Gold’s biggest drop in three decades caused what has become an ongoing global rush into physical gold. Reports are still flooding in at the same pace from around the world, confirming the extent of recent purchasing and persistent shortages.
The U.S., Britain, China, Myanmar, Thailand, India, Dubai and Australia are topping the charts for physical precious metals demand.
A picture (below) of a Thai gold shop in recent days with customers (video link here) pressed three deep against the counter:
Sales doubled from the previous week at Zaveri Bazaar, India’s largest bullion market, and the country tops Google trends for “gold price,” with searches hitting their maximum reading. Now, from The Indian Express:
"We are unable to get supply as refiners have sold out till second or third week of May. Gold for immediate delivery is quoted at $10 on London prices," said a dealer with a state-run bank.
In Dubai, Sky Jewellery’s general manager identifies "pressure for retailers on the inventory side, and there is a bullion shortage– our instructions are to snap up any supply so that stocks are constantly replenished…
The last thing any retailer wants to see is get caught with insufficient stock at his shops – if it means paying a steep premium then it will be paid. Song Hongbing estimated "just 10 days since the crash, only the Chinese mainland investors devoured 300 tons of physical gold, accounting for about gold 10% of annual production. To 300 yuan per gram basis [$1,510.50], people in 10 days, spent nearly $900 million to buy gold.”
This aligns with Chinese reports of the mass of buyers being average workers “wearing water shoes, coming in from the market.” The vice chairman of the China Gold Association, Zhang Bingnan,saidyesterday from Beijing: “Chinese consumers still widely accept gold as a wealth protection.”
Click picture above to see the gold buying frenzy yourself (in a new window)
One gold trader quipped: “it is like you put 60” TVs on sale for $100– they are going to fly off the shelves.”
Supply remains just as tight as when the president of the Hong Kong Gold & Silver Exchange Society announced on the 19th on Bloomberg that the exchange was out of gold, and shipments from Europe would arrive in a week.
“Part of the network of physical gold supply has been sold out,” the Industrial and Commercial Bank of China just reported.
At the other Mints, Perth’s Treasurer Nigel Moffatt said "the volume of business that we’re putting through is way in excess of double what we did last week... There’s been people running through the gate.” And the shopping spree may still not be over. Britain’s Royal Mint, established in the 13th century, sold more than three times more gold coins this month as prices declined than a year earlier.
Sales are more than 150 percent higher than last month, according to Shane Bissett, director of bullion and commemorative coin at the Royal Mint. “Since the dip in the price of gold we have seen increased demand for our gold bullion coins from the major coin markets, and this presently shows no sign of abating,” Bissett said to Bloomberg.
The rush to buy gold is not only a result of a sharp decline in pricing; there is a growing sense out there that there are massive troubles brewing in the global economy. A weaker U.S. Dollar and debt concerns have sparked the notion of trading ‘”paper for metal,”– and the sooner the better! Chinese consumers are scrambling to obtain that “wealth protection” they seek. Their history—the fact that they vividly remember rising prices—is a stark reminder that “saving in currency” should be avoided. And "China and Singapore aren’t the only ones leery of banking on the viability of the Federal Reserve’s dollar – similar preparation is also occurring within the United States’ own borders.”
Reuters reports U.S. coins have been "flying off dealers’ shelves this week as retail investors snapped up bargains since the metal’s historic plunge in price.” Additionally, the U.S. Mint has sold out of 1/10 ounce gold American Eagles, and sold ten-times its average daily sales volume of one-ounce gold American Eagles this past Monday.
As our readers know, many states in the U.S. are pushing for a law to approve bullion as an alternative to the dollar. The continuing jobs reports and seemingly endless recession have caused many to fear the dollar’s decline in the midst of staggeringly dismal economic conditions. As Sunil Kashyap, head of precious metals and foreign exchange in Asia for Bank of Nova Scotia, a leading bullion dealer, says: “Physical demand is just absolutely incredible. There’s a genuine fear of inflation.” The gold rush of recent days only highlights the fact that many consumers worldwide are growing increasingly suspicious of fiat currency and putting their faith in precious metals as the global economy teeters on the precipice of yet another possible recession.
In closing, Mineweb just released news that “immediate delivery of physical metal is hard to obtain, seemingly anywhere, premiums are rising rapidly, and Goldman Sachs, perhaps cynically, is warning of a short squeeze developing on the gold markets. Indeed reports also suggest that long held short positions in gold are being unwound rapidly against just such a scenario developing. How many more indicators are there out there that we could be in for a strong and rapid bounce back in the gold price.”
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