On the 9th January 2008 Mr. A Demby, Executive Chairman of The South African Gold Coin Exchange, appeared on Summit TV where he was interviewed by David Williams on "Face to Face"

 

Please see below transcript.

 

 

 

 

Gold hits new high
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 Presenter: David Williams  Guest: Alan Demby

DAVID WILLIAMS:

Welcome to Face to Face. Excitement with the gold price hitting an all-time high earlier today of $890 an ounce. With me to talk about gold and how to invest in it is Alan Demby, chairman of the SA Gold Coin Exchange. Alan, you were in a couple of months ago - we didn’t expect this to have happened, although the gold price was pretty good. What’s behind it?

 

ALAN DEMBY:

There’s a lot of instability at the moment - there’s dollar weakness. I think the sub-prime market is starting to hit home - there’s been another resignation today - so I think all told there’s a lot of uncertainty on Wall Street that’s spreading throughout the market. Obviously the oil price is over $100 a barrel - they’re talking of inflation now, and increased inflation is going to be good for gold with a weak dollar - so I think all these things are starting to play into the hands of gold. We’ve been waiting 27 years for this - or 6,000 years to be precise. I think there’s a lot going on at the moment - there’s a lot of uncertainty in the markets and in the world economically and politically - and I think this is putting gold back on the map again.

 

DAVID WILLIAMS:

Looking at that price - in real terms they say it would have to get to $2,200 an ounce to match that 1980 price. Do you think that it could get there?

 

ALAN DEMBY:

I think with gold at $890 at the moment $1,000 an ounce is within spitting distance - I think once it’s got that sort of base I don’t see why $2,000 an ounce is such an incomprehensible number to reach.

 

DAVID WILLIAMS:

You mentioned the factors - the oil price, the dollar, instability - then you have a self-fulfilling prophecy where people who aren’t normally interested in these things start buying, there’s excitement, and that in itself drives the price up…

 

ALAN DEMBY:

Very much so. In fact a report out a year ago said that the individual collector or investor wasn’t actually buying gold like they were 27 years ago, and I must say we haven’t experienced the sort of rush that there was 27 years ago - so I think now that gold has reached or overcome that 27 year high of $850 an ounce I think the individual investor is going to start getting in, and of course as you say once fear and greed take over and the possibility you could be losing out take hold a lot of people are going to drive the market up. In fact that was what the Gold Fields report said last year - that the individual investor wasn’t in the market - so if we can get the individual investor back into the market big time that will drive gold to $2,000 an ounce…

 

DAVID WILLIAMS:

Of course it’s different now - in 1980 there was much less information on the markets, on gold, on anything - now we’ve got real-time information from so many different sources so one would like to think it’s better based, this boom…

 

ALAN DEMBY:

Well yes, but there’s probably more instability now than 27 years ago - in fact one of the reasons why the gold price went to $850 was when Russia invaded Afghanistan - and I think with the political scenario at the moment worldwide there’s a lot of uncertainty that’s probably compounded by the economic uncertainty that portends well for a very strong and bullish gold price going forward.

 

DAVID WILLIAMS:

Of course the trick is how to get into gold - we know the gold shares are not always the best way because of costs and so on, and the gold shares haven’t tracked the gold price although presumably they will still appreciate. There is your business which is gold coins - how do you expect that to do?

 

ALAN DEMBY:

Krugerrands track the gold price - I don’t think there’s a better item on the market for the retail investor than Krugerrands. I suppose if you’re looking for say between one and 1,000 coins - taking into account storage and holding, and all those sorts of reasons - Krugerrands is still the best gold bullion coin in the South African context for South African investors to buy. It’s easy to buy - you walk in with your money, you walk out with the coins - or if you’ve got a few hundred coins you wish to sell you walk in with your coins and you get a cheque straight away. It really is a very fluid and liquid market...

 

DAVID WILLIAMS:

No more or less fluid than buying say an exchange traded fund which is the other way for smaller investors to get in?

 

ALAN DEMBY:

I think when it comes to exchange traded funds that probably suits the more institutional investor - that’s why I say for the individual retail investor looking to buy between one and 1,000 coins Krugerrands are the best. Having said that Krugerrands is still one of those investments you can physically hold in your possession - not that I recommend that today, I certainly recommend that you store them in a safe place in a safe deposit box - but in the uncertain times that we live in I think it does give you peace of mind to know that you have a few coins stashed away in your own safe so to speak.

 

DAVID WILLIAMS:

Looking at what effect this will have on the industry - obviously supply of gold is very important to your business - are gold mines that were perhaps not going to produce now going to start opening up shafts and opening up new projects?

 

ALAN DEMBY:

We only have to look at the rand value of gold - a few months ago when we met it was about R5,000 an ounce, it’s now R60,00 an ounce - so there’s no doubt that some marginal mines have become much more profitable now, and more gold will come back onto the market, more gold will be mined, and more projects will come on stream. In fact I think South Africa last year mined the least amount of gold that it’s mined for many, many years - so certainly the gold price will be very positive for bringing a bit more gold back onto the market. I think it’s finely balanced at the moment - I’m sure that being the case the price of gold will still go up even further.

 

 

    

 

 Additionally on the 9th of January 2008, Mr. Demby was interviewed on SA fm - "Market Update" and on the 10th of January 2008, Mr. Demby appeared on CNBC Africa - "Business Tonight" where he was addressed by Bronwyn Nielsen.