NEWS

Investors seeking to play it safe set off gold rush

Gold sovereigns have concluded countless economic transactions and have been the cause of just as many financial disputes. During World War Two they were sometimes traded for a tin of food or false papers, thus saving lives. They’ve also been linked with legends, hidden in chests or buried in forgotten places. In recent years demand for sovereigns has skyrocketed, as has their price. According to market sources, gold investments have increased since the collapse of financial services giant Lehman Brothers in 2008. In Greece, sovereigns can be bought from the Bank of Greece and Piraeus Bank, and with the proper documentation one can even purchase gold bars, though such a transaction has not taken place in recent years. According to data from the Bank of Greece, since 2008 there has been a 10 percent annual rise in the demand for gold sovereigns. The same sources add that during February and March of 2009, at the peak of the international downturn, there were 700-800 gold sovereigns sold daily, causing their price to rise, while a total of 100,000 were sold over the whole of 2009. This year due to the downward spiral of the Greek economy, combined with fears that the country might default, demand has shot up: Around 50,000 had already been sold by April. «It’s remarkable, since demand usually goes up during the Christmas season, as they make popular gifts,» said a bank official who wished to remain anonymous. Although 50,000 is a striking number, it represents only official transactions, and it is estimated that a further 100,000 sovereigns have been sold through unauthorized channels. «It’s usually the elderly who want them, or people who have saved up large amounts and don’t trust banks anymore,» explained an expert in the field. Such shady deals used to be done covertly but now, thanks to the Internet, potential «prospectors» operate openly. «I am interested in buying gold sovereigns, my number is xxxxxxx,» writes a user with the name Giorgos on a coin exchange forum, where reportedly even auctions take place. It’s an open discussion even though the actual transaction is illegal. «I bought six sovereigns from a jeweler, but instead of the usual queen’s head on one side they have a male figure,» another worried member posted on the forum. Experts advise potential buyers to be cautious. There are numerous stories of investors being defrauded as there are many fake sovereigns in circulation or collectibles with no intrinsic value. It is also stressed that they should be kept in a safe place, preferably at a bank.