Gold rush for locals

Joanita Cillié | Tue, 21 Jul 2009 09:04

[miningmx.com] -- Gold bars can, for the first time in almost a century, once again be bought locally as an investment.

"South Africans were for a long time unable to share in the country's gold wealth. The only possibility was to invest in gold companies or in Krugerrands, or to buy Mandela coins or jewellery, said Bernard Stern, chief executive of Metal Concentrators (MetCon).

Stern explains that large fines or even imprisonment could be imposed on individuals who violated the law. As a result South Africans could not hide gold "under their pillows or in a safe" for the lean years, a common practice in Europe and India.

After the promulgation of the new Precious Metals Act South Africans no longer need to obtain a licence to hold unwrought gold. Such ownership was last permitted in 1911.

MetCon, a refiner of precious metals as well as a major supplier to jewellers, immediately identified a market opportunity and has since June been offering for sale bars of gold, platinum and silver.

MetCon's gold bars are being sold at the gold spot price and the group will add an 8% to 10% margin for their preparation.

Stern says it's essential for the gold to be sold at the right price.

"Our profit margin is so small that we could easily lose money."

Clients who contact MetCon receive a quotation and, if they give the go-ahead, MetCon immediately purchases the gold, which has to be paid for within 24 hours.

Stern reckons the bars can easily be resold. Jewellers or even MetCon will buy them (each bar has a certificate of purity and weight).

The price of the bars is also directly linked to the value of gold and is not a perceived value, as in the case of coins.

A Mandela coin can cost a buyer R26,000, though the gold is worth only R6,500. Krugerrands sell for R8,000 to R13,000 each.

-Sake24