Long considered the ultimate refuge for nervous investors, gold has climbed as the dollar has steadily weakened, budget deficits have expanded in the United States and Europe, and central banks have continued to pump trillions of dollars into weak economies, creating fears of another asset bubble that will ultimately pop. It’s not that gold has changed, but gold buyers have changed. It’s a structural shift seen on the investing side, from Asian central banks right down to individual investors buying ingots and coins. Gold’s appeal has broadened. Indeed, last month, Harrods, the 160-year-old London department store, began selling coins as well as gold bullion ranging from tiny 1-gram ingots to the hefty, 12.5-kilogram, 400-Troy-ounce bricks that are so often featured in movies and stocked inside the vaults of Fort Knox. Harrods’s lower ground floor, where the gold is peddled, has been packed with interested shoppers. Bars are definitely more popular than coins. The 100-gram is the most popular.
IN the United States, ads promising high prices for gold are regular fodder for late-night television spots, while buyers are setting up tables at shopping malls or hosting gold-buying gatherings at private homes. 10 times as many people are going into stores to sell gold compared to when the metal was selling for $300 an ounce at the beginning of the decade. Adjusting for inflation, gold would have to top $1,885 to set an all-time record.
China has already doubled its gold reserves over the last six years underscored how even the most traditional investors are shifting a portion of their assets into bullion.
Gold has been around as an investment or placed in jewelry for over 6,000 years, there is just nothing else like it, with no real alternative.
Partial reprint of a New York Times article.