Gold Vaults Bursting at the Seams

The dizzying rise of gold, punctuated though it might be with stomach-churning dips in price, has moved at such a pace during its 11-year rally that vaults that store the precious stuff are running out of room. Customers willing to hoard gold and pay for the privilege of having a secure facility in which to keep it have led to an expansion in the number of those facilities, and demand shows little sign of slowing.

According to a Bloomberg report, many vaults are at or near capacity, and the businesses that own them—whether dealers or banks or security firms—are responding with alacrity, breaking ground for new facilities or already in the process of building them.

As previously reported by AdvisorOne, Barclays Capital announced earlier this month that it was planning to build a vault in company with Brink’s in London, to be open next year. Brink’s already opened a new vault itself this year and may build another to accommodate soaring demand.

Deutsche Bank and the Perth Mint are among the other entities adding storage for their precious metals. So is Geneva-based Swiss Precious Metals, which has a vault in Singapore that has nearly reached capacity under a fivefold increase in the demand for the safe haven of such valuables in the past year alone.

In August the firm relocated its CEO, Jean-Francois Pages, to Singapore to handle the flood of investors putting their trust in shiny metals. In the Bloomberg report he said, “The European debt crisis and its impact on the solvency of European financial players are driving European customers to find refuge in tangible values like physical gold and other precious metals,” adding that demand “is totally compatible with the current financial and political global turmoil.”