Investment Advisors Stress Gold

By Lawrence J. Demaria, Ny Times | THE JOURNAL RECORD, February 12, 1988 | Go to article overview

Investment Advisors Stress Gold


Lawrence J. Demaria, Ny Times, THE JOURNAL RECORD


According to Citibank's Precious Metals Center, 75 percent of the bank's sales of gold coins in 1987 came after the stock market's Oct. 19 collapse as nervous investors flocked to the world's traditional ``disaster insurance.''

``It was primarily a market reaction,'' said Sharon Ziemian, a vice president at the Citibank unit. ``There was concern about economic uncertainty.''

While that concern still exists - witness the recent paralysis of the Dow Jones industrial average - gold sales have fallen off, presumably because much of the money freed by investors selling late last year has already found a home.

But in Wall Street's post-collapse world, more and more investment advisers - including some sophisticated portfolio managers - are urging clients to put at least a portion, perhaps 5-10 percent, of their assets in gold.

Not everyone believes that gold and other precious metals have a place in the typical portfolio. Some economists argue that society and the world's financial structure are evolving away from historical measures of wealth. They see a future in which hard currencies, like gold, will give way to electronic credits.

But others believe that people will always need something tangible to trade. Ziemian notes that gold ``is a universally agreed-upon way of transferring wealth among nations.'' And the real pessimists among the ``gold bugs'' argue that, regardless of what currencies may evolve, after the mushroom clouds dissipate, people will want some gold clinking in their pockets.

Armageddon scenarios aside, buying gold - and silver and platinum - is easy. But being taken advantage of is also easy. For example, in recent months there has been a number of advertisements, in newspapers and on television, for the new American Gold and Silver Eagle coins in which the prices, particularly for the Silver Eagles, are exorbitantly high.

Some ads play on the fear generated by the stock market's collapse. In some cases, they are so misleadingly structured as to convey the impression that the seller has some connection to the government or the U.S. Mint. The disclaimer to the contrary is in print small enough to be etched on a real coin.

Even the quotes offered by small coin shops in the New York area vary widely, with some shops asking $20 to $40 for a single 1986 Silver Eagle, when a fair price, as quoted by large dealers, such at Manfra, Tordella & Brookes, is more in the $12-to-$14 range. And around the year-end holidays, even large retailers are not above offering such coins in a cute gift box for $25.

Serious investors, as opposed to those who buy coins to give their grandchildren at Christmas, usually try to buy gold and silver as near to spot price as possible. …

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