Precious Metals Being Replaced By Real Estate & Art As Wealth Storage

Gold could not hold above the 1200 support level and gave back Tuesday’s gains in the Asian session to trade at 1199.00. The price of the precious metal seems to be galvanized to the 1200 level over the past weeks. Silver dipped 75 points to trade down below $16 at 15.933 on Wednesday morning. Platinum edged lower following gold to trade at 1145.95.

Traders continue to focus on the Greek bailout situation as more and more news headlines mention the possibility of a default without Greece leaving the Eurozone. Many trades now expected a selective default. The central bank could make it more difficult for Greek banks to access liquidity from the ECB if the country’s leaders can’t reach an agreement with its creditors on economic reform measures. It would do this by increasing the haircuts on the bonds those Greek lenders posts as collateral when borrowing from Greece’s central bank.

Eurogroup president Jeroen Dijsselbloem offered a glimmer of hope on the debt negotiations with Athens on Tuesday, saying some progress had been made. The EU has pressed Athens to detail a program of acceptable reforms by Friday, when Eurozone finance ministers are due to meet in Latvia’s capital Riga. But Athens has been resisting reforms demanded by creditors.

On Monday, Gold reclaimed the $1,200 level as tensions in the Middle East and nagging worries over debt woes in Greece helped lift safe-haven investment demand for the metal. Gold for June delivery climbed 0.8% to settle at $1,203.10.

Gold’s traditional role as a store of wealth has been usurped by contemporary art and apartments in cities such as New York and London, says Laurence Fink, head of the world’s biggest asset manager.

“Historically gold was a great instrument for storing of wealth,” the chairman of BlackRock said at a conference in Singapore on Tuesday. “Gold has lost its luster and there are other mechanisms in which you can store wealth that are inflation-adjusted.”

Over the centuries, bullion traditionally lured demand as a protection of wealth during crises, including conflicts and periods of inflation. Prices posted the first back-to-back annual drop last year since 2000 as investor holdings in exchange-traded products contracted, global equities rallied and the dollar climbed on prospects for higher US interest rates. Since peaking in 2011, it has dropped about 38 per cent.

Holdings in gold-backed ETFs totaled 1621.7 metric tons as of Monday, 1.5 per cent bigger this year after contracting 9.3 per cent last year, according to data compiled by Bloomberg. The funds trade like shares, enabling investors to own bullion without taking physical delivery of it.

In other metals, copper added 5 points in the morning session but still remains well below its average trading range. Copper inched higher but was below four-week highs hit in the previous session as the initial positive impact of a cut in China’s bank reserve requirements was eclipsed by renewed worries over its beleaguered property sector. China’s weekend stimulus was targeted to support its service sector rather than commodity-intensive industries, and falling land sales flag a potential slowdown in construction in the second half that could drag on metals demand.