Gold Fever Strikes the Super-Rich

Gold Fever Strikes the Super-Rich Stock prices have been volatile since the credit crisis hit. The market hit multiyear lows in early 2009. The May "flash crash" showed that even the technology that allows markets to operate can be a danger to equity investments. Bonds have peaked in value, according to new research from Goldman Sachs Group (GS). And while U.S. real estate values have begun to recover in some regions, in others they are still falling.

So the rich -- that is, the very rich -- have begun to hedge what they see as a dangerous financial world by buying gold. And, in some cases they've begun to stock up the precious metal literally by the ton. Reports from the Reuters Global Private Banking Summit show that several banks, led by Swiss giant UBS (UBS), have begun to suggest that their wealthiest individual investor clients to put as much as 10% of their assets into gold. One banker said that a super-rich couple bought a ton of gold -- worth more than $42 million at today's prices -- and moved it to a country where they don't live. Other clients are buying gold by the bar.

One banker told Reuters that concerns about inflation and global economic instability have pushed the rich to seek hard assets.

The most dangerous aspect of this gold fever for the buyers is probably that a number of experts don't expect the value of the metal to go much higher. However, actions by central banks -- such as Tuesday's move by the Bank of Japan to cut its benchmark rate to near zero -- may lift the value of gold still further. As central banks in the EU, Japan and the United States change monetary policy, the value of currency could drop, and extremely low interest rates could eventually cause runaway inflation.

Still, the price of gold has risen from a 52-week low of $1,026 to a recent all-time high of $1,329. That is a tremendous run, which raises the logical question of how long it can last. But for now, the richest of the rich appear to be banking on it continuing.

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mrchevman468

I buy only at the Bottom to buy at these prices are crazy bought 21 oz in I think 98 for 277.00 a oz sold it all first time it broke 1000.00 starts getting risky kenw alot of people back in 80s that lost there ass when the floor fell out...wish you luck buying at these crazy price's

October 06 2010 at 9:23 AM Report abuse +1 rate up rate down Reply
Robert & Lisa

Gold has been hitting all time new highs for a over a year now. The really smart money would be in platinum and silver which are both well off their all time highs, especially silver.

October 06 2010 at 2:37 AM Report abuse rate up rate down Reply
Robert & Lisa

If you had bought $200,000 in gold 10 years ago, it'd be worth a million dollars now. If you'd put your money in the stock market 10 years ago, what would it be worth now?

October 06 2010 at 2:20 AM Report abuse +1 rate up rate down Reply
Robert & Lisa

When all the rich people leave our country, who will supply the jobs and at what wage? Think about it Obama labor loving thugs.

October 06 2010 at 2:13 AM Report abuse rate up rate down Reply
krp2

The fed is printing worthless money and borrowing like crazy! That devalues the dollar. Add to that all the cash sitting on the sidelines and when the velocity of money eventually picks up inflation follows. When inflation comes the dollar goes down more. That is the only way the feds can even think about paying off the huge debt by making it worthless. Hence gold is the hedge. They are moving out of the country to avoid another FDR seizure of gold assets during the democratically induced great Depression! The super rich know what is coming and are planning on having the ability to generate cash liquidity. Obama try and find my gold!! I bought it when he secured the nomination at a little over $500 an oounce! It makes no sense for the stock market to be going up along with the price of gold so that tells you that there is something else coming. The only time tested asset to rely upon has been and will always be gold! The only way gold goes down is if the debt comes down, inflation doesn't happen and the dollar value goes up! In other words Obama has to hit an economic home run and that ain't happening!!

October 05 2010 at 11:44 PM Report abuse +3 rate up rate down Reply
wfreeberg

what are you going to do with all that gold? Buy groceries, buy fuel, pay utilities, pay off you home? gold is good only if you have a buyer. It's kind of like antiques and art, the value is dependent on buyer interest.

October 05 2010 at 7:24 PM Report abuse -2 rate up rate down Reply
4 replies to wfreeberg's comment
darkhrse4011

Smart move ......Fiat currency , particularly the Dollar will soon be relegated to the role of toilet paper ...as a matter of fact , it already has! prepare for 2000 gold in no less than two years !

October 05 2010 at 6:27 PM Report abuse +5 rate up rate down Reply
BUFFALO

My gold makes me feel a little safer I have a lot of fractional stuff just in case I would have to use it for currency. Silver and platinum and rhodium are great for holdings also!!

October 05 2010 at 6:01 PM Report abuse +7 rate up rate down Reply
havecash

If you are buying bullion from anyone, you don't move the gold. If you do, you have additional storage and security fees somewhere; and, worse, you have to re-hallmark the bullion if it is moved. If you don't know what you're doing, folks, stay away from gold and gold delivery. You will wind up like the doctor who bought some gold for $145,000.00 and wound up selling it for $83,000.00 a few months later because there is NO LIQUID MARKET FOR GOLD BULLION in smallish amounts.

October 05 2010 at 5:08 PM Report abuse -2 rate up rate down Reply
2 replies to havecash's comment
martinsportraits

Absolute nonsense , complete lie , there are a thousand brokers that buy bullion over spot in small quantities , in every city in America! why would you even spread such misinformation!

October 05 2010 at 9:13 PM Report abuse +1 rate up rate down Reply
mark

what a load of Cr*p Look on E-bay and tell me there is no market??? PLEASE, Both silver and gold are selling like hot cakes, For me, The Poor mans gold has the best shine, Siver will out perform gold and all others in the short and long term,

October 06 2010 at 3:01 PM Report abuse rate up rate down Reply
imp82

"...several banks.....have begun to suggest..." ???? The ship left the port loaded with gold 2 years ago. How could the financial managers have not seen that coming when it reached $900., $1000. Just like Pedluvnky noted below, precious metals are finite. Gold is king.

October 05 2010 at 5:05 PM Report abuse +4 rate up rate down Reply