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The price of gold reached an eye-popping $1,550 an ounce this year and that compares with $40 back in 1971.
Silver has climbed, too, reaching a near-nominal high of $50 per ounce recently. In the last decade, investors have significantly stepped up their purchases of gold, silver, platinum and palladium bullion and coins. "A lot of gold is in the hands of private investors now," says Mike Clark, president and general manager at Delaware-based Diamond State Depository. "In fact, private investors now hold more gold than the world's national central banks." Private investors own about 30,000 tons of gold, over a sixth of global, above-ground supplies and more than the central banks own, according to metals consultants GFMS. That's partly because private demand for bullion and coins is rising rapidly in China and jewelry demand continues to grow in India. "In the U.S., one reason for the rush to buy precious metals is that investors are losing faith in the dollar," Clark said. The U.S. greenback, measured against a basket of other currencies, has declined rather significantly in value over the last decade. Add in investor concerns about the U.S. debt and deficit problems, the specter of coming inflation, growing unrest in the Middle East, and the ongoing European sovereign debt crisis, and it's easy to understand their desire to diversify their investments to include tangible assets, like gold and silver. In addition to buying bullion and coins, they have also flocked to gold and silver Exchange-Traded Funds or ETFs, which are backed by physical metals in storage. Meanwhile, some countries, particularly Switzerland, report they are running out of storage space for precious metals. Metals storage capacity has expanded in the U.S. in recent years. Diamond State Depository opened last year as a state-of-the-art, fully insured, top-security facility, located in the heart of the East Coast business corridor. The Delaware-based depository operates with a class-three gold vault, the highest rated vault available. Diamond State Depository also features several spacious and secure bulk-storage warehouses, capable of handling 1,000-ounce silver bars in large volume. The facility has an emergency back-up power source, capable of supplying full backup power, if needed. And, it is protected by a three-tiered, UL-rated (Underwriters Laboratories), multi-redundant security system. Access throughout the facility is controlled by a card-reader system, permitting access on a pre- authorized basis only, with all areas of the facility, both external and internal, continuously recorded by video. |
