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  Fears that the euro is heading for collapse have prompted panic buying of gold coins and bars. Austria’s mint, which makes a bestselling gold coin, has warned it may run out of stock as investors seek a safe haven from Europe’s threatened currency.
  
  And banking giant UBS reported its sales desks are ‘exceptionally busy’ coping with heightened demand for coins and small bars, much of it coming from Germany. Swiss refinery Argor-Heraeus estimates demand for small gold bars and minted products has jumped tenfold since the start of the year.
  
  The news came as the euro took another fall amid fears that the £640billion EU/IMF rescue plan hatched over the weekend would fail to secure the single currency’s future. Against the dollar, the single currency fell under $1.254 – not far from the 14-month low of $1.25 it struck a week ago. Marcus Grubb, of the World Gold Council, an industry body representing miners, said there was anecdotal evidence of a sharp increase in purchases of coins. ‘
  
  ‘There has been a spike in demand for physical products in the past week or so,’ said Mr Grubb. ‘Scepticism about the euro has been strongest in Germany. Retail investors are voting with their feet and buying gold coins. They are concerned about the currency.’
  
  The price of gold traded at $1,233.95 a troy ounce yesterday, shy of the record $1,248.15 it hit on Wednesday. Gold is seen as a safe haven when there are fears that paper currencies could lose their value. At the height of the banking crisis in 2008, the U.S. mint suspended sales of popular Buffalo and American Eagle coins because of a flood of demand.
  
  More recently money-printing programmes in the U.S. and Britain have fuelled fears of inflation, and these have now spread to the euro area. This week the European Central Bank announced it would purchase government bonds, in a move similar to the Quantitative Easing policy undertaken by the Bank of England.
  
  Meanwhile some economists are warning that Greece remains headed for a debt default, and that its woes could spread to other eurozone countries, threatening the future of the euro. Portugal and Spain are seen as particularly vulnerable because of their heavy debt loads.
  
  Yesterday the Portuguese government said it will cut wages of top officials and temporarily raise taxes in a bid to narrow its budget deficit faster than previously planned. The government approved increases in value-added, personal income and corporate taxes, Prime Minister Jose Socrates said.
  
  This comes just a day after Spanish public sector workers were hit by wage cuts and a pension freeze, prompting strike threats. The EU on May 10 unveiled a program of loans and ECB bond purchases in a despearate attempt to stop the Greek debt crisis from engulfing the currency union.
  
  Edel Tully of UBS said in a client note: ‘As long as confidence is under threat in Europe, gold should continue to be on the receiving end of elevated physical demand as money look for a safe home.’

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