Tags: Europe | Gold | Asia | bars

Europe Crisis Spurs Shift of Gold to Asia

Tuesday, 16 Oct 2012 01:54 PM

The European debt crisis has prompted nervous wealthy investors to build holdings of gold in Asia and demand that banks allocate them individual bullion bars, a Deutsche Bank executive said.

"We've seen a huge pick-up in demand for physical (gold) holdings," Raymond Key, global head of metals trading, told Reuters.

"People are geographically moving out of Europe and into Asia and private wealth is becoming more sophisticated around how to manage credit exposure to banks, wanting to hold allocated physical metal in the right regions," he said in an interview.

Editor's Note: Get David Skarica's Gold Stock Adviser — Click Here Now!

With allocated gold holdings, clients get serial numbers for specific bars of gold they own. When investors have unallocated holdings, they own a certain amount of a bank's bullion, but many are worried about potential bank failures in Europe.

Besides the movement of gold from Europe, demand is also coming from wealthy Chinese people who are moving wealth out of the country, London-based Key said.

Concern has mounted around shifts in China's political leadership this year and the extent of slowing growth, which has been steeper than most had expected.

"There's a lot of money coming out of China, particularly into places like Singapore, so holding physical gold in Singapore has been a trend over the past three months," he said.

"Either they're taking capital out of China and looking to put it in Singapore or they're concerned about the sovereign issues in Europe and moving gold holdings out to places like Singapore."

MORE HEDGING INTEREST

The spot price of gold climbed 12 percent from mid-August until the first week of October, when it touched a peak just below $1,800 an ounce, on the back of stimulus measures by central banks.

Key said Deutsche has seen more interest in hedging from medium-sized gold mining companies, especially since low share prices and valuations make it difficult to issue new shares to raise cash.

"CEOs of mid-tier producers who were definitely against hedging are more openly talking about the rally we've seen in gold becoming more mature and as a result being a little more open to hedging," Key said.

"I find it a fascinating change, but does it mean that we'll see a lot more hedging in five years time? Absolutely, but there's not going to be a floodgate (opening)," he added.

"Raising by the equity markets is a tough proposition, so CEOs looking at expansion or investing for the future are a lot more open to looking at some form of hedging."

Many investors oppose hedging because they want exposure to higher prices and the major gold producers are not expected to reintroduce the practice, Key added.

Editor's Note: Get David Skarica's Gold Stock Adviser — Click Here Now!

© 2017 Thomson/Reuters. All rights reserved.

 
1Like our page
2Share
Markets
The European debt crisis has prompted nervous wealthy investors to build holdings of gold in Asia and demand that banks allocate them individual bullion bars, a Deutsche Bank executive said.
Europe,Gold,Asia,bars
459
2012-54-16
Tuesday, 16 Oct 2012 01:54 PM
Newsmax Inc.
 
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
© Newsmax Media, Inc.
All Rights Reserved