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Gold CombiBars draw investors worried about inflation, financial markets

709302555bInvestors in Austria, Germany and Switzerland are flocking to buy CombiBars, gold bars about the size of a credit card that can be broken down into one-gram pieces to be used as emergency payment.

Valcambi, an arm of U.S. mining firm Newmont, plans to introduce the CombiBar to the U.S. market next year and build its presence up in India, the world’s largest market for gold. The company also plans to focus on platinum and palladium CombiBars in Japan, FirstPost reports.

Gold bar and coin sales rose to $77 billion in 2011, up from $3.5 billion in 2002. Investors concerned about financial markets and inflation have driven the sales increase over the past 10 years. Prices have increased by approximately 500 percent since 2001.

“The rich are buying standard bars or have deposits of physical gold,” Michael Mesaric, the CEO of Valcambi, said, according to FirstPost. “People that have less money are buying up to 100 grams. But for many people a pure investment product is no longer enough. They want to be able to do something with the precious metal.”

The CombiBar is easily transportable, costs less than buying 50 one-gram bars and can be used as an alternate form of payment.

Demand for the product is particularly strong in Germany. Many Germans are still wary of post-World War One hyperinflation, when the Deutsche mark became almost worthless.

“Demand is rising every week,” Andreas Habluetzel, the head of the Swiss business arm of Degussa, a gold trading firm, said, FirstPost reports. “Particularly in Germany, people buying gold fear that the euro will break apart of that banks will run into problems.”

Some fund managers, however, remain skeptical of the CombiBar’s appeal. Stephan Mueller, the manager of Julius Baer Group’s $6 billion gold fund, said that the problem with using gold as an alternate method of payment is that people will have to blindly trust the value.

“Gold is a useful store of value,” Mueller said, according to FirstPost. “However I doubt whether it will succeed as a method of payment.”

Crises within the euro zone, however, have led to an increased demand for gold sold in vending machines. Thomas Geissler, the CEO of Ex Oriente Lux, which operates 17 gold vending machines across Europe, the U.S. and United Arab Emirates, said that the crisis has driven demand for gold.

In 2010, one day after Josef Ackermann, the CEO of Deutsche Bank, expressed doubts over whether Greece would be able to meet its financial obligations, the machines saw record sales, FirstPost reports.

Since the machines were put into operation under the name “GOLD to go”, 50,000 customers have purchased more than 21 million euros of gold. The average customer is well-to-do, male and over 50 years old.

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