PDA

View Full Version : Super-rich investors buy gold by ton



MNeagle
4th October 2010, 08:28 AM
http://www.reuters.com/resources/r/?m=02&d=20101004&t=2&i=218236200&w=460&fh=&fw=&ll=&pl=&r=2010-10-04T144306Z_01_BTRE6930ZC100_RTROPTP_0_MARKETS-PRECIOUS

By Laura MacInnis

GENEVA | Mon Oct 4, 2010 10:43am EDT

GENEVA (Reuters) - The world's wealthiest people have responded to economic worries by buying bars of gold, sometimes by the ton, and moving assets out of the financial system, bankers catering to the very rich said on Monday.

Fears of a double-dip downturn had boosted the appetite for physical bullion as well as mining company shares and exchange-traded funds, UBS executive Josef Stadler told the Reuters Global Private Banking Summit.

"They don't only buy ETFs or futures, they buy physical gold," said Stadler, who runs the Swiss bank's services for clients with assets of at least $50 million to invest.

UBS is recommending top-tier clients hold 7-10 percent of their assets in precious metals like gold, which is on course for its tenth consecutive yearly gain and traded at around $1,317 an ounce on Monday, near the record level reached last week.

In a sign of the uncertain times, some clients go further.

"We had a clear example of a couple buying over a ton of gold ... and carrying it to another place," Stadler said. At today's prices, that shipment would be worth about $42 million.

Julius Baer's chief investment officer for Asia is also recommending that wealthy investors park some of their assets in gold as a defensive stance following a string of lackluster U.S. data and amid concerns about currency weakness.

"I see gold as an insurance," Van Anantha-Nageswaran said. "I recommend 10 percent as minimum in portfolios and anything more than that to be used for trading purposes, to respond to short-term over-bought or over-sold signals."

ULTIMATE BUBBLE?

Billionaire financier George Soros, echoing comments from investment guru Warren Buffett, last month described gold as the "ultimate bubble" because it is costly to dig up and has no real value except its market price.

But a rising price for the precious metal has in itself generated more and more demand from investors looking for a way to hedge themselves against a fresh recession. Gold bears no yield and is uncompetitive in an environment of rising interest rates.

The uneasy outlook for inflation, hard currencies and global growth has triggered a five-fold increase in a physical gold fund launched by Pictet one year ago, the Swiss private bank said.

UBS's Stadler said the precious metal had become a staple of investors' portfolios, despite questions about whether it makes for a smart long-term investment.

"If you talk to ultra-high net worth individuals that level of uncertainty has never been higher in the last two, three, four years," he said. "If they ask me 'is inflation going up or are we entering a deflationary cycle?', I don't know. But obviously nobody knows."

Samir Raslan, Citigroup's regional head for central, eastern and northern Europe, Africa and Turkey, said clients were not going overboard on gold.

"I wouldn't say that clients are over-investing. It's part of an asset allocation but it's not something that they are deciding all of a sudden," he said.

And not all bankers are recommending exposure to gold.

Andreas Wolfer, head of private banking at UniCredit Group, attributed the run-up in the price of gold to frayed investor nerves after the 2008 financial crisis as well as concerns about sovereign debt in the euro zone.

"We have seen it but we have not overweighted it in our asset allocation," Wolfer told the Reuters Summit in Geneva, which has emerged as a major trading hub for precious metals as well as other physical commodities.

"We strongly believe in an asset allocation having a clear and diversified portfolio, which sounds a bit boring but in the end it brings the best returns," Wolfer said.



http://www.reuters.com/article/idUSTRE6932NR20101004?pageNumber=1

palani
4th October 2010, 10:13 AM
Using this information I would guess we would find an offsetting increase in the consumption of tungsten.

Would this mean that tungsten would be a good commodity to invest in?

sirgonzo420
4th October 2010, 10:21 AM
Using this information I would guess we would find an offsetting increase in the consumption of tungsten.

Would this mean that tungsten would be a good commodity to invest in?


LOL, I'd say so!

madfranks
4th October 2010, 12:24 PM
We had a clear example of a couple buying over a ton of gold ... and carrying it to another place," Stadler said. At today's prices, that shipment would be worth about $42 million.

If you can afford to buy $42 million in gold, you should be able to afford a private assayer to come and verify you didn't just buy tungsten bricks before you pack them in your truck and leave.

MNeagle
4th October 2010, 03:48 PM
Uh, Oh! The Rich Are Buying Gold Again

http://online.wsj.com/media/scrooge_D_20100713102343.jpg

By Robert Frank

As I wrote in June, the rich have caught the gold bug again.

They caught the bug in 2008 and 2009, when the global financial crisis was in full swing and many doubted the viability of the banking system. Now they are piling in because of fears that the U.S. will experience a double-dip recession.

We aren’t talking about exchange-traded funds or funds. We are talking bars and coins stashed in safes in the mansion. According to a Reuters article, one wealthy UBS client recently bought more than ton of physical gold and had it shipped. At Friday’s closing price, a ton of gold cost a little more than $42 million.

UBS is even recommending that its richest clients hold 7% to 10% of their assets in precious metals such as gold, which last week vaulted over $1,300 an ounce.

Let us set aside the issue of whether this is good advice or not, or whether gold is a smart investment. The problem with the rich gold rush is what it does to the broader economy.

It has long been a tacit understanding in the U.S. that the wealthy will invest their excess cash in productive, job-creating businesses. For decades, most of the money invested by millionaires has gone into stocks and bonds–products that, whatever their pitfalls, helped fund Main Street by providing capital to companies and governments.

What does gold do? Nothing but sit in a safe. It doesn’t launch start-up companies, it doesn’t help towns build roads and it doesn’t create jobs (except those for safe companies and coin dealers).

The gold purchases may also have implications for the tax debate. Conservatives say the Bush tax cuts shouldn’t be allowed to expire because we need spending by the wealthy to create jobs–especially now. Liberals say the wealthy just hoard their money, so higher taxes won’t affect jobs.

If the wealthy are plowing their money into gold–the ultimate hoarding vehicle–are those tax cuts being well spent? (That assumes, of course, that the government would spend it better, which is a stretch).

We can’t blame the rich for being paranoid about the economy right now. A new survey out today from Phoenix Marketing Intl. shows that millionaire investors are now at their most pessimistic since April of 2009. What’s more, the gold buyers may represent a minority of the wealthy.

Still, their gold fever could chill any economic recovery.

Do you think the rich should be buying gold?


http://blogs.wsj.com/wealth/2010/10/04/uh-oh-the-rich-are-buying-gold-again/

hoarder
4th October 2010, 04:39 PM
This is only bullish IF the super-rich investors are NOT bankers. If it's the latter, they're doing it so they can flood the market at strategic moments.

Book
4th October 2010, 05:00 PM
If you can afford to buy $42 million in gold, you should be able to afford a private assayer to come and verify you didn't just buy tungsten bricks before you pack them in your truck and leave.



[/url]

[url=http://www.amazon.com/19-2-Craftsman-Cordless-Drill-Driver/dp/B002ZQNUJK/ref=sr_1_1?s=power-hand-tools&ie=UTF8&qid=1286236666&sr=1-1]Do It Yourself For $40 (http://www.amazon.com/19-2-Craftsman-Cordless-Drill-Driver/dp/B002ZQNUJK/ref=sr_1_1?s=power-hand-tools&ie=UTF8&qid=1286236666&sr=1-1)

:D