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Collapsing Finance companies and a plateau in the property boom are fuelling a modern-day gold rush, with small investors flocking to the security of solid gold.
Bullion dealer the New Zealand Mint says its gold trade has increased by 300 per cent in the past six months, a rise in business worth hundreds of millions of dollars. The soaring price of gold has helped - it exceeded US$700 ($1100) an ounce in the past week, and the price is tipped to break the US$1000 mark in the next three years.
NZ Mint trader Michael O'Kane said this, together with flattening property prices and the rash of finance company collapses, were reasons "average" investors were convinced to buy.
The low US dollar - the currency for gold trading - and the strength of the Kiwi dollar against it had also seen investors turning to gold in record numbers.
O'Kane said that in recent weeks, one "well-to-do" couple in their mid-20s had bought gold instead of a house, and some customers bought a single coin every few weeks when they could afford it.
"We get a whole gamut of customers here. I've had people ring up looking to buy gold because they've been burned by finance companies, or property prices are too high," he said.
Property commentator and self-described "gold bug" Olly Newland always keeps pure gold coins in a bank deposit box, as security in the uncertain world of property developing. "It's always a good time to buy gold," he told the Herald on Sunday.
But financial advisers are unconvinced about the gold rush, and warn that gold does not always glitter. Deborah Carlyon, partner in financial advisory firm Stuart & Carlyon, said gold always had a value, particularly in countries where currency became worthless through high inflation.
But it was a collectable, akin to art, and as such did not generate cash flow through dividends or interest. Also, as a physical commodity, it could be stolen - unlike shares.
"When you get nervousness in share markets, or collapsing finance companies, it's like putting money under a mattress."
There was nothing wrong with buying gold as a part of a diversified investment portfolio but Carlyon warned against "backing just one horse".
Leo Krippner, head of strategic investment for AMP Capital Investors, did not recommend commodities of any kind in diversified portfolios and believed that precious commodities were currently generously priced.
The experts added there was always the possibility that Europe's central banks, which all hold significant gold stockpiles, might flood the market in coming years as they had done in the past.
Economist Donal Curtin, head of the Vestar investment committee, warned people were getting interested in gold too late, given the rising price, and should consider banks were offering high interest rates at present.
