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Trading Lessons

Gold And Silver Bullion Coin And Bar Shortages Continue

Commodities / Gold and Silver 2013 May 03, 2013 - 12:27 PM GMT

By: GoldCore

Commodities

Today’s AM fix was USD 1,476.50, EUR 1,124.95 and GBP 949.34 per ounce.
Yesterday’s AM fix was USD 1,456.00, EUR 1,106.22 and GBP 935.07 per ounce.



Cross Currency Table – (Bloomberg)

Gold rose $8.10 or 0.56% yesterday to $1,466.80/oz and silver finished + 0.68%.

Physical demand for coins and bars internationally continues and is the strongest since the immediate aftermath of the Lehman Brothers collapse on September 15, 2008, and the consequent global financial crisis.

Government mints, refiners and bullion dealers internationally are reporting demand as high as in the aftermath of the Lehman crisis.

Brokerages are seeing nearly all buyers and little or no sellers which is making for a tight market with rising premiums. At GoldCore, sellers have been people liquidating unallocated positions and opting for taking physical possession or the increased safety of allocated accounts.

Higher prices will be needed by bullion owners in order to incentivise them to sell – prices that will likely be significantly higher.

Most physical owners are buying for the long term and will not sell in the coming months even when prices recover. If prices rise to back above $1,600/oz, some physical gold might come back into the market and alleviate the supply issues.

Gold in USD, 1 Year – (Bloomberg)

However, we believe that this may be a long term structural supply demand issue in what is a very small physical bullion market, that will only be alleviated by much higher prices and indeed higher premiums.

It is difficult to generalise regarding premiums as there are so many products and so many regions but in general terms, prices on nearly all small coins and bars are rising and on average there have been 1% to 2% rises in the premiums on popular one ounce gold coins and bars. This means that one ounce coins and bars can cost some $14 to $28 more than they did prior to the price falls.

The percentage increase in premiums in the silver market is even higher and there are more delays and unavailability of silver coins and bars with popular formats such as Eagles and Maples now almost difficult to secure. We acquired a large number of Silver Eagle Monster Boxes yesterday which we expect to have sold by the close today.

Today, return of capital is of far more importance than return on capital.

Gold in Euros, 1 Year – (Bloomberg)

Gold and silver bullion coins and bars are important in this regard as they are not about making a capital gain per se rather they are about wealth preservation.

Given we are in an era of competitive currency devaluations, there is also the real possibility of making significant capital gains.

Of fundamental importance is the fact that gold and silver coins are not 'investments' rather they are a safe form of money and an important form of financial insurance that everybody should own.

With the risk of a global depression remaining very real, people need to own the financial insurance that bullion coins represent. Bullion coins are like health insurance in that you should own them but hope you never have to use them.

The biggest benefit of owning gold coins either in your personal possession or allocated in secure vaults internationally is that they will always retain a value unlike paper assets and currencies which have considerable counter party risk today - as was seen in the deposit confiscation in Cyprus.

For the latest news and commentary on financial markets and gold please follow us on Twitter.

GOLDNOMICS - CASH OR GOLD BULLION?




'GoldNomics' can be viewed by clicking on the image above or on our YouTube channel:
www.youtube.com/goldcorelimited

This update can be found on the GoldCore blog here.

Yours sincerely,
Mark O'Byrne
Exective Director

IRL
63
FITZWILLIAM SQUARE
DUBLIN 2

E info@goldcore.com

UK
NO. 1 CORNHILL
LONDON 2
EC3V 3ND

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WINNERS MoneyMate and Investor Magazine Financial Analysts 2006

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: Past experience is not necessarily a guide to future performance. The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. GoldCore Limited, trading as GoldCore is a Multi-Agency Intermediary regulated by the Irish Financial Regulator.

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