Private Bankers: "Just Say 'No' to Gold"

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"Bankers say gold's glittering price tag should give clients pause."

Gold is all the rage as investors flee uncertain markets and worry about inflation, but some bankers to the very rich do not take a shine to the precious metal.

Gold prices have spiked 22% this year, with investors sending gold futures to record highs of more than $1,337 on Tuesday. The weak dollar, volatility in currency markets and deficit worries boosted demand for the metal as a safe store of value.

Private banking executives say gold's glittering price tag should give their wealthy clients pause.

"We're not really recommending gold right now, just because it's at a level where there are things driving it beyond the types of things (where) that we can add a lot of value," U.S. Trust President Keith Banks said at the Reuters Global Private Banking Summit in New York.

Instead, Banks said gold prices may reflect the surge in demand for gold exchange traded funds, listed shares that purchase physical gold, and broader worries about government spending leading to rapid price inflation.

"So what exactly is leading gold to the levels it's at? Your guess is as good as mine," said Banks.

U.S. private bankers, to be sure, also told the Summit they do recommend investments in a range of commodities.

"We have been a proponent of having an exposure to commodities. The bank is optimistic about the economic recovery, and commodities is a way to play global growth," said U.S. Trust's Banks.

"These are assets that I think people can feel good about, that are probably not going to track the more typical areas, and it's just a unique opportunity," Banks said.

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