Thursday October 2 2008
Tucked away beside the ornate entrance of the Savoy hotel in London are the discreet premises of ATS Bullion. Over the last few days staff there have witnessed an unprecedented phenomenon: queues.
The customers are wary savers looking to build their own solution to the global financial crisis and the parlous state of the banking system. They are buying gold.
“There has been enormous demand,” said Sandra Conway, managing director at ATS, one of the UK’s leading gold coin and bar merchants. “There are very few sellers of physical gold and we have actually had queues of people today.”
The world’s makers of gold bars and gold coins are running flat out to try to keep up with this surge in demand, but stocks are dwindling, especially of Krugerrands.
Named after Paul Kruger, who led the Boer resistance to the British at the turn of the 19th century, the coins were first minted in South Africa in 1967. Although it was illegal to import them into the UK during the 1970s and 1980s because of apartheid, they have become one of the most widely circulated gold coins in the world. But the £547 coins are becoming more scarce as investors snap them up.
As a result, the Rand Refinery is now operating seven days a week, as is the Austrian mint, which produces the popular Vienna Philharmonic coin.
The US Mint, responsible for ensuring an adequate supply of American coinage since 1792, has been forced to halt sales of its American Buffalo solid 24 carat gold coin because it was running out of supplies. It is also limiting the availability of its 22 carat American Eagle alternative.
Canny investors had also noticed that both one ounce coins cost less than an ounce of gold on the open market at the time, making them incredibly tempting to anyone looking to make a quick return. Having broken through the $1,000 barrier earlier in the year, the gold price has retreated slightly and is now trading at around $880 an ounce. The 2007 American Eagle one ounce coin, however, was going for $789.95 while the 2006 Buffalo coin cost $800 – offering the potential for an instant return of $80-$90.