Money world

Gold consumers across Asia greeted bullion’s run to a record high cautiously on Wednesday, with a few moving to cash in gains but the majority opting to wait for the rest of a rally they believe has only just begun.

In contrast to a second day of busy trade on global gold markets, the scene at shops and jewelry merchants from Sydney to Hong Kong to Mumbai was marked by a distinct lack of occasion, suggesting that the wave of retail scrap selling that greeted gold’s record run in March 2008 may not be quick to recur.

“Today’s been like any other day,” said David Carr, of KJC Coins Australia in Sydney, which deals in precious metal coins and bars. “No one’s coming in to sell gold because the price jumped overnight, it’s more wait and see, business as usual.”

The Australian outback gold mining town of Kalgoorlie, home to a nearly Times Square-sized electronic ticker tape broadcasting up-to-the-minute bullion prices, also was quiet.

“There’s nothing going on that’s out of the ordinary,” said John Horner, editor of the Kalgoorlie Miner newspaper.

Profit taking — read selling — replaced gold purchases that in New York and across Europe on Tuesday had swept spot bullion more than $10 above its previous March 2008 peak, and carried through on Wednesday to a record $1,048.20 an ounce.

The issue of scrap supply in the gold market — generated largely from the resale of jewelry to merchants — has taken on greater importance in recent years, as the advent of physically backed Exchange Traded Funds (ETFs) attracts new investors.

The biggest such fund now holds more than 1,000 tons of gold, equivalent to the world’s fifth-largest central bank, and analysts had said that only the flow of scrap material into the market had prevented gold from soaring much sooner, much higher.

While there was some evidence of retail sales, it wasn’t overwhelming.

“It is simple, buy low and sell high — I am making a 10 percent profit already so I am selling,” said Nguyen Duc Hung while waiting to sell five taels of gold at a shop on Hanoi’s Ha Trung street. Vietnam is Asia’s second-biggest gold buyer.

To date, there have been no reports of gold hoarders burying stashes in secret spots as was the case in 1980, when gold zoomed above $800 an ounce for the first time, or about double today’s level when adjusted for inflation.

“Both buyers and sellers are coming to the shop today, they are more or less evenly balanced,” said Osamu Ikeda, general manager at Tanaka Kikinzoku Kogyo, Japan’s top bullion retailer.

Rival Tokuriki Honten Co. Ltd. saw a similar scene.

“There are no queues outside our shops,” said general manager Fumio Yamamoto. “For the Japanese, the (yen-based) price is too high to buy, but too low to sell.”

DOLLAR EFFECT 

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