The BET index of the Bucharest stock exchange went up by 12.3% since the beginning of the year, with only the BET-FI index, which follows financial investment companies SIFs and Romanian investment fund Fondul Proprietatea (FP.RO), boasting a higher rise of 22.9% in the analyzed period.
In the past few weeks the price of gold fell by around 3.7% after it had exceeded the RON200/gram mark at the beginning of October, but analysts expect the trend to remain positive because of inflationary pressures generated by the programs to stimulate economies conducted by central banks.
“Historically the regular purchase of financial gold over the medium and long term has helped preserve investors’ wealth. Given the current conditions, and the deepening of problems on global financial markets, increasingly more investors are turning towards gold,” said Laura Hexan, head of the retail treasury products department within BCR.
So demand for gold remains high, although transactions no longer amount to the 2011 level, when the price of gold climbed 35% in just a few months amid turmoil on the European financial markets and amid the eurozone crisis.
Investors also have stock exchange instruments available, that allow them to take advantage of the increase in the price of gold, with the most basic ones being index-linked certificates on the price of gold.
BCR has recently launched a certificate that follows the price of a gram of gold in the Romanian currency. The price of such a certificate is similar to the price of one gram of gold.
“We offer our clients for the first time in Romania the possibility of buying Index Certificates that follow the evolution of physical gold directly from the stock exchange. They bring the same yield as physical gold, but without the added costs of storage, insurance, transport and evaluation,” said Laura Hexan.
Index certificates on the price of gold were introduced on the Bucharest stock exchange in September 2012 under the symbol EBGLD1.
41 transactions involving such certificates have been conducted so far, amounting to 3.14 million lei (EUR680,000). The price of a certificate was RON194.2 on Tuesday.
Raiffeisen Centrobank also has an index certificate on the price of gold listed on the Bucharest stock exchange since August 2010 under the symbol RCGLD. But the price of Raiffeisen certificates is higher because they follow the price of 0.1 ounces of gold (around 2.835 grams) and transactions are more seldom. The latest transaction with these instruments was conducted at a price of RON605 per certificate.
Although they are easier to trade and don’t involve any other costs, transactions with index-linked certificates on the price of gold are still low as compared with transactions with physical gold conducted by local banks. Many investors prefer to own gold in physical form and take it home.
Since the beginning of the year BCR has sold around half a ton of gold worth around RON100 million. Last year BCR had sold 1.27 tons of gold.
(English version by Daniela Stoican)