said. Gold prices climbed more than 1 percent on European markets on Wednesday as stock market losses prompted investors to turn to bullion. Media in several countries have reported a surge in interest in gold from small investors, with one report from Britain saying gold coin and bar vendors in London had experienced queues for the first time. On the Rue Vivienne, demand is high. "We're seeing mostly buyers and the volumes they're looking for vary widely from small to large," said Corinne Monamy from the AVD Gold Team shop. Some coin experts have advised collectors to hang onto their gold coins rather than selling to make the most of recent price surges because they say prices may remain on an upward trend.

This is an interesting story as France has been one of the European countries that has steadily dishoarded physical gold investment holdings over the past decade. It is a measure of the concerns about financial safety that this appears to have reversed. This has been backed up with some of our own flows: some banks that have steadily sold gold to us, reflecting sales of long-held investment gold, have turned buyers on a number of occasions over the past month. Following the huge number of government plans to recapitalise and derisk bank balance sheets over the past week or so we have noticed our own clients slow their safe haven purchases of gold. But concerns clearly remain and buying is still taking place.