January 30, 2013 at 5:54 p.m.

Recession spurs a high demand for gold

Recession spurs a high demand for gold
Recession spurs a high demand for gold

By Don [email protected] | Comments: 0 | Leave a comment

The gold rush is on. But there’s no need for pickaxes and sluices; traders make it easy for local prospectors to mine the best deals. 

LOM Securities (Bermuda) Limited, has been hosting a series of seminars this year to help make it even easier for people to lay their hands on the commodity in these times where people have lost a lot of confidence in stocks.

David Barker, head trader for LOM Securities (Bermuda) Limited, said: “We have the entire range of products that most any other brokerage firm would offer: ETF (Exchange traded fund), futures and in the terms of actual physical we’re really the only ones on the island who do it.”

He said at the start to the global recession gold had reached $1,000 per ounce but had retraced down to the high $600s.

“That was more due to people who were long and were lucky enough to be in from the $400 area,” Barker said.

“They were liquidating in order to raise cash to cover their losses. It’s one of those funny things about markets as something goes down, you get margin calls on that position, so profitable positions need to be liquidated.

“So the correction we saw a couple years ago where it touched $1,000 and went straight back down to around $700 was more to cover positions in other markets.”

He said with many investors’ confidence shaken in the stock markets, they turned to gold. Yesterday, gold hovered around the $1,200 mark, a solid increase in price for those who got in at $700.

“We have seen significant interest in gold, not only just from locals — businesses and individual investors — but from overseas investors as well. That runs the gamut of people using ETFs; speculators using futures, and one or two people buying gold by certificates.”

Mr. Barker said LOM has been handling about an equal number of transactions from investors from Bermuda and from those overseas, but the larger volume is being purchase by investors from overseas.

“We have a fair volume that comes through here — definitely nothing to sneeze at. The gold market can be pretty sporadic. I could go a week and not write a ticket, but then all of a sudden everybody crawls out of the woodwork and I’ll do 500 or 600 ounces in a space of five minutes.”

Buying gold isn’t difficult he said.

People who are interested in purchasing the metal can walk into LOM’s offices, fill out some paperwork and can be walking out gold owners. Mr. Barker said those investors who don’t feel comfortable keeping the gold at their house or don’t have a safety deposit box elsewhere, could opt to have at stored at LOM for a fee.

He added the company does not deal in cash transactions for the metal in adherence to Bermuda’s money laundering laws.

“If they want to buy ETFs or futures, they would have to open an account with us. If they want to buy the physical gold and they want us to custody it for them, then they would need to do the same thing. We do have a small walk-in service so people can just come in and buy gold, but obviously they would have to pay us for it first.

“It’s very easy — all they have to do have the money.”

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