Gold: Wealthy Investors Want Bars, Not Paper

Ambrose Evans Pritchard over at the Telegraph has filed this report (hat tip Domus) on the recent surge in demand for gold bars by wealthy individuals.

No, the rich aren't asking their stockbroker to buy shares of one of the many gold ETFs or some commodity futures contract. They want gold bars - the physical, not the paper.

Gary Dugan, the chief investment officer for the US bank, said there has been a remarkable change in sentiment. "People are genuinely worried about what the world is going to look like in 2009. It is amazing how many clients want physical gold, not ETFs," he said, referring to exchange trade funds listed in London, New York, and other bourses.

"They are so worried they want a portable asset in their house. I never thought I would be getting calls from clients saying they want a box of krugerrands," he said.

Merrill predicted that gold would soon blast through its all time-high of $1,030 an ounce, and would hit $1,150 by June.

Mr. Dugan also seems to believe the deflation propaganda that is permeating the financial news these days, so take his views on gold with a grain of salt.

Despite the fact that prices for many consumer goods have been falling for many years, he notes, "It's very difficult to get the deflation psychology out of the human brain once prices start falling. People stop buying things because they think it will be cheaper if they wait."

Maybe in Germany they do, but elsewhere in the world, people have stopped buying stuff they don't need with money they don't have because it was a bad idea in the first place, something they are now just realizing, and the developments of the last five months have them scared to death.

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Comments

[prudentinve...:]

Interesting article. The recent scandals makes one wonder whether these ETF's have actual gold equal to what they sell to investors, or whether they "sell" the same gold bars multiple times, as in "fractional reserve gold holding".

As an aside, I like your statement "...people have stopped buying stuff they don't need with money they don't have because it was a bad idea in the first place..". Succinct and to the point!

Jan 11 08:00 AM

[goldis4ever:]

>>>>Gold: Wealthy Investors Want Bars,......<<<...

My question to those folks who wised-up and are buying the metal: what took you so long????

Jan 11 08:20 AM

[know nothing:]

The Gigs up,our Uncle Sam has lost control of our future,and our childrens future! Poeple feel that they must take responsibilty for their future and their childrens future by reverting back to the age old currency. It's sad that "we the people" should be the ones electing public officials to represent our wishes and protect our tax dollars,only to find out that that is not the case at all,in fact the special interest groups who pay billions to the greedy corrupt politicians (which almost all politicians are corrupt with all the power and influence they posses, again filling their pockets at the taxpayers expense) are the group the politicians work for. Thus it's not suprising that the only way we feel we can protect our future and our childrens future is to escape our Uncles control and go back to the age old proven currency Gold and Silver. These prescious metals have stood the test of time,their prices have been influenced and manipulated by our Uncle Sam and his co-horts, but even with all their power, influence, and false promises,the age old currency has held it's value. Now it is time for the people to be heard loud and clear,as they dump worthless paper for something solid that they can be sure isn't a lie or false promise. Such as our Uncles federal reserve notes have been. Once we take away the politicians power by showing them that the Gigs is now up, and we will not be trusting them,their cover ups, their lies any longer, by putting what is left of our wealth into the age old currency, leaving their paper worthless, only then will Uncle Sam understand that the people can be more powerful than special interest. That is when our politicians will start listening to the peoples will, and working for the peoples best interest. God Bless the american people!!

Jan 11 09:02 AM

[donzelion:]

"...people have stopped buying stuff they don't need with money they don't have because it was a bad idea in the first place..."

The main problem was never "plasma screen addiction" - rather, "people buying stuff they don't need while spending other people's money." And the growth of gold owes a great deal to the realization that, after years of spending "other people's money" - those "other people" may demand something back.

Jan 11 09:41 AM

[dordot:]

Good article. I am one of those people who have been trying to buy the physical metal. Do you have any idea how difficult it is to buy the physical from a reputable dealer who will ship to you rather than "store" it for you in their vaults...that you are not even able to go into to ensure it is there? It is remarkable to me that the price for the physical is not soaring now....I wonder if the questionable "Gold ETFs" are what is keeping the price of the physical down.

Jan 11 10:20 AM

[Top Gun:]

people have stopped buying stuff they don't need with money they don't have because it was a bad idea in the first place,

Best statement I have heard from an internet article/blog in over one year. I have emailed writers asking them to discuss this, to no avail. The financial community does not want to discuss the fact - we have what we need, and now must reconcile the 4,000 sq ft houses, SUV's whose capacity goes unused 90% of the time, etc, etc with our actual ability to pay for them. Just let us alone! Maybe we'll find our families and manners again.

Jan 11 11:02 AM

[Kelly Liebe...:]

"people have stopped buying stuff they don't need with money they don't have because it was a bad idea in the first place,"

A very true statementv with one caveat, what most don't have and what you will need is as much food, water, toiletries, seeds, light farm equiptment, bikes gold, silver, ...etc... that you can store now for hard times ahead.

This is the beginning folks. The dominos fall harder and faster now, and you had better be prepared. Have you thought about what you might use to barter with if your job is gone in 6 months? You need to start thinking ahead now. There really is no time left.

Jan 11 11:43 AM

[Kelly Liebe...:]

The truth is that the entire US govt. has engaged in a conspiracy to prop up the dollar and in order to get away with it, has allowed alot of huge corporations to get in on the game. They believed in the trickle down theory and for awhile it worked as most of America ended up with a better standard of living than the generation before them.
The problem is that the ruse is up. The lies are being exposed and it is not pretty. The rug has been snatched from under our feet and we are tripping over ourselves and each other before we are trampled.
The world is a lot more dark and sinister than anyone wants to believe. Unfortunately, if you don't wake up and take action on behalf of yourself you will be more likely to be one of it's victims.

Jan 11 12:00 PM

[Gold Barron:]

I am buying physical bars. They are actually very easy to find, however the premiums are a bit too high in my opinion.

apmex.com is the best place to purchase gold online.

Jan 11 12:39 PM

[mkreisel:]

During the height of the financial panic last year, gold coins were sold out at Kitco for a few months. But it does seem to have enough inventories now.

I don't think GLD can really be trusted. Has there ever been an independent audit done?

Jan 11 03:06 PM

[ussmls7:]

Here is a one more reason the rich may be finding Physical Gold Bars & Coins,are better that ETFs & Bank accounts filled with greenbacks!!!...... Posted on jsmineset.com web site.... "Citing pressure from U.S. federal authorities, Swiss mega-bank UBS said it would close 19,000 accounts! It seems that the IRS thinks, these accounts are Tax Havens for American Investors? The Swiss bank will write checks for balances in house,or transfer them to other accounts,either way, creating a paper trail for the IRS! A UBS client,told the NY Times"You can take the "Check" & toss it in the "Woods",or deposit it somewhere & get "Busted"."Theres nowhere to "Hide"! "According to the IRS", "UBS is helping American investors evade around $300 Million in Taxes each year". "UBS won't be the only target by the IRS probes".
Wow, $300 million a year in taxes. If 19,000 accounts will now have tracks to the owner of said accounts,will any Names be released to the public? When & where did the money in each account come from? Are any of these accounts belong to Madoff's family or friends? I bet we will never know! Truth & Trust has even the very rich,wanting to hold the real thing,not a paper promise!

Jan 11 03:10 PM

[BobT:]

You better also be willing and able to protect that gold and silver and other physical assets that you want to keep at home. there are people ( read gangbangers and thugs) who will be more that happy to take it away from you along with your life and the lives of anyone else who gets in their way.

Our forefathers gave us the Second Amendmet for a reason. If you aren't smart eonugh to be armed and able to protect yourself don't expect anyone else including the Police to do it for you.

Jan 11 04:13 PM

[digitaldorobo:]

I can't afford gold bars and I am not stupid enough to invest in paper gold (GLD) or silver (SLV) so I bought into Central Fund of Canada Limited. It is independently audited twice a year to ensure that it holds aroun 95% of its worth in physical gold and silver.

Better yet, I buy it on the Canadian exchange so my money stays in Canadian dollars rather than the soon-to-be-worthless US dollars.
Central Fund of Canada Limited(Public, TSE:CEF.A)

However, if you insist upon buying it on a US exchange: Central Fund of Canada Limited (USA)(Public, AMEX:CEF)

Check it out on Yahoo: finance.google.ca/fina...

Good luck all. Batten down the hatches...

Jan 11 10:18 PM

[Analyste de...:]

I think of the old Jews who got burned by Madoff, the sons & daughters of immigrants, refugees from Hitler, self-made millionaires who worked hard & saved... but got duped, in a "paper-value Ponzi scheme."

They people are old enough to remember gold as REAL money, what you held on to ... they didn't. Maybe the memories of their grandparents - and the Obama Era frugality we'll all face - will return, as we must ALL save "something of value"?

They won't be broadcasting their gold purchases from the rooftops, either.

Think about it.

Jan 12 01:43 AM

[mauijeff:]

"people have stopped buying stuff they don't need with money they don't have because it was a bad idea in the first place"

This is the new reality. Too bad the only trick our debt based fiat system has is more consumption based on debt. I think this is the central problem in our current crisis. I believe people won't buy as much stuff and this will cause the collapse of the current economic system because with no new debt, there is no new money. No new money means we cannot service existing debt.

Jan 12 03:10 AM

[scotty1560:]

Kelly...the government has been fooling us for years...this is nothing new..
just the scale is bigger..

When I was a teenager in the 70's old timers told me the same things about
gold and collapse....read Scott Nearing's books..

that said they have the reins and can confiscate gold like FDR or freeze bank
accounts, or a number of tactics. In the long run the system will collapse but
it could be years...look at UK and Germany...they are still functioning.
I do think Social Security will fail as we know it and our standard of living
may decline...it's doing so now for me. Frankly, as long as the sheeple
continue to elect the two parties in power, we are stuck with this system.

Jan 12 07:37 PM

[Kaleb22:]

The key is to invest in what you feel comfortable with. I started by buying a few coins here and there and then researched and invested in various gold mining companies that hold strong reserves.

Jan 13 01:43 AM

[grishmoney:]

I'm curious which gold miners you have invested in and where one can get gold coins without being scalped 20 percent?


On Jan 13 01:43 AM Kaleb22 wrote:

> The key is to invest in what you feel comfortable with. I started
> by buying a few coins here and there and then researched and invested
> in various gold mining companies that hold strong reserves.

Jan 13 11:12 AM

[silver-bullet:]

NG, PAL, TDC.V, CDE

Jan 23 11:55 PM