Gold Investment via German ATMs says the "mania phase" may be gathering pace...
ARE WE THERE YET? "There" being the elusive point in time when the gold mania (no, make that Gold Mania) hits and everyone and their cat will want to invest in the yellow metal, writes Jeff Clark, editor of Big Gold at Casey Research.
That of course will propel the Gold Price to dizzying heights – up to $1,500...$2,000...$5,000 an ounce – the sky's the limit.
At least that's how the theory goes. But it's not just a theory anymore. In the past year, we've been seeing unmistakable signs that Gold Investment may indeed be going mainstream.
For example, we have always believed that when the mania phase of this gold bull market really got underway, mobs would break down the doors of pawn shops and Gold Coin dealers in order to get their fill of the yellow metal. And while most pawn shops' doors are still intact, that trend seems to have already begun.
In August 2008, the US Mint temporarily suspended sales of the one-ounce American Gold Eagle and in September of the American Buffalo coin, because it couldn't keep up with customer demand. In December, bullion dealers from Johannesburg to New York City were starting to run out of gold coins when investors caught in the economic downturn scrambled to get into safe-haven assets. The sudden "gold rush" was so extreme that large coin dealers posted disclaimers on their websites that their customers should expect delivery times of a month or more.
According to the World Gold Council, in the first quarter of 2009, "the biggest source of growth in demand for gold was investment. Identifiable investment demand reached 595.9 tonnes in Q1, up 248% from 171.3 tonnes in Q1 2008."
At the same time, there is a counter-trend in motion: cash-strapped Americans are selling their scrap gold like there's no tomorrow. All over the country, housewives throw Tupperware-style parties to sell their gold jewelry by the ounce, often at a steep discount to market price. And businesses like cash4gold.com – which, by the way, we do not recommend – are popping up like mushrooms after a summer rain.
But even Joe the Plumber may soon be enticed to turn from seller to buyer. Even if he never sets foot into a Gold Coin store, he might be able to get his share of gold – in easily affordable, and portable, slices. And he won't have to look any further than his nearest airport, bus or railway station. Because a German company has come up with a brand-new marketing concept for the yellow metal: shop for gold while you wait.
Asset management company TG-Gold-Super-Markt is planning to set up 500 ATMs at strategic locations all over Germany. The machines will distribute one-gram (0.0353 oz) mini-bars of gold, about the size and thickness of a child's fingernail. The tiny gold pieces will cost €31 (US$44) which includes a hefty 30% markup to spot.
Thomas Geissler, chief executive of TG-Gold-Super-Markt, told Reuters that this new way of selling Gold Bullion "is an appetizer for a strategic investment in precious metals. Gold is an asset everyone should have, between 5% and 15% of your liquid assets in physical gold."
Even though Geissler admitted that "In absolute numbers, the demand for physical gold is still tiny," he sees a very bright future for the yellow metal. "[In] relative terms, the growth is explosive," he noted. "Inquiries have been doubling every six months."
Are gold ATMs the go-to "gold mine" of the future? While we wouldn't necessarily bet on it, Geissler will. And the fact that he thinks it a lucrative enough business to set them up is no doubt encouraging. It's moves like these that we think we'll see more of as Gold Investment becomes increasingly popular. The countdown for the moon shot is on.