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Greeks queue to buy gold sovereigns for financial security in turbulent times
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THEY were parachuted in during World War II to fund local resistance to the Germans and now, with a population mired deep in another -- if very different -- crisis, British gold sovereigns once again are the foreign currency of choice in Greece.

Once again, too, they are offering a tangible sense of security amid turbulent uncertainty.

In the 1940s, as the only reliable currency available, much of it was hoarded in trunks, under floorboards and buried in gardens. Any respectable girl's dowry included a cache of sovereigns.

Now they are being used as a physical hedge against fears that Greece may leave the euro zone.

For weeks buyers have been queuing patiently in the central bank's main downtown Athens office, prepared to shell out nearly €273 ($409) per piece, up from €243 at the start of May and €180 last July.

Persistent worries that Greece could default at least partly on its debts are emptying the Bank of Greece's vaults of at least 700 gold coins a day, giving a whole new meaning to the term sovereign debt.

"The public's renewed interest in sovereigns as an asset started with the collapse of Lehman Brothers," the daily Kathimerini newspaper wrote.

Central bank officials estimate that while Greek demand for the distinctive bullion has been rising by 10 per cent a year since 2008, its price has been soaring by more than 50 per cent.

Greeks' uncertainty about their future has manifested itself more dramatically in a series of strikes and riots.

The markets have been jittery, too, something unlikely to have been eased by remarks last night by Olivier Blanchard, chief economist of the International Monetary Fund, who said: "The markets are wondering if Greece will be able to repay its debt or not.

"Given the behaviour of Greek governments in the past, their uncertainties are understandable."

Sovereigns remained legal tender amid an unstable drachma until 1965, when the Greek government placed restrictions on their trading.

Many hoarders cashed in their stocks, although street vendors near the Athens Stock Exchange continued to do a brisk trade in the coins.

The growing run on the bullion sovereign has spawned a thriving black market: in addition to about 50,000 sold legally by the Bank of Greece in the first four months of this year, officials estimate that at least 100,000 have changed hands on the black market at prices of up to €300.

Trading offers have invaded the Greek blogosphere, where buyers are sometimes confused at the variety of sovereigns on offer.

Some expect the head of George V, standard on most of the 1930s coins flown into wartime Greece. Others want Elizabeth II, whose likeness is on a batch of several million pounds' worth of sovereigns that Greece bought in the 1970s.

Source > The Australian

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