Bars of gold bullion are selling like hotcakes at Scotiabank's metals desk
Keith Damsell
Financial Post
Rana Kazemi has
witnessed gold fever in
all its sweaty, nail-biting
angst.
The precious metal's
volatile climb to as high as $340.50 (US) an ounce has meant a surge in
business for Bank of Nova Scotia's foreign exchange and precious metals
desk where Ms. Kazemi is senior operations officer. She said one mature
customer, convinced the price of gold would double by year end, cashed in
all her mutual funds last week and snapped up $200,000 in bullion.
"Her hands were shaking at the counter. She wants it right now, right now,"
Ms. Kazemi said. "You should see them. They're biting their nails. I feel sorry
for them."
Gold fever is alive and well at the corner of King and Bay Streets in Toronto.
Wallet permitting, customers can stroll into Scotiabank, perhaps Canada's
biggest clearing house for gold, and walk out 20 minutes later with bullion in
the bag.
"We've been very busy," says Ms. Kazemi. "People are buying, buying
because they thought gold was going higher. It quiets down and then it gets
busy all over again."
Gold has been on a tear in recent weeks. On Sept. 21, the Bank of England's
second auction of 25 tonnes of gold went better than expected, triggering a
price rally. Five days later, Europe's central bankers capped gold sales and
lending for the next five years, killing gold-dumping fears that have kept the
precious metal depressed.
Gold touched $340 (US) before falling to $324.40 (US) yesterday, up $8 (US).
Only six weeks ago, gold hit a 20-year low of $252.55 (US).
At 40 King St. W., there's nothing like the real thing. Options range from
maple leaf-embossed coins containing one-twentieth of an ounce at $48.05 to
wafer-sized ten ounce bars for $5,016.60. All that's needed are two pieces of
identification. "The cage," a bullet-proof room with double-locked doors that
sits in the corner of the lobby, doles out the required ounces.
The bank will buy gold, too. A bullion analyzer, a flat grey machine the size
of a typewriter, can calculate the purity of coins and bars brought in by
prospective sellers. Two years ago, the machine exposed a bogus bar being
hawked by a Toronto lawyer.
Bigger transactions are more complex. The source of currency must be
determined and the vault notified. The vault is a non-descript room with a
series of large grey gym lockers. Each locker swings open to reveal fat trays
of 400-ounce bars. Security is tight. A 52-tonne door with an elaborate timed
lock keeps unwanted visitors at bay. Its exact location in the bank is a closely
guarded secret.
Secrets are thick among the bank's customers. Several gold bugs declined to
talk to the Financial Post about their bullion buying. Fear -- rather than
monetary gain -- appears to be gold's greatest sales tool, bank staff say.
According to many gold bugs, economic catastrophe is lurking just around
the corner.
"Some people believe there'll be an economic event in the year 2000 and they
want to have gold for protection," said Glenn Brown, analyst at Toronto's
Haywood Securities Inc.
Scotiabank has more immediate concerns. Bess Fuda, assistant manager of
the precious metals desk, gets "an uneasy feeling" when a customer heads
out the door with a $200,000 gold bar in his briefcase. "It's not like a cheque
that can be replaced," she says, recommending use of a safety deposit box.
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