ZURICH Dec 21 Private investors in Switzerland,
Austria and Germany are lining up to buy gold bars the size of a
credit card that can easily be broken into one gram pieces and
used as payment in an emergency.
Now Swiss refinery Valcambi, a unit of U.S. mining giant
Newmont, wants to bring its "CombiBar" to market in the
United States and build up its sales presence India - the
world's largest consumer of gold where the precious metal has
long served as a parallel currency.
Investors worried that inflation and financial market
turmoil will wipe out the value of their cash have poured money
into gold over the past decade. Prices have gained almost 500
percent since 2001 compared to a 12 percent increase in
MSCI's world equity index.
Sales of gold bars and coins were worth almost $77 billion
in 2011, up from just $3.5 billion in 2002, according to data
from the World Gold Council.
"The rich are buying standard bars or have deposits of
phsyical gold. People that have less money are buying up to 100
grams," said Michael Mesaric, CEO of Valcambi "But for many
people a pure investment product is no longer enough. They want
to be able to do something with the precious metal."
Mesaric said the advantage of the "CombiBar" - which has
been dubbed a "chocolate bar" because pieces can be easily
broken off by hand into one gram squares - is that it can be
easily transported and costs less than buying 50 one gram bars.
"The produce can also be used as an alternative method of
payment," he said.
Valcambi is building a sales network in India and plans to
launch the CombiBar on the U.S. market next year. In Japan, it
wants to focus on CombiBars made of platinum and palladium.
Elsewhere, demand is particularly strong among Germans,
still scarred by post-World War One hyperinflation, when money
became all but worthless and it took a wheelbarrow full of notes
to buy a loaf of bread.
"Above all, it's people aged between 40 and 70 that are
investing in gold bars and coins," said Mesaric. "They've heard
tales from their parents about wars and crises devaluing money."
The CombiBar is particularly popular among grandparents who
want to give their grandchildren a strip of gold rather than a
coin, said Andreas Habluetzel head of the Swiss business of
Degussa, a gold trading company.
Other customers buy gold for security reasons.
"Demand is rising every week," Habluetzel said.
"Particularly in Germany, people buying gold fear that the euro
will break apart or that banks will run into problems."
Some fund managers, however, remain sceptical.
Stephan Mueller, who manages bank Julius Baer's $6
billion gold fund, said one problem with using gold as a method
of payment is that people have to take its value on blind trust.
"Gold is a useful store of value," Mueller said. "However I
doubt whether it will succeed as a method of payment."
Nonetheless, as developments in the euro zone lurch from one
crisis to another, demand for gold that can be sold in vending
machines is also growing.
"Sales rise according to the temperature of the crisis,"
said Thomas Geissler, whose firm Ex Oriente Lux operates 17 gold
vending machines in Europe, the United States and the United
The machines saw record sales in 2010, one day after the
then Deutsche Bank CEO Josef Ackermann raised doubts over
whether Greece would be able to pay its debts.
Since the launch of the machines, which operate under the
name "GOLD to go", 50,000 customers have withdrawn more than 21
million euros in gold. The average buyer is male, over 50 years
old and well off.
"Customers are hoarding gold mostly at home as a precaution
against a crisis, just as their fathers and grandfathers did
before them," Geissler said.
($1 = 0.7555 euros)
(Writing by Caroline Copley)