Modern day gold rush affects countries, banks, and investors

published on 9/14/11 12:07 PM

Photo: EPA/BGNES

Banks have turned into modern time gold diggers, becoming the biggest buyers of gold for the past decades. Even South Korea has invested in gold for the first time since 1998. Central banks have accumulated more gold reserves for half a year than for the whole of 2010. The US State of Utah has recognized gold as a legal currency, while the Swiss government has started discussions over the introduction of golden francs. The gold rush has affected even the Libyan rebels searching for Gaddafi’s gold bars, which reportedly equal 10 billion dollars.

In the gold reserve chart Bulgaria occupies the prestigious 44th position, according to the statistics by World Gold Council. 8% of the gold reserves of central banks in the world are located in Sofia. In Central and Eastern Europe the Bulgarian National Bank is 7th in the gold reserve chart, with nearly 40 tons. 11% of the Bulgarian currency reserve is in gold. The precious metal stored in the vaults of BNB costs1.5 billion euro and since the beginning of 2011 Bulgaria has gained 300 million dollars from the rise of its price. Concerning gold mining Bulgaria occupies the 4th position in Europe, with a number of discovered deposits.
But why has the gold rush affected the world powers?
“The main reasons are the insecure financial system, the increased debt of the US and Europe and obvious lack of abilities of states to control these processes,” Blagovest Belev, manager of the Bulgarian branch of an international gold trading company told Radio Bulgaria. A number of investors who worry about inflation look for gold as one of the secure positions these days.”

The company has sold 35 kilos of gold just in August. There were even days when the company had no more gold bars to sell to clients.
“There were moments when we worried if we could supply our clients with gold. There was a day in which we did not have anything to sell. There were moments when a number of people realized they must buy some gold as the price was going up. Things have started to get back to normal, although there is still a shortage of Swiss gold bars on the market. But if one wants to invest in gold there are a number of ways to do it.”

In 2008 the price of gold was 680 US dollars, which means that there has been a 30% rise in the price of gold for the past 3 years. There are forecasts that a troy ounce of gold could reach the price of 8000 dollars in 2 years. According to Mr. Belev, the price of gold will continue to grow, as when governments print money, the result is a higher price of gold. “It is more like currencies lose value compared to gold, rather than gold increasing its value,” Blagovest Belev says. “The price of gold is usually very stable but the value of the currencies has reduced,” he adds

There are bankers who love to say that gold climbs up on a ladder but uses an elevator on the way down. That is why some investors are not sure if they should trust the shiny metal. What would the expert say?
“I would definitely advise people to invest in gold,” Blagovest Belev says. “Bank deposits are losing their value fast. At least one third of the finances must be kept in gold, as the future cannot be predicted,” Mr. Belev added.

According to some geologists, gold deposits would be depleted in the next 30-40 years but do not worry. Oceans still keep a kilo of gold for each one on the planet.

English: Alexander Markov

По публикацията работи: Tanya Harizanova

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Modern day gold rush affects countries, banks, and investors

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