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Ardent Listener
14th October 2008, 20:15
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Bullion Shortage and Spot Prices Tell Two Different Gold Stories
by: The Prudent Investor October 13, 2008 | about stocks: GLD




Having blogged earlier on a physical silver shortage and the drying up of gold bullion purchases, recent events in the precious metals markets justify an update that again arrives at the conclusion that last Friday's silver and gold price plunge on COMEX has pretty little to do with the actual physical investment demand for gold and silver. Tim Iacono had a good post with the headline "Gold prices getting fishier and fishier," that does away with the myth that the US mint faces unprecedented demand. I stumbled across several more reports that show the ongoing dichotomy between official spot or futures prices and premiums actually paid by investors, if they can get their coins or bars at all.



The British Evening Standard ran a story over the weekend that said demand in Germany had grown 10-fold and dealers were not taking any more orders:

German gold dealers say demand has skyrocketed this past week to 10 times normal so no more orders can be taken for the foreseeable future.

"The demand exceeds our capacities by a great deal," said Heiko Ganss, head of precious metal company Pro Aurum.

"The requests cannot be satisfied right now," a dealer from the Düsseldorf WGZ Bank confirmed.

"Demand for gold as a conservative investment has risen dramatically," said Stephan Henkel. "right now the demand is about 10 times as high as in normal times."

Gold deliveries now take between four and six weeks.

This was confirmed by the Berlin daily Tagesspiegel, which reported in a very insightful article that German gold dealer Pro Aurum has closed its mail-order business due to demand never seen before.

One reportedly has to wait four weeks to take delivery of one kilo gold bars.

Physically backed gold ETCs (Exchange Traded Commodities) see heydays as well, according to a story at investegate:

Physically-backed gold ETCs saw $93m of net inflows, equivalent to 106,000 ounces of gold, in the six business days up to October 6, the largest weekly increase during the past 10 weeks, while silver also saw net inflows.

Despite a fall in gold prices last week, the ETCs' total assets reached $4.5bn, equivalent to 5,340,000 ounces. So far this year the products have seen $992m in inflows, equivalent to 1,530,000 ounces, an increase of 30%.

ETFS Physical Silver experienced a net inflow over the six-day period of USD7m, an increase of 4% or 1,194,729 ounces. Over the past six weeks, the product's volume of silver has increased by 25% to 12.8 million ounces, the highest level since January 30, and its total assets to $141m.

The new gold rush has also taken grip of Dubai's gold market. According to a report from ameinfo:

We have a similar rush in the souks of Dubai. Gold coins are selling at the highest premiums to spot gold price in 30 years, and stocks are running out.

In silver the premium paid for bullion bars is up to 50% above the spot price as dealers are running low and demand remains very strong.

Vietnam saw gold rising strongly last Saturday too. From Vietnam News:

Domestic gold prices increased strongly here yesterday, rising by VND50,000 to between VND17.90 million and VND18.10 million a tael yesterday as the world share situation became more chaotic.

Nguyen Huu Dang, head of the business department of the Ha Noi-based Bao Tin Minh Chau Jewellery Co, said his shop was full of sellers because of the big profits.

Bloomberg fills in the gaps on the world map, reporting excessively strong demand in more places. In Australia:

The Perth Mint, producer of 10 percent of the world's bullion, doubled output in the past six months, joining a global push to boost production as investors seek protection from the credit crisis.

Perth Mint sold so-called Kangaroo and Nugget coins weighing a total of 62,630 ounces in the three months to Sept. 30, compared with 154,501 ounces for the 12 months to June 30, senior manager Bron Suchecki said in an interview from Perth, Australia yesterday, adding there's been a surge in "moms and dads'' buying over the counter in the past three months.

"It's reflecting a real breakdown in trust in financial products,'' Suchecki said at the mint. "People aren't thinking how do I grow my wealth' but 'how do I protect it."

The shortages don't stop there, reported Bloomberg. In Austria, Muenze Osterreich, producer of gold and silver philharmonics has added a third shift.

Muenze Oesterreich, which makes the world's second highest- selling gold coin, increased output of the Philharmonic almost fourfold and doubled production of gold bars in the past year, Vienna-based Marketing Director Kerry Tattersall said yesterday. The 800-year-old mint, located in a former Habsburg palace, has also added a third work shift to press more coins.

The US Mint announced already a week ago that it would expand its production after gold coins have been suspended from sale quite many times since one year.

Now can someone tell me why gold is always falling ahead of the US trading session? Dan Norcini offers daily insights, alleging gold price manipulation for quite some time. Check out his daily commentary at jsmineset.com.

http://seekingalpha.com/article/99680-bullion-shortage-and-spot-prices-tell-two-different-gold-stories?

Trvlr45
15th October 2008, 04:41
Hello Listener,

I am a firm believer that it is ALL manipulated from the price of silver and gold to the price of wheat and coffee to interst rates based on the Libor. Call me a conspiriatoralist but my own personal thoughts are that through the IMF, the BIS and central banks around the world the entire global economy is manipulated.

As for how, I haven't a clue. I'm no professional invester. I do think that there is, by now, a rather large group of people around the globe who have made trillions over the last 100 years cashing in on interst paid on the debt based economies they have created through fiat currencies. A debt based economy and a fiat currency that are BOTH unconstitutional in THIS country as well as a direct tax on the fruits of ones labor and a progressive tax system.

I think they are getting ready to make a huge global power grab and I think they are purposely cutting off the supply of silver and gold to the masses so no one will have any real money when the global collapse they have engineered happens. They want a cashless system and I think they are working towards that at a rapid pace.

With tens of millions not having ANY form of money when the fiat collapses they will be able to trick everyone into thinking that a plastic card is the best way to go. A card you have to swipe everytime you buy anything. Globally. Just my gut feeling. Look at the way the US Mint is blatantly breaking the law by not supplying the demand for ASE's here in America.

There is no shortage of silver on this planet and definitely no shortage here in the states. All they have to do is start digging but, among other things, environmental regulations are in the way just like with drilling for oil. How convienient!

Papers Please?

Ardent Listener
15th October 2008, 19:47
Hello Listener,

I am a firm believer that it is ALL manipulated from the price of silver and gold to the price of wheat and coffee to interst rates based on the Libor. Call me a conspiriatoralist but my own personal thoughts are that through the IMF, the BIS and central banks around the world the entire global economy is manipulated.

As for how, I haven't a clue. I'm no professional invester. I do think that there is, by now, a rather large group of people around the globe who have made trillions over the last 100 years cashing in on interst paid on the debt based economies they have created through fiat currencies. A debt based economy and a fiat currency that are BOTH unconstitutional in THIS country as well as a direct tax on the fruits of ones labor and a progressive tax system.

I think they are getting ready to make a huge global power grab and I think they are purposely cutting off the supply of silver and gold to the masses so no one will have any real money when the global collapse they have engineered happens. They want a cashless system and I think they are working towards that at a rapid pace.

With tens of millions not having ANY form of money when the fiat collapses they will be able to trick everyone into thinking that a plastic card is the best way to go. A card you have to swipe everytime you buy anything. Globally. Just my gut feeling. Look at the way the US Mint is blatantly breaking the law by not supplying the demand for ASE's here in America.

There is no shortage of silver on this planet and definitely no shortage here in the states. All they have to do is start digging but, among other things, environmental regulations are in the way just like with drilling for oil. How convienient!

Papers Please?

Conspiriatoralist or not, someone please answer this question: In the land of capitalist and fee enterprise why hasn't someone rushed in to make a healthy profit by taking delivery of "paper" silver and turing it into small bar physical silver? Sure it takes time to mint small bars, but come on now, many online dealers are still saying 6 weeks for delivery. (What if it isn't ready yet in 6 weeks still?) Someone could at the very least take a hacksaw to a 1000 ounce bar and make 10, 100 ounce bars out of it. When people are buying bags of silver shot what makes you think they wouldn't jump at a peice of the 'big bar' at even $1.00 + per ounce ($100.00 profit X 10) over spot & S&H?

Let's forget the price manipulation conspiricy for a minute, even if the recession has killed the demand for silver like it did for oil, copper, zinc, nickel and so on, why isn't someone out there filling the void in the physical silver market and making a killing on it now?

Because no one has, that to me gives much more weight to your conspircy ideas.

I got this reply to my question over at Gold is Money.

"It takes months to get delivery off of COMEX.

First you have to declare you want delivery 30 days in advance and then it takes at leat another 30 to actually get it. I had a friend that took delivery of 7 futures (35,000 oz) and it was months before he got his Silver. At this time you can't even declare it and I think the next time you can is the end of Nov and ask for delivery at the end of Dec. then they delay that also by a few weeks as they account for it and give you the serial numbers and tell you where you can pick it up. Right now the way I see it the soonest you could get it would be sometime in Jan 2009 if you had the contracts?"

podrag
16th October 2008, 02:54
It takes at least $20million to set up a half-decent mint and a mint needs to be staffed with people who know what they are doing. Listen to Hommel's recent chat with Al Korelin. That takes at least 3-6 months to finance and set up. I'm sure there are a few businessmen with that kind of money stroking their chins at the moment. Maybe someone might list on the TSX with the idea?

The premiums only started 4-6 weeks ago. After 4-6 months I'll be looking for new mints to come online and started acting upon this clear signal from the market. Because of this I think the COMEX only has 1-2 years left if they don't sort themselves out quickly.