Wealthy in Switzerland, Austria and Germany lining up to buy the gold 'CombiBars' | The Post-Paper Currency

Private investors in Switzerland, Austria and Germany are lining up to buy gold bars the size of a credit card that can easily be broken into one gram pieces and used as payment in an emergency. 

Now Swiss refinery Valcambi, a unit of U.S. mining giant Newmont, wants to bring its "CombiBar" to market in the United States and build up its sales presence India - the world's largest consumer of gold where the precious metal has long served as a parallel currency. Investors worried that inflation and financial market turmoil will wipe out the value of their cash have poured money into gold over the past decade. Prices have gained almost 500 percent since 2001 compared to a 12 percent increase in MSCI's world equity index.

Sales of gold bars and coins were worth almost $77 billion in 2011, up from just $3.5 billion in 2002, according to data from the World Gold Council.

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

Demand For Gold "CombiBars" Soaring

 

One of the biggest complaints about gold - always a parallel currency to paper, and soon to be serial, once the world shifts to a post-paper currency reality in which faith in infinitely creatable electronic paper money is finally destroyed - is that it would be an impractical medium of exchange, as the traditional denominations are so large one would be unable to trade one ounce (and certainly one bar) for every day needs. This is also one of the main reasons various retail investors prefer silver over gold. All this may be changing courtesy of Swiss refiner Valcambi which has created a CombiBar, a credit-card sized, 50 gram block of 99.9 gold, which is precut, and which can easily be broken into one gram pieces which can then be used as forms of payment in an emergency. And since one gram of gold has roughly the value of two ounces of silver, it is a far more practical lowest common denominator unit of exchange than the traditional one ounce minimums in broad circulation. 

                               More on this novel, and practical, use of gold from Reuters:

Swiss refinery Valcambi, a unit of U.S. mining giant Newmont Mining Corp., wants to bring its “CombiBar” to market in the United States and build up its sales presence India – the world’s largest consumer of gold where the precious metal has long served as a parallel currency.

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

Mesaric said the advantage of the "CombiBar" - which has been dubbed a "chocolate bar" because pieces can be easily broken off by hand into one gram squares - is that it can be easily transported and costs less than buying 50 one gram bars.

"The produce can also be used as an alternative method of payment," he said.

Valcambi is building a sales network in India and plans to launch the CombiBar on the U.S. market next year. In Japan, it wants to focus on CombiBars made of platinum and palladium.

   Will the golden chocolate bar soon replace the one ounce gold coin as the most favored denomination?

The CombiBar is particularly popular among grandparents who want to give their grandchildren a strip of gold rather than a coin, said Andreas Habluetzel head of the Swiss business of Degussa, a gold trading company.

Other customers buy gold for security reasons.

   Whatever the final outcome, demand is soaring:

Elsewhere, demand is particularly strong among Germans, still scarred by post-World War One hyperinflation, when money became all but worthless and it took a wheelbarrow full of notes to buy a loaf of bread.

"Above all, it's people aged between 40 and 70 that are investing in gold bars and coins," said Mesaric. "They've heard tales from their parents about wars and crises devaluing money."

“Demand is rising every week,” Mr. Habluetzel said. “Particularly in Germany, people buying gold fear that the euro will break apart or that banks will run into problems.”

Naturally, there are those who are desperate to infuse skepticism toward the new product. After all, one can't print gold, and any form of money that takes away wealth dilution power from the central banks (i.e. printing money), is implicitly disastrous for the status quo.

Stephan Mueller, who manages bank Julius Baer’s $6-billion gold fund, said one problem with using gold as a method of payment is that people have to take its value on blind trust.

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

True- is is much better to have value in a EUR paper bill, collateralized by such non-blind trust items as Greek geta and Kalamata olives.

One thing is certain: after a record November, December sales of gold in the US Mint have already surpassed the total from 2011, and are set to be third most active gold purchasing month in 2012, recent violent paper smackdown of gold notwithstanding. Perhaps the US population has finally learned that all increasingly more frequent smackdowns of paper gold by central banks and other authorities do, is to make gold more affordable for more people, for longer. And increasingly more are taking advantage of precisely this, not of hopes of striking it rich overnight and then converting hard money once more into worthless paper equivalents.