RECORD SALES ON THE DOMESTIC MARKET Gold - the band-aid for investors

Gold id the safe haven for investors, in a crisis, as proven by the sales of yellow metal, which have exploded over the course of the last two months.

The Romanian Commercial Bank (BCR) and Piraeus Bank, the only banks that trade gold, have seen their sales of the metal pick up speed.

Alina Piciorea, the head of the Corporate and Retail Sales Department and of the Treasury and Financial Markets Department of Piraeus Bank, claims that investments in gold have been on an upward trend, as a result of foreign events. She said: "Since the beginning of the year, the total sales of physical gold have reached over 140 kg of ingots and approximately 1,800 coins, worth almost 5.5 million Euros. Approximately 60% of this amount was traded during the last two months, to the tune of over 2.5 million Euros. Moreover, the daily number of trades in July and August doubled over the first months of 2011".

Alina Piciorea says that Romanian investors have kept up with foreign investors. She said: "The Romanian market reacted emotionally to foreign stimuli, proving once again that it is influenced and strongly correlated with the international events, and especially in the last two months, demand boomed. Gold is once again applied as a patch to heal the wounds inflicted by the drop of the stock markets and by the depreciation of the currencies and is making new historic highs daily".

BCR also saw its gold sales increase last month.

"The maximum quantity sold since the beginning of July, approximately 310 kg, exceeds the entire quantity sold in the first six months of 2011 (220 kg)", said Răzvan Furtună, the head of the Treasury Products Sales of BCR.

A few investors closed their positions opened one year ago, he added.

On average, each Piraeus Bank customer acquired about 150 grams of gold in ingots and ten coins, according to the head of the Treasury and Financial Markets Department of Piraeus Bank. As for private banking clients, they bought more than 3,000 grams and opted for storing it, using the custody service provided by the bank, she added.

"Even though in January we have seen an increase in the appetite of investors for risky assets, and thus, a drop of the price of gold, the new economic and political developments later brought < save-haven > investments back into favor", said Alina Piciorea.

Aside from physical gold, Piraeus Bank also offers its clients gold accounts, for those who want to benefit from the volatility of gold over shorter periods.

The evolution of the price on the interbank market, together with the downgrade of the US bonds from "AAA" to "AA+" and with the sovereign crisis in the Eurozone, have attracted attention over the potential gains that investing in gold accounts could offer, said Alina Piciorea.

Investors have become interested in investing in the yellow metal in the short term, which allowed them to increase the returns of their portfolios, she said.

"Romanian investors have opened long positions (ed. note: buy orders) on gold in their accounts, expecting it to surpass the 1800 USD/ounce threshold", said Alina Piciorea.

• Răzvan Furtună: Gold could reach 2,000 dollars an ounce before 2012

The price of gold could reach the 2,000 dollars an ounce, before 2012, which was the target estimated by the analysts of "Erste Group", in a report published in early July, considers Răzvan Furtună.

"The sentiment on gold being a safe haven investment remains positive, and the target price of 2,300 dollars per ounce remains in place for a medium to long term horizon", he added.

The head of the Sales of Treasury Products Department of BCR explained that two of the most important reasons behind the rise of the price of gold (or more correctly, why currencies are depreciating against gold) are the issuing of new currency and the negative real interest rates.

"These past few days have brought us the official confirmation that the money issuing process will continue in Europe (the programs to buy bonds of the peripheral countries) as well as in the EU. Moreover, the Swiss National Bank has announced a similar program in an attempt to halt the strengthening of the franc", he said.

Răzvan Furtună added that there will be no changes in the key rate in the US, and that, for the first time, analysts have criticized the measures taken by the ECB this year, to raise the key rate. "The IRS rates (interest rates swap) have gone down, as the financial markets consider that there comes a relatively long period of near zero interest rates. The conclusion is that at least until 2013 we will have negative real interest rates", he said.