Message: Gold Rush as Investors Pile into Bars
Gold Rush as Investors Pile into Bars
The Financial Times Limited 2008
By Jonathan Guthrie and Helen Warrell
Published: October 3 2008
Bullion dealers are busier than at any time since 1980 as retail investors, concerned with the safety of bank deposits, rush to buy gold coins and bars.
“Dealers are doing incredible business,” said Philip Olden, managing director for jewellery at the World Gold Council, an industry body. “Some are calling up and saying they have run out of stock.”
Precious metal: gold bars at the Tanaka Kikinzoku store in Tokyo. Gold futures traded near two-month highs as the credit crisis worsened
The feeling among retail investors is “if you can’t have confidence in banks you can at least have confidence in gold,” Mr Olden said.
“The distrust of banks has intensified recently,” said Lawrence Chard, a veteran bullion dealer, who said he was “very busy”. He said: “People are taking money out of their savings account to invest in gold. Typically they’re withdrawing amounts over £35,000, which is the level of the government deposit guarantee.”
“We have seen higher interest in gold over the last two weeks but from Monday onwards it’s been really, really busy,” said Sandra Conway of ATS Bullion in London. “There are people coming into the market who have never bought gold before. They know it’s a gamble but they’re not so worried about making a profit – it’s all about security. Baird & Co, another London dealer, said: “People are buying both bars and coins. We have not sold out, but we are selling faster than we can source new supplies.”
Mr Chard said his Blackpool-based business sold 1,000 ounces of gold coins to retail investors on Wednesday at a margin of 5-7 per cent over the wholesale price, which is currently around £485 ($858, €620) per troy ounce. “Before the banking crisis that was the level of business we would have done in a fortnight,” he said.
The retail gold rush is an alarming sign of how panicky some Britons have become as the world financial crisis intensifies.
Bullion dealers reported they were struggling to source krugerrands, South African one-ounce gold coins favoured by retail gold bugs. They complained that many retail investors refused to believe that gold coins from other countries were made of the same fundamental element and thus were equally safe.
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