Investors find safety in gold

Robert Laing

Robert Laing

Gold is likely to be back over $900 an ounce today, catapulted from last week's $740 doldrums by the Lehman Brothers, Merrill Lynch, AIG and now HBoS crisis.

Gold coin and bullion dealers in America and Britain yesterday struggled to meet demand from panicked bank customers rushing to move their savings into a physical asset.

Local Kruger rand sellers, however, said business was slow with the retail price at R7600 a coin.

Wednesday saw gold set a record single-day price jump of $70 at the New York Mercantile Exchange, beating the previous record of $64 which dates back to 1980.

This week has seen people rush into gold because "they can't trust banks, they can't trust insurance companies, they can't trust stock markets", a trader said.

Anxiety among US savers that their bank may be the next sub-prime casualty spread to the UK yesterday.

Millions of Britons with savings accounts managed by HBoS were warned that only their first £35000 would be guaranteed by government if a sale to Lloyds failed to rescue the banking group.

This pushed gold on to $893 yesterday before it settled back to around $870 an ounce.

On the JSE, NewGold exchange traded funds hit an intraday high of R71,64, nearly seven percent up from Wednesday's closing price, while the JSE's price for Krugerrands rose 3,7percent to R7000.

DRDGold, which announced yesterday it has sold its 12percent stake in "digital gold currency" venture for $3million, rose 16percent to an intraday high of R4,50 a share.