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Investors take shine to golden oldie - Australia

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  • Investors take shine to golden oldie - Australia

    Investors take shine to golden oldie

    * Frank Walker
    * August 10, 2008
    *

    AUSTRALIANS are going for gold - and not just the Olympic variety.

    With share values plummeting, real estate in the doldrums and banks losing billions on dodgy loans, investors are returning to the time-tested safe place to put their surplus money and buying gold bars.

    Bullion sellers report the amount of gold bars and gold coins sold over the past 12 months has doubled.

    Gold has more than trebled in price over the past seven years, reaching $US1000 an ounce in March. It has since fallen to $US874 ($986) but its value has still far outstripped that of shares in the past year.

    Gold watchers say the price is likely to rise again if interest rates are cut, with pundits predicting a level of $US2000 an ounce in five years.

    The Perth Mint reports a 70 per cent growth in gold sales in the past 12 months. Nigel Moffatt, the mint's treasurer,-- said: "Humans have treasured gold for more than 5000 years and that attraction ... has never faded. It is a symbol of beauty, it is rare, it is attractive and it never tarnishes. But in troubled times people also see it as a great investment, a safe haven to store their wealth."

    Mr Moffatt said buyers could purchase a gold bar and take it home or, for a fee, keep it safely in the mint. People could also buy "unallocated" gold - a gold pool kept at the mint.

    Sydney-based Australian Bullion Company said it had a 10 per cent rise in new customers for gold over the past year, and demand had increased dramatically over the past 24 months.

    In the past two years, the All Ordinaries Index rose just 1.3 per cent, while gold rose 29 per cent.

    Investment research analyst Greg Canavan, of Fat Prophets, said investors had flocked to the safety of gold as the sharemarket dropped in the past 12 months. "Gold's been a good investment as it rose from $US500 an ounce a few years ago to $US1000 earlier this year," he said.

    "We think it will go up again as interest rates are cut.

    "Gold could go into the thousands over the next couple of years."

    Mr Canavan said investors shouldn't turn all their spare cash into gold but keep it at about 10 per cent of an investment portfolio.

    Investors are also turning to rare coins, stamps and art works.

    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx
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