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[Frank Pembleton]

Gold retains alure in troubled times
Coins become hot seller as battered investors seek safe harbour: INVESTING

----------- EDMONTON JOURNAL

Gold -- a traditional "safe haven" in times of financial skittishness -- is selling like hotcakes.

One gauge of gold's revival as an investment commodity is retail sales of the Royal Canadian Mint's solid gold Maple Leaf coin.

"We surpassed our annual sales target less than halfway through the year," says mint spokeswoman Diane Plouffe-Reardon.

The goal was to sell 200,000 ounces. By the end of September, sales of the coins were 258 per cent ahead of the same period of 2001.

"It's a normal trend," Plouffe-Reardon says. "When the (stock) markets are down, real estate and precious metals sales go up."

Within Canada, Alberta is usually a very good market for gold, said Patricia Mohr, an economist and commodities specialist with Scotiabank, which sells coins and one-ounce wafers.

The absence of a provincial sales tax in Alberta makes it the preferred place to pony up $550 or so to buy a Maple Leaf coin.

"It's been good for business," says Ray Nieman, owner of National Pride Coin & Stamp on Edmonton's south side. But the key, he said, is price fluctuation.

At the beginning of the year, gold was selling for under $280 US per ounce. Last month, it flirted with $330 US before settling back a couple of dimes.

"We welcome (price) activity," Nieman says. "Business is stagnant when the price doesn't move."

Some customers have been buying as a hedge against falling stock prices, says Alex Krimberg, co-owner of Alberta International Bullion Dealers & Refiners. "Others are putting it in gold because of concern about the (Canadian) dollar."

Neither Nieman nor Krimberg had comparative figures on sales this year and last.

But Krimberg says he has several customers who have returned to buy 10, 20 or even 50 coins at a time.

The investment interest in gold coins hasn't carried over to jewelry sales, however. The World Gold Council says worldwide sales of gold for jewelry declined by 1.7 per cent in the second quarter of 2002, while investment sales of gold rose 3.6 per cent.

"We tell customers not to buy jewelry as an investment," says Katrin Durand, general manager at Adamas Goldsmiths. The labour required to craft a ring or pendant makes them, ounce for ounce, far more expensive than a gold wafer.

Still, the market for rings and other baubles has been strong in Edmonton, she says, and sale of gold jewelry has been steady.

The new-found gold fever has also boosted shares of companies that mine it, says Bill Belovay, manager of BMO's precious metals fund. The Toronto Stock Exchange's sub-index of gold-company shares has increased by 12 per cent in 2002, while most other indices have tanked.

"There's not enough gold mined annually in the world to meet demand."

The current demand is often met by using gold from national banks, many of which have been selling off their bullion for years.

Nor is that situation likely to change any time soon, Belovay added. It would take a price of $380 US per ounce to bring significantly more mine production on stream, he says.

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