!!! Wealthy investors hoard bullion

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!!! Wealthy investors hoard bullion

Postby bigearth » Wed Oct 01, 2008 12:05 pm

hmmz..

Wealthy investors hoard bullion

By Javier Blas in Kyoto

Published: September 30 2008 19:00 | Last updated: September 30 2008 19:00

Investors in gold are demanding “unprecedented” amounts of bullion bars and coins and moving them into their own vaults as fears about the health of the global financial system deepen.

Industry executives and bankers at the London Bullion Market Association annual meeting said the extent of the move into physical gold was unseen and driven by the very rich.


EDITOR’S CHOICE
Full coverage: Global financial crisis - Sep-30
Banking’s crisis of confidence deepens - Sep-30
Martin Wolf: Risking another depression - Sep-30
Editorial Comment: Failure and blame game - Sep-30
Full coverage: US elections 2008 - Sep-30
Comment: Banking rules - tread carefully - Sep-30

There is an enormous pick-up in investment demand. I have never seen a market like this in my 33-year career,” said Jeremy Charles, chairman of the LBMA. “The gold refineries cannot produce enough bars.”

The move comes as fears grow among investors over the losses at investment vehicles previously considered almost risk-free, such as money funds.

Philip Clewes-Garner, associate director of precious metals at HSBC, added that investors were not flying into gold simply because they saw it as a haven amid Wall Street’s woes. “It is a flight into gold because it is a physical asset,” he said.

“Vault staff are also doing overtime,” another banker at the LBMA meeting said, adding that investors in some countries were paying premiums of up to $25 an ounce above the London spot price to secure scarce gold bars.

Spot gold prices in London on Tuesday traded at about $900 an ounce, more than 25 per cent above the level before Lehman Brothers’ collapse. Although some traders said the rush into physical gold could boost prices, others cautioned that prices were depressing jewellery demand, capping any price gain. Industry executives said gold refineries and government mints were working at full throttle to keep up with investor demand, but acknowledged they were suffering from shortages, particularly on coins.

Johan Botha, a spokesman for the Rand Refinery in South Africa, which manufactures the Krugerrand, the world’s most popular gold coin, said the plant was now running at full capacity seven days a week. “Even so, now and then we have shortages,” he said.

The Austrian mint, which manufactures the Vienna Philharmonic, a popular gold coin in Europe, said it had extended work to the weekends to accommodate soaring demand.

Last week, the US mint suspended the sale of its American Buffalo coin after it ran out of stocks.

Copyright The Financial Times Limited 2008

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Last edited by bigearth on Wed Oct 01, 2008 12:09 pm, edited 1 time in total.
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Postby FourthBase » Wed Oct 01, 2008 12:07 pm

Can someone explain to me why on earth gold is inherently valuable?
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that fills you up and makes you naturally want to do your best.” - Bill Russell
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Postby bigearth » Thu Oct 02, 2008 8:32 pm

Central banks favor gold as crisis unfolds
Thu Oct 2, 2008 7:20am EDT


By Jan Harvey - Analysis

LONDON (Reuters) - Sales of gold by European central banks are likely to be lower than expected over the next year as the global banking crisis boosts bullion's appeal as a "safe" reserve asset.

And banks elsewhere in the world, most notably in Asia and the Middle East, may even become buyers of gold in an attempt to diversify their reserves away from the dollar, analysts say.

Under the terms of the Central Bank Gold Agreement, signed in 1999 by key European institutions including Germany's Bundesbank and the European Central Bank and renewed in 2004, members can sell up to 500 tonnes of gold a year.

But in the fourth year of the latest agreement, which ended on Friday, sales fell well short of this ceiling, to just over 357 tonnes.

With banks worried by the outlook for the financial sector, sales could be even lower in the final year of the pact.

"Given the damage done to a lot of other paper assets that were formerly considered secure, there will be greater risk aversion among central banks," said Philip Klapwijk, executive chairman of metals consultancy GFMS. "This will only boost gold's status within central bank reserves."

A key reason why central banks want to hold onto gold is the instability of their most common reserve asset, the dollar.

The U.S. currency slipped to record lows against the euro earlier this year, and although it has since taken on a firmer tone, doubts remain over its outlook.

"Gold assets have moved up in value in euro terms whereas dollar assets have fallen considerably," Klapwijk said. "There has been a reassessment of gold given developments in last few years."

"There are more and more questions being placed against the U.S. dollar and its role at center of existing international financial system," he added.

Aside from the pressures associated with the current financial crisis, with a number of European central banks now having completed previously announced sales programs, analysts say a dip in selling is to be expected.

Germany's Bundesbank, with the second largest gold reserves in the world after the U.S. Federal Reserve, said on Tuesday it would make no gold sales over the next 12 months, aside from a small sale already agreed with its finance ministry.

The Swiss National Bank also said on Monday it had completed the sale of 250 tonnes of gold it announced last June, and had no plans for further sales.

CORRECTION

The correction in the gold price from the all-time high of $1,030.80 an ounce it hit in March is also relieving some of the pressure on banks to sell gold to re-balance their reserves.

"One reason people had been selling was because the gold price had risen and therefore the reserve value, relative to foreign exchange, had increased," said RBS Global Banking & Markets commodity strategist Nick Moore.

"There was some selling pressure in order to rebalance reserves back to levels people were comfortable with."

"The fall in the gold price from over $1,000 puts us in a situation where the percentage of gold as a proportion of banks' reserves will be lower, so that will take some pressure off for rebalancing," he added.

CBGA signatories aside, some central banks are more likely to be buyers than sellers of gold as the outlook for financial markets and the dollar stays rocky, analysts say.

These purchases are most likely to come from Asian and Middle Eastern central banks looking to diversify their dollar assets into gold than their European counterparts.

"Central banks flush with dollars in Asia and the Middle East may try to diversify into gold," said Calyon metals analyst Robin Bhar. "The argument in favor of that may have been made stronger by recent events, which may encourage more diversification away from depreciating currencies."

(Reporting by Jan Harvey; editing by Christopher Johnson)

http://www.reuters.com/article/gc06/idU ... H820081002
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Postby Joe Hillshoist » Fri Oct 03, 2008 12:25 am

FourthBase wrote:Can someone explain to me why on earth gold is inherently valuable?


Cos it tastes good?

Keeps you warm and dry?

Grows good food and helps you hunt?

Looks pretty?
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Postby bigearth » Mon Oct 06, 2008 8:43 pm

Investors seek security in gold

While politicians grapple with the banking credit crisis, many investors are looking at other ways to safeguard their wealth - by recapitalising on gold.

The new gold rush ignites as investors and savers queue on the streets of London to get their hands on gold coins.

Al Jazeera's Alan Fisher reports on the appeal for those buying - and selling - gold.


Image



http://english.aljazeera.net/news/europ ... 65961.html
. is it a wise man, who knows that he is not wise
. it's good to have cynicism but not be cynical
. the more truth you live with, in your life, the stronger you are
. intelligence is merely an attitude to knowledge and learning
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