Germany has always been something of a cash economy. Even as North America and the rest of Europe were ganging up against anyone with a wad of cash a decade ago, German auto dealers would accept nothing but cash for that new Mercedes or BMW, while travelers in Germany were amazed that hotels and train stations would not accept credit cards either. Things are changing, but the ‘Bundesrepublik Deutschland’ is certainly the largest ‘cash economy’ in Europe.
Perhaps it’s not surprising, therefore, that Frankfurt Airport in Germany is the testing ground for a sophisticated new type of vending machine that sells gold bullion for investment purposes. As regards the typical trade-off between money laundering regulations and privacy, a camera monitors the machine. Presumably anyone hogging the machine to purchase large quantities will be regarded as suspicious.
Operator TG Gold-Super-Markt plans to roll out 500 of the machines in airports and railway stations across Europe, including Germany, Austria, Switzerland and the UK. They are also offering worldwide franchise licenses. The sophisticated machines sell everything from small bars intended as gifts, such as a 1 gram bar for about €30, to larger ingots aimed more at investors – a 10 gram bar costs about €245 – or gold coins such as the Maple Leaf or Kangaroo.
Demand for retail gold bullion (in other words, physical gold that you can hold and touch, rather than paper gold such as certificates and ETFs) has of course shot up in the past year. An article in Britain’s Daily Telegraph states that demand reached an estimated 108 tonnes in 2008, up from 36 tonnes in 2007 and 28 tonnes in 2006.
Thomas Geissler, who owns TG Gold-Super-Markt, said: “German investors have always preferred to hold a lot of personal wealth in gold, for historical reasons. They have twice lost everything. Gold is a good thing to have in your pocket in uncertain times.”
Unfortunately, however, buying physical gold in these vending machines comes at quite a premium. Geissler claims that the premium over spot is less than charged by most banks, which may be true. But then ‘most banks’ are not specialists in gold. Those who are more serious about investing in gold bullion know which banks to go to to buy at substantially lower premiums. For example, nearly all banks in Vienna, Austria are now stocked up with gold coins that are available for cash purchasers at a much lower premium.
So, in summary, it’s a cute idea and next time we fly through Frankfurt Airport we will likely test it out ourselves. It’s ideal for encouraging impulse savings (that’s the opposite of impulse purchases!) But if it gets too successful – in other words if investors are treating this seriously rather than as a gimmick – we may well see some resistance from governments. After all, little more than ten years ago Austria had anonymous bank accounts (ATM Sparbuchs) that could be operated through similarly innovative technology. Five years ago you could buy prepaid Travel Cards and Mobile phone SIM chips anonymously for cash in Switzerland. But no longer…
If you want to know more about discreet ways to buy gold bullion offshore while protecting your privacy, you’ll want to check out Peter Macfarlane’s article about Precious Metal Investments: How to Buy and Hold Gold Bullion Offshore. We expect Gold to go through the roof (at least in dollar terms) quite soon. Very soon we expect it to break through the $1000 mark again. So don’t delay and miss out on these opportunities. Members of Q Wealth have full access to Gold Intelligence – in the form of the Gold Report and regular updates in each issue of The Q Wealth Report – from Peter Macfarlane.