GOLD is becoming such a rock solid investment in these troubled times that dealers of the precious metal are finding it hard to keep up with demand.

Mr Robert Hartman, CEO of Munich-based gold dealer Pro Aurum, told Spiegel Online that for the past two weeks, he has been unable to fulfil all the gold orders his company has been receiving.

Experts say that the sudden flight to gold was triggered by the collapse of US investment bank Lehman Brothers, which caused nervous investors to look for more stable investments.

Mr Roger Breitkopf, a precious metals dealer at German banking multinational Deutsche Bank, adds: 'Compared to August, (gold) sales have increased tenfold.'

Hot among investors are gold coins like the Krugerrand, the American Eagle, the Maple Leaf and even the Vienna Philharmonic. Gold bars in all sizes and weights are also selling well.

The trend has led to gold prices jumping from US$730 ($1,060) on 11 Sep to US$880 last Wednesday.

'In light of the run on the market, it's going to be even higher soon,' Mr Eugen Weinberg, an analyst at Germany's Commerzbank forecasted.

It's not just the smaller investors who are craving the shiny metal.

Mr Hartmann believes that major investors are also shifting their focus to gold.

'You can tell because the value of total orders is climbing faster than the volume,' he said, adding that it's a clear signal that people with savings are preparing for a crisis.

Mr Breitkopf explained that this is because investors feel that if worst comes to worst, 'people know they can always buy something with a bit of gold.'

There is a reason why gold is the go-to haven for money in troubled times - few other precious metals have proven as resilient to general economic crises as gold.

According to Mr Weinberg, 70 per cent of all gold is used to make jewellery, so its price is less dependent on industrial developments than other precious metals. To give a comparison, Mr Weinberg says that while gold prices continue to rise, platinum prices have halved since July.

Already, many coins and bars are sold out. The problem isn't that there isn't enough gold available.

'The gold that's recently been mined will be enough for decades,' Mr Weinberg explained.

Demand outstrips supply

The problem is that coins and gold bars can't be produced quickly enough.

For example, the highly-regarded South African Krugerrand coin is more difficult than ever to obtain. Even though the Rand Refinery, where the coins are minted, is producing at its full capacity seven days a week, it is still unable to meet demand.

Demand for other gold coins are equally high, with dealers have so many backlogged orders that they have stopped taking new ones.

Experts say that gold prices are likely to continue rising, even if the US financial crisis resolves itself quickly. And even if gold prices fall by a few percentage points, it will still be a good investment, Mr Hartmann advised.

He said: 'The loss then would be like an insurance premium. In return, your money will be safe in the event of a crisis.'

This article was first published in The New Paper on October 6, 2008.