KEY POINTS:
United States hurricanes, ballooning world oil prices, geopolitical instability and a high Kiwi-US exchange rate - New Zealand Mint bullion trader Michael O'Kane has a vested interest in bad news.
"We don't exactly broker on the fact that the world is going to hell in a handbasket, it's
just that gold is the perfect hedge," says O'Kane.
His employer, the country's only private mint, has seen a 400 per cent increase in gold investment in the past few months, mainly due to what most would view as negative events.
"When normal markets are decreasing, gold goes up. When demand for gold goes up so does its price. It's used to offset oil prices and to hedge in times of crisis. Gold is seen to secure a portfolio," says O'Kane.
A former ASB teller who ended up working in the bank's foreign exchange department, O'Kane is the mint's head trader and spends his days buying and selling gold and silver bullion on behalf of investors here and offshore.
The country's only minter of precious metals, the mint is based in Auckland and is run by a family trust.
It makes commemorative coins and medallions for New Zealand, Thailand, Fiji, Nepal, the Cook Islands, Pitcairn Island and Niue. The most popular item is the NZ gold kiwi, a one ounce coin or "bullion piece" which yesterday was selling at $979.
Investors can buy their gold or silver coins, bars or jewellery online or at the mint's Auckland office and have them shipped to them or stored in the mint's storage vaults. Certain items have set prices but mostly buyers are quoted live prices.
There is no typical gold investor, says O'Kane, who has clients of all ages and professions, from a former a welder to financial advisers.
Headhunted from the ASB in January last year, O'Kane, 35, "got sick of working with money" as a cashier in his early ASB years but has not yet become immune to the lure of gold.
"There's something about gold, it's exciting," he says.
More Kiwis are feeling the same way with the mint's number of new investors increasing 400 per cent in the past three to four months.
O'Kane's theory is that they see gold as a safer bet than property.
"It's an alternative to getting into the housing market. A lot of mum and dad [investors] are looking at it as a security blanket for their portfolio, a way of shoring up in case things do go wrong with everything else."
Most traders see it as a type of safe haven investment.
Having 5 per cent to 10 per cent of a portfolio invested in gold "takes the edge off" foreign exchange and inflationary risks.
"It's a hedge that nothing can beat."
O'Kane says the rise in the dollar against the greenback during the past few years has flattened the gold price increases when expressed in New Zealand dollar terms.
Gold prices have doubled in five years up to US$679 an ounce. But it's not all up - the past two weeks have seen prices fall 1.5 per cent to US$662 an ounce last week in the US.
The large rise in US oil inventories led funds to trimming gold investment to lessen risk and that removed some of the price impetus.
Precious trade
* New Zealand Mint is the country's only privately owned precious metals minter.
* Gold is a "security blanket" investment.
