-- Posted Thursday, 22 September 2011 | | Disqus

Bullion vaults are almost full according to a survey by Bloomberg of global gold depositories. These are the highly secure facilities that any serious investor should use to store their gold and silver. Keeping it at home is a very bad idea.

Apparently the Swiss Precious Metals Vault in Singapore is close to filling up, while Barclays is building a new facility and Brink’s, Deutsche Bank and Perth Mint are all considering adding new space for bullion.

Eurozone crisis

The European debt crisis is the latest reason for buying gold with the euro now falling in value against the US dollar in which gold is denominated. Gold and silver also have the benefit of being a monetary unit without counterparty risk or to be more frank: outside the clutches of any money-printing central bank.

European investors have also moved into US T-bonds but there is a widespread fear that what is happening to bonds in Italy, Spain, Portugal, Ireland and Greece will one day happen to US bonds. After all the US has amassed similar levels of indebtedness in its economy and continues to print money to finance it.

The flight to gold is not only happening in Europe. Trading of Dubai Gold Securities on Nasdaq Dubai more than doubled in August from July and that month’s total represented a 10-fold increase on the whole of the first half of the year. The DGS is a local ETF tracking the price of gold.

E-gold

This so-called electronic gold is sometimes seen as the answer to storage problems. However, certainly in the case of the Islamically approved DGS every unit is backed by physical gold held either in Dubai or with HSBC in London, so it solves nothing. Indeed, this only adds to the storage problem.

On the other hand, gold vaults running out of space makes good media headlines but is hardly a problem in practice. All the gold ever mined in the world could be housed in a 21-metre cube, and silver is actually much rarer than gold so the demand for storage space is much less.

However, the cost of storage is rising with the gold boom. Perth Mint used to offer free storage for larger buyers of pooled silver but stopped doing so back in May. New vaults after all will not come cheap.

-- Posted Thursday, 22 September 2011 | Digg This Article

About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in 1999 to complete his first book, a history of the Bovis construction group.

Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in www.ameinfo.com, which later became the Middle East's leading English language business news website.

Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time www.ameinfo.com prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.

He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog www.arabianmoney.net is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.

Order my book online from this link

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