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.This is reflected by the draught in the retail sector. Both the South African Mint and the Austrian Mint have reintroduced the 7-day workweek in order to satisfy demand for Kruger Rands and Gold Philharmonics. The US Mint had suspended all gold coin sales earlier this month, the FT writes. It also noted that high demand has led to premiums of up to $25 per ounce in some countries.
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.
"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 professional gold traders are upbeat for the future.
In a second story covering the LBMA annual the FT writes that dealers expect higher prices.
The gold industry forecasts bullion prices at about $958.6 a troy ounce by November next year, according to the annual LBMA poll among delegates. The poll, which has been a reliable indicator in the past, compares with current prices just above $902.But there are some voices warning that a significant rise in the price of gold would lead to decreasing demand from the jewellery industry and put a cap on prices.
Last year, LBMA delegates gathered in Mumbai correctly forecast gold prices surging to record levels and predicted that by September 2008 prices will be at about $840 an ounce, almost the correct level just ten days ago.
Jeremy Charles, the LBMA chairman, told delegates that gold’s role as a safe haven has returned as a vengeance amid Wall Street’s woes.
”High bullion prices are here to stay,” he said. His bullish comments came as many delegates said they forecast gold prices in 2009 in a $700 to $1,200 an ounce range.
This may be outweighed by a growing reluctance of central banks to sell their best asset of all. Central banks had not sold their annual quota of 400 tons under the central bank sales agreement that will expire in September 2009.
I repeat my perma-recommendation: hoard gold! All paper assets will see more deflation coming their way before the credit crisis will abate.