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Some Northern Rock customers switched into gold

Section: Daily Dispatches

By Richard Curran
The Sunday Business Post, Dublin
Sunday, September 30, 2007

Some beleaguered Northern Rock customers who withdrew their savings used the money to buy gold in search of old-fashioned stability.

Dublin-based broker Gold and Silver Investments said that some of its British customers had switched funds from Northern Rock to gold as the price of the precious metal hit a 28-year high last week.

Mark O'Byrne said the demand for gold has been rising steadily but the falling dollar and record oil prices have driven up gold prices as investors turn to traditional investments.

"The turbulence in financial markets is another factor," O'Byrne said. Gold and Silver Investments sells gold to investors in Britain and Ireland and it is the only broker in this region to sell gold held in the famous Perth Mint in Australia, an institution with a AAA credit rating.

O'Byrne said most investors receive certificates that show how much of a gold bar they now own. At current prices a gold bar is worth nearly $300,000.

A small number of clients actually want delivery of gold, which can be small 1-ounce and 10-ounce bars or in the form of gold coins. Around 60 percent of the firm's investors are Irish and the minimum investment is for E5,000.

"We have more than 1,100 clients and our average Irish trade is E30,000", he said.

The upcoming Indian wedding season combined with Christmas jewellery demand are also major drivers in price at this time of year.

Increasingly wealthy Indian families have been major buyers of gold in recent years as it is still used in a rough form for wedding dowries, according to O'Byrne.

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