[DEBATE] : Austria sees new gold rush as its mint struggles to keep up
Riaz K Tayob
riaz.tayob at gmail.com
Mon Oct 13 11:43:49 BST 2008
Austria sees new gold rush as its mint struggles to keep up
Submitted by cpowell on 08:38AM ET Sunday, October 12, 2008. Section:
By Bethany Bell
BBC News, London
Sunday, October 12, 2008
VIENNA, Austria -- There's a new gold rush.
The financial crisis is prompting people to look for safer forms of
investment than stocks and shares.
The interest in gold coins is so great that many of the world's major
mints are struggling to keep up with demand, including the Austrian
Mint, which produces the Vienna Philharmonic -- one of the best-selling
bullion coins worldwide.
Sales of Vienna Philharmonic gold coins have gone up by more than 230%
since last year.
Kerry Tattersall, the director of marketing at the mint, says production
has gone into overdrive: "We are running at present something like three
shifts on all of the machines, on the presses, producing both gold and
the silver bullion coins. We've actually got delays in delivering orders
in silver. With gold, we are just about keeping pace, but it is a bit of
In September alone, the mint sold 100,000 ounces in gold coins -- in
normal times it would take three to four months to sell that much.
Mr Tattersall says people are looking for security.
"We are seeing a lot of panic buying at the moment. People are losing
confidence in the economy -- whether that is justified or unjustified is
a matter of opinion. But we are seeing a lot of people looking for a
... King's Ransom
At the mint, chunks of gold are melted down in a fiery furnace. Then a
stream of molten metal is formed into a thin strip of gold, out of which
the blank coins are cut. Later the blanks are struck with the design of
violins and musical instruments.
The Austrian mint, in the heart of Vienna, was founded more than 800
years ago to make coins out of the silver ransom paid for King Richard
the Lionheart, who was taken prisoner in Austria on his way home from
It is a sign of the importance people have attached to precious metals
over the centuries.
But there is no such thing as a completely safe investment.
Gold, like all commodities, is vulnerable to fluctuations in price.
Prices tumbled in 1999 when Gordon Brown announced a decision to sell
off some of the Bank of England's gold reserves.
Robert Stoeffele, an analyst at Austria's Erste Bank, says until
recently there was less interest in gold as an investment.
"We forgot the appeal of gold in the last 28 years because we had a bear
market in gold. But within the last few years we have seen a huge
fundamental bull market for gold.
"Gold is like a thermometer for the financial markets. I'd say we've got
fever," he said.
... Life Savings
But rising demand for gold is not just a phenomenon of global finance.
Ordinary Austrians, shocked by the precipitous falls in their own stock
market -- which was suspended this week for the first time ever -- are
also looking for a more solid store of wealth.
The shop at the Austrian Mint usually specialises in selling collectors'
coins. But these days, a number of customers are buying bullion there --
I saw one middle-aged couple handing over thousands of euros in cash, in
exchange for dozens of 1-ounce Vienna Philharmonic gold coins.
A little later, a Viennese pensioner took a thick wad of 500-euro notes
out of her handbag and gave it to the sales assistant. He sold her a
large gold bar, which looked as though it weighed a kilo.
"I have taken one piece of gold," she told me.
"You see, I am old, and I have earned money all my life and now I have
the money in the bank and I am afraid of the financial situation -- that
it will disappear. Gold is safe, I think."
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