Banks Have No More Storage Spaces For Investments In Gold
According to various estimates, by the end of the year, the yellow metal could be priced at $ 1.400 an ounce, while in 2011 it cost will rise at just about $ 2,000 per ounce.
Despite numerous statements concerning the end of the global crisis, investors are not quite so optimistic. They continue to buy and invest in gold, which they deposit in banks, where already there are no more suitable facilities. However, banking experts still recommend their wealthy clients to have 7% -10% of their assets in gold. Yesterday, the most valuable of the world’s precious metals reached a new record price of more than the psychological threshold of $ 1.380 per ounce.
According to the GFMS consultancy company, private investors currently have 30,000 tons of gold, that is one sixth of the world; it is more than the total balance of banks worldwide. The “gold rush” has infected the world in our previous history as well, the last time in 1980, when the price passed $ 700 an ounce, which, calculated according to inflation, would now mean, $ 2.300 per ounce.
Then a long period of popularity of the stock followed, gold losing considerable value. This prompted central banks to give up on the yellow metal. And when in 1999 the British Ministry of Finance announced it would sell half its reserves in gold, the price collapsed to a minimum of 23 years: $ 250 per ounce.
Therefore, commercial banks have closed their deposits due to lack of activity. But the current crisis has significantly changed the problem. In 2009, for the first time in the last 30 years, the amount of gold purchased by investors exceeded the one purchased by jewelers. According to the World Gold Council, the demand in the investment environment amounted to 1893 tons, while the one coming from the jewelry manufacturers amounted to 1759 tons. If these figures are added up with the data for the first six months of this year, the result shows that in the last18 months investors have requested 2789 tons of gold, while the jewelry sector – 2667 tons. Banks are again in the need of storage space.
Banks recommend the yellow metal
As such, JP Morgan “unsealed” New York storage facility, located in Manhattan, where more HSBC, Bank of Nova Scotia and the Federal Reserve of New York also use the facilities.
The same bank, JP Morgan has recently completed the construction of a new warehouse in Singapore. Deutsche Bank and Barclays Capital are considering new warehouses in London.
Last autumn, HSBC asked customers to free up the storage spaces under the building on 5th Avenue, only keeping the gold of the institutionalized investors. “The demand for storage comes from funds, corporations and people with money,” says the head storage services at JP Morgan, Peter Smith.
However, the banks advise the wealthy clients to keep at least 7% -10% of their assets in gold. Such a recommendation has come, for example, from the experts at UBS and Julius Baer. “I suggest that at least 10% of investment portfolios to be kept in gold as a kind of insurance policy. The rest can be used in financial market operations to meet short-term signals of sales, told Reuters the Van Ananta-Nagersvaran, at the investment bank in Asia, Julius Baer.
Moreover, a recent survey conducted by Reuters shows that in the months remaining in 2010, gold prices will remain anchored on the upward slope that propelled the last record of $ 1.320 per ounce. Of the 21 analysts surveyed, 11 have predicted a corridor tariff ranging between 1.350 and $ 1.400 an ounce, while two thirds estimated that the yellow metal will remain at around $ 1.350 per ounce. Weakness of U.S. dollar, the prospect of new measures to adjust spending in the United States, and other factors have played in favor of increasing gold. Or, says Bill O’Neill, of Logic Advisors, “all those factors which led the yellow metal price rises remain topical”.
According to Bloomberg forecasts, based on a survey conducted among experts in the field, the gold price will reach the peak in Q3 2011, when he climbs to $ 1.350 an ounce. Then gold will start to lose value, so that by the end of 2014 was down to $ 1.100 an ounce.
Representatives of the London market London Bullion Market Association (LBMA) are more optimistic, estimating that in the next 12 months will cost $ 1.500 gold per ounce, or even $ 2,000 per ounce.11