Nervy investors spur rush at Swiss gold refiners
Arizona Coin Collector
The story has and image slide show that I liked
very much. Enjoy.
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FROM:
http://www.reuters.com/article/worldNews/idUSTRE4BG07720081217
Reuters
Nervy investors spur rush at Swiss gold refiners
Tue Dec 16, 2008 9:56pm EST
By Arnd Wiegmann and Lisa Jucca
MENDRISIO/ZURICH, Switzerland (Reuters) - Sealed off
by grey concrete walls and barbed wire, the workmen
in protective glasses and steel-toed boots at this
smelter cannot work fast enough to meet demand from
the nervous rich for gold.
(Image Slide Show)
http://www.reuters.com/news/pictures/articleslideshow?articleId=USTRE4BG07720081217&channelName=worldNews#a=1
This refinery near Lake Lugano in the Alps is
running day and night as people worried about
recession rush to switch their assets into something
that may hold its value.
"I have been in the gold business for 30 years and
I have never experienced anything like this," said
Bernhard Schnellmann, director for precious metal
services at the refiner Argor-Heraeus, one of the
world's three largest.
"Production has dramatically increased since the
middle of the year. We cannot cope with demand,"
said Schnellman, wearing a gold watch on his wrist.
Spot gold hit a record $1,030.80 an ounce on
March 17. It fell below $700 in late October,
partly because investors sold their holdings to
cover losses in equity and bond markets hit by the
credit crisis, and is now around $830 an ounce.
The trigger for the price to rise again could come
from a much weaker dollar, making gold cheaper for
holders of other currencies, and a renewed
aversion to paper assets as governments and
central banks pump large amounts of cash into the
economy, stoking inflation.
Smoke billows as the molten gold, like glowing
butter, is poured. To cool it, the worker drops
it into water. It hisses as it hits. Once hardened
in moulds, the gold bars are embossed with the
refinery's seal. Workers wearing white gloves
stack them into boxes like domino pieces.
Though Switzerland is not a gold miner, it is
home to some of the world's largest refineries,
which process an estimated 40 percent of all
newly mined gold.
Argor-Heraeus is part-owned by the Austrian Mint
and a subsidiary of Germany's Commerzbank.
Commercial and central banks are its chief
customers and it says it processes some 350-400
tonnes of gold and 350 tonnes of silver per year.
Customers buying gold bars, which can weigh more
than 10 kg each, have to wait roughly a month,
taking into account the year-end holiday season.
For those buying coins or ingots, which can fit
into the palm of a hand, the delay is six to
eight weeks. A year ago, these small products
could be had within a couple of days.
Worries about the banking system globally have
boosted worldwide demand for physical gold,
the Gold Council said.
"Many (people) are afraid of leaving their
money in banks," said Sandra Conway, managing
director at ATS Bullion in London, which sells
bullion and gold coins to institutions and
the retail market.
"It's difficult to quantify, but I would say
our turnover over the last three months has
certainly doubled compared to the previous
three months," she said.
Other Swiss gold refiners also say business
is booming.
"Since the summer we have experienced a sharp
rise in demand for certain gold products.
The one-kilo bar has become very popular,"
said Fiorenzo Arbini, in charge of health
and safety at Pamp, another large Swiss refiner.
"People used to buy certificates, now they
want physical gold."
Schnellmann said the Argor-Heraeus smelter is
operating at full capacity, three eight-hour
shifts a day. Conquering the backlog by
hiring is difficult, because each candidate
has to undergo a security check.
Gold refiners were established in Switzerland
to supply the watch industry and, later,
jewelry-makers in Italy.
Switzerland's largest banks stepped in to
replace a void in gold trading while the
London gold market was shut after World War
Two and again during a brief closure in 1968.
The former Soviet Union, another top gold
producer, chose Zurich banks to handle most
of its gold sales in the 1970s and 1980s.
"Gold has an image of being the asset of last
resort. This could be viewed as old-fashioned
but this is how enough people with enough
money to matter think," said Stephen Briggs,
a metals strategist at RBS Global
Banking & Markets.
GOLD TOUCH
India, China and the Middle East remain the
biggest gold importers, particularly for
jewelry. But demand for physical gold has
exploded also in Europe, the Gold Council said.
In Switzerland, home to the world's largest
private banking industry, demand for gold
bars and coins shot up six-fold to 21 tonnes
in the third quarter of 2008, more than in
any other European country.
Retail investment in gold rose 121 percent
in the third quarter of 2008, an important
contributor to the overall increase in
global demand, the Gold Council said.
In that period purchases of gold bars by
retail investors, who often buy through
commercial banks, rose nearly 60 percent,
notably in Switzerland, Germany, and the
United States.
There was a surge of interest among
professional investors shortly after the
collapse of Lehman Brothers in September.
Private bank Julius Baer in October launched
a fund to invest exclusively in gold bars
stored in highly secured vaults in Switzerland.
"The fascination with gold has been there
since the beginning of civilization," said
Schnellmann. "It cannot be explained: you
can't eat gold, you cannot build anything
resistant with it and yet people want to
hoard it."
(Additional reporting by Pratima Desai in
London; Editing by Catherine Bosley and
Sara Ledwith)
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