Indian’s have always been notorious gold bugs, but the fever now seems to be spreading. As stock markets, banks and even governments wobble, more and more investors are finding solace in gold.
Sample for instance, bullion sales by the US mint. In May 2010, the US Mint sold gold coins weighing a total of 260,500 ounces — over 8,000kg! This is the highest weight of gold sold by them since January 1999.
Gold sales were up in 1999 because of the Y2K scare — when people were scared that their savings would be wiped off. The same fear has resurfaced because of the financial crisis. Unfortunately, its much more real now.
Investors are also finding other ways to invest in gold — apart from buying coins. Paper gold, or exchange traded gold, is an emerging favourite. SPDR — an exchange traded gold fund — now holds 1,286 tonnes of gold worth over $50 billion. This is the highest ever gold holding by the fund, which operates like a mutual fund. This is the highest ever gold holding by the fund, which operates similar to a mutual fund.
Rand Refinery Limited, a South African company and the largest smelter of gold globally, has raised its output of the Krugerrand — a one ounce gold coin.
Media reports indicate that the refinery is now producing 30,000 of these coins a week — the highest in the past 25 years.
Germany has reportedly become a big buyer. Other countries that sell bullion coins include Canada, China and Australia.
Gold prices have nearly tripled over the past five years. During May 2005, the yellow metal had averaged $422/oz. The current price of gold is $1,242/oz. The rise in gold prices has come even as other assets — particularly stocks — have been hit. In fact, gold prices tend to do particularly well during times of crisis or high inflation.