Physical gold back in vogue for super-rich

City A.M. Reporter
The world’s wealthiest people have responded to economic worries by buying bars of gold, sometimes by the tonne, and moving assets out of the financial system, bankers catering to the very rich said yesterday.

UBS executive Joef Stadler told the Reuters Global Private Banking Summit that fears of a double-dip downturn had boosted the appetite for physical bullion as well as mining company shares and exchange-traded funds. “They don’t only buy ETFs or futures, they buy physical gold,” said Stadler, who runs the Swiss bank’s services for clients with assets of at least $50m to invest.

UBS is recommending their top-tier clients hold 7-10 per cent of their assets in precious metals like gold, which is on course for its tenth consecutive yearly gain and traded at around $1,317 an ounce yesterday.

In a sign of the uncertain times, some clients go further. “We had a clear example of a couple buying over a tonne of gold... and carrying it to another place,” Stadler said. At today’s prices, that shipment would be worth about $42m.

Julius Baer’s chief investment officer for Asia is also recommending that wealthy investors park some of their assets in gold as a defensive stance following a string of lacklustre US data and amid concerns about currency weakness. “I see gold as an insurance,” Van Anantha-Nageswaran said. “I recommend 10 per cent as minimum in portfolios and anything more than that to be used for trading purposes, to respond to short-term over-bought or over-sold signals.”

Billionaire financier George Soros, echoing comments from investment guru Warren Buffett, last month described gold as the “ultimate bubble” because it is costly to dig out of the ground and has no real value except its market price.