LONDON (Reuters Life!) - London luxury goods department store Harrods is moving into the precious metals market with the launch of a service to sell investment-grade gold bullion bars and coins to customers.
Malcolm McLean, general manager of Harrods Bank, told Reuters on Thursday that the company saw a gap in the market for a well-known retailer to enter the increasingly high-profile gold market.
“We have been very conscious of the fact that there has been an ever increasing amount of interest in the gold market, and in buying investment gold,” he said.
“We became very conscious that there is no well-recognized name out there which the general public can turn to and say, I know that name, I trust it, I want to buy from them.”
“That is not to say there are not reputable dealers out there — we know there are,” he said. “But they don’t carry the brand that we do.”
Since Monday, Harrods has been selling Swiss-sourced investment grade bars and coins including sovereigns, South African Krugerrands and American Eagles, from the Harrods Bank premises on London’s upscale Brompton Road.
Harrods would not be drawn on the sales volumes seen by the store so far, but McLean said feedback for the service had been positive.
“We are very much looking to the Harrods customer, and the customers of Harrods bank itself,” said McLean. “But we are open to the general public.”
Prices vary according to the spot price of gold, the amount of bullion ordered, and the type of product selected. Internationally traded spot gold prices rose to a record high of $1,070.40 an ounce on Wednesday.
Around midday Thursday, a one-ounce Kruggerrand coin would have retailed at just under 740 pounds, around a 14 percent premium above the gold spot price at the time.
Premiums on gold investment products in Europe are typically between 5-20 percent, depending on the spot price, supply and demand conditions, and volumes.
The store offers a secure safety deposit service, with its smallest box available for 235 pounds a year and capable of holding the largest investment product Harrods offers: the 12.5 kg bar.
“The customer can take the gold away with them if they wish, or can arrange for it to be delivered to wherever they choose,” McLean said.
Investment in gold coins and bars rose sharply in late 2008 and early this year as the financial crisis boosted the appeal of physical gold as a safe store of value for consumers.
According to the World Gold Council, worldwide net retail investment in gold, which includes coin and bar buying, rose 22 percent in the first half of 2009 from the same period of the previous year to 301 tonnes.
Reporting by Jan Harvey; Editing by Paul Casiciato