Răzvan Furtună, BCR: The interest in gold will remain high

After making investors 30% in 2010, gold will continue to remain the object of interest in 2011, considers Răzvan Furtună, the head of the Retail Sales Department of the Financial Markets Department of the Romanian Commercial Bank (BCR). "The explanation is reasonable, to say the least", he said, and he added: "The national and the international authorities, competent or not, are trying to find the perfect solution for the economic recovery. The first solution on the list, is the depreciation of their currencies, of all currencies ... We can ask ourselves, without making a mistake, depreciation compared to what or to whom? So, what are we comparing those currencies against? We need a standard, and then we have this trend of major investors of turning to gold. Everyone talks about gold because it is a subject that is easy to understand. Analysts talk about gold a lot because they have access to the trading flows of the central banks and of the big investors. There is a real interest and a logic in all this".

The price of gold will rise to around 2,300 dollars/ounce until 2012 (ed. note; gold currently hovers above 1350 dollars ounce), "Erste" analysts predict, in a report published at the end of last year, which mentions that all fiat currencies depreciate against gold in the long run. "Over the past ten years, has proven a very profitable asset. Its price has risen almost five times since 2001. The price of gold denominated in Euros, has risen at a rate of around 13.5% a year", Erste analysts say.

According to Mr. Răzvan Furtună , other reasons why gold still remains attractive, include the fact that the precious metal represents a way of preserving wealth for individual investors (whereas in 2000, 80% of the trade were intended for jewel production, in 2010, this percentage dropped to 40%), as well as the fact that unlike other commodities, the fact that gold is used less extensively for industrial purposes hinders short term speculation and does not pressure the prices of other products.

Furthermore, it is becoming increasingly obvious "that the solutions which are supposed to help overcome the recession and help resume economic growth include inflation, currency depreciation, the stopping of state aids to troubled companies, the restructuring of sovereign debt and of the financial systems. By default, the first two automatically make us think about other financial assets than currencies", Mr. Furtună added.

• Who"s investing in gold

Customers that buy large volumes of big gold bars, are those who don"t want to take on any risk. "The fact that they hold gold in physical form, stored in the bank, means that their investment is guaranteed in the event the bank goes bankrupt, because they actually have a storage contract", said Răzvan Furtună.

According to him, most of the investors that wish to protect their savings against risk, invest 20% of their assets in physical gold over the long term. Aside from them, there are also investors that are looking to diversify their portfolio, and who invest less than 10% in paper gold for the medium term. There are also investors that wish to join the ride to the upside of the gold market, and who invest from 10 to 20% of their portfolio in structured products, as well as in short and medium term paper gold.

"Whereas in the case of physical gold, the trading costs are rather high (insurance, transport, storage and 4-5% spreads compared to the market price), structured products have very low costs, but they do carry a credit risk that investors have to contend with", said Mr. Răzvan Furtună.