Mendrisio, Switzerland: Here, in a corner of Switzerland where Italian is spoken and roughly one-third of the world’s gold is refined into bars and ingots, business is booming. Every day, bangles, bracelets and necklaces arrive in plastic bags—from souks in West Asia, from pawn shops in South Asia and from corner jewellers in Europe and North America.
“It could be your grandmother’s gold or the gift of an ex-boyfriend,” said Erhard Oberli, the chief executive of Argor-Heraeus SA, a big refiner here that processes roughly 400 tonnes of gold a year. “Gold doesn’t disappear.”
Amid a global frenzy fed by multibillion-dollar hedge funds, wealthy speculators and governments all rushing to stock up on the precious yellow metal, the price of gold briefly surpassed $1,100 (Rs51,480) an ounce on Friday, a record high.
Precious: Gold pieces of 100g being made at Argor-Heraeus. The gold refiner processes roughly 400 tonnes of gold a year and makes sure that even the tiniest amount of it doesn’t disappear during refining. Christoph Bangert / The New York Times
Long considered the ultimate refuge for nervous investors, gold has climbed as the dollar has steadily weakened, budget deficits have expanded in the US and Europe, and central banks have continued to pump trillions of dollars into weak economies, creating fears of another asset bubble that will ultimately pop.
“It’s not that gold has changed, but gold buyers have changed,” said Suki Cooper, a precious-metals strategist for Barclays Capital. “It’s a structural shift we’re seeing on the investing side, from Asian central banks right down to individual investors buying ingots and coins.”
“Gold’s appeal has broadened,” added Cooper, who predicts that it will hit $1,140 an ounce by the second quarter of next year.
Indeed, last month, Harrods, the 160-year-old London department store, began selling coins as well as gold bullion ranging from tiny 1g ingots to the hefty, 12.5kg, 400-Troy-ounce bricks that are so often featured in movies and stocked inside the vaults of Fort Knox. Harrods’s lower ground floor, where the gold is peddled, has been packed with interested shoppers.
“The response has been astounding,” said Chris Hall, head of Harrods Gold Bullion. “Bars are definitely more popular than coins. The 100g is the most popular.”
In the US, advertisements promising high prices for gold are regular fodder for late-night television spots, while buyers are setting up tables at shopping malls or hosting gold-buying gatherings at private homes—like recession-era Tupperware parties.
“Everyone and their grandmother has a sign out saying, ‘We buy gold,’” said Ron Lieberman, the owner of Palisade Jewellers in Englewood, New Jersey. He estimates that 10 times as many people come into his store to sell gold now as when the metal was selling for $300 an ounce at the beginning of the decade. “I hear people come in and say gold is going to $2,000.”