DUBLIN – Disgusted by how the banks have wrecked the economy and worried their savings are no longer secure, some Irish are buying gold and diamonds or storing their money in safes until the crisis blows over.
Ireland’s government has guaranteed deposits but anxiety about what the future holds, particularly after Dublin was forced to seek a bailout from the EU and the IMF last month, has some savers seeking alternatives to the banks.
“There has been an increase in demand, sustained over a period of months. There’s been a slight increase in the last month. We get that every single day. From mom and pop investors to high net worth individuals,” Mark O’Byrne, executive director of bullion dealer GoldCore, told Reuters. O’Byrne said the firm always advised its customers not to turn their savings exclusively into gold.
“Gold is a classic hedge against the rest of your portfolio and you should put five to 10 percent,” he said, adding that more companies were diversifying their cash holdings into gold than before. “We had a few (corporate deposits) per year before, now we have a few per week,” he said. Tony Cahill of the Retail Jewellers of Ireland, which has 130 members, also said he was seeing a similar trend.
“The reality is that gold was never as expensive as it is now and with the uncertainty in markets, more people are looking at investing in diamond rings and gold,” he said. “They’re scared of banks, scared of uncertainty in the markets, that’s what it’s going to be from now on,” Cahill told Reuters.
Tom Crowley, a 46-year-old accountant, said he decided a few months ago to invest in gold. With banks reliant on state support, construction firms going bust and the euro under pressure over the debt crisis, gold was a “very attractive option”. He now has about five percent of his portfolio in gold, “but it’s something that I’m building up,” he said.
“I see it as a hedge and safe haven from turbulent markets. The currency risk and what will happen with the euro prompted me to look at gold.” Gold hit record highs above $1,425 an ounce last week, partly due to investors spooked by the euro zone debt crisis. A year ago gold was about $1,200 an ounce. Ireland’s banks have suffered large outflows of deposits, largely among corporate customers, since the middle of the year due to uncertainty over a growing financial crisis.
Allied Irish Banks lost 12 billion euros in deposits since the middle of the year while Bank of Ireland lost 10 billion euros in the third quarter. An EU/IMF 85-billion-euro aid package is meant to restore confidence in the sector but in the meantime a small minority of people feel more comfortable putting their money in security boxes at home.
Neil Donnelly, CEO of AllSafes told Reuters that the sale of home safes had increased by 80 percent in the three months to the end of November compared to a year ago.
“We’ve seen a steady increase (in sales) since January, a larger increase in the last four, five months or so,” he said. “More people are storing cash at home than before. A handful of customers have said ‘I don’t trust the banks. I want to keep my cash at home’.”
