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The Rich Move to Precious Metals

Commodities / Gold and Silver 2010 Oct 06, 2010 - 11:25 AM GMT

By: Dr_Jeff_Lewis

Commodities

Before this year, precious metals demand was mostly local, with a few large institutions and investment banks buying shorts on precious metals to mitigate any possible increase in price.  However, as time goes on and investment banks around the global shutter their trading desks, big money is now moving into metals.  So much big money is moving, in fact, that a number of investment banks are opening up new vaults to keep up with exploding demand.


Major Moves into Metals

JP Morgan was the first to reopen an underground vault in New York to cater to its wealthiest clientele.  The company closed the vault in the 1990s when precious metals reached all time lows, but has since reopened it to make room for large buyers of gold to store their assets safely. 

A number of news agencies are now reporting that other banks such as the German Deutsche Bank and Barclay's will open new vaults in London to store precious metals amidst physical demand that hasn't been this high since the 1980s.

JP Morgan's newest reopening follows another new depository that was built in Singapore to cater to Asian investors.  With new vaults being opened for the first time in all major trading areas (New York, London, and Singapore), investors can be certain that the growth isn't just in the United States, but all around the world.

UBS Becomes Outspoken Gold Salesman

UBS has effectively cornered the market for wealthy investors and traders on both the equity and currency markets, but now it is pushing its clients to buy more and more physical metals, especially gold.  In a note to investors, it now advises that they hold as much as seven to ten percent of their total assets in physical metals to protect against economic calamity and the possibility of inflation or a double dip depression. 

Unlike speculative buyers who are looking to strike it rich with capital appreciation, wealthy investors are buying for the sake of insurance to protect their assets from a dip.  Such insurance is available only through physical metals, where the assets are real, deliverable, and can be converted to cash anywhere in the world.  As such, demand from the wealthiest of investors will come only in the form of physical metal, and it will likely have a huge impact on premiums going forward. 

If the world's wealthiest were to allocate a small percentage, even 5 percent, of their overall assets to gold, we would see a bull-run in gold and silver like never seen before.  All the gold ever mined is worth just over $7.5 trillion (assuming we can find it all, again), but the wealthiest in the world have assets that far outpace that amount. 

Also, we have to consider that at any one time, only a very small percentage of the total gold and silver supply is for sale. 

Therefore, considering all the big money variables, huge amounts of upside do surely exist, and that is without all the other elements that drive metals including: fear, inflation, and real manufacturing.

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com and Hard-Money-Newsletter-Review.com

    Copyright © 2010 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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