Demand for physical gold and silver contradicts the market

The doom and gloom mongers who gaze upon the fantasy world that is a commodity market where people buy and sell fresh air in the form of heavily leveraged futures, have been out in force in the media, parroting the line that gold is finished as a safe haven / investment / store of wealth (* delete as appropriate).

There was an objective to last week’s raid… and a lot of people are making a convincing argument that it was designed to stop investors turning their back on the dollar and moving into wealth into such safe havens, while making millions on the side into the bargain.  If the bankers could scare people out of gold, the thinking went, the people would put their money where the Fed wants it, into the dollar.

Meanwhile in the real world, away from the investment banks who encouraged their sheep-like clients to dump their paper gold to force a dramatic drop in price that also, err, enabled investment banks to buy the real physical product more cheaply to squirrel away in their underground vaults, we see that people around the globe aren’t buying the establishment line that gold is over – indeed they are buying it as fast as they can.

From Zero Hedge:

We noted here that the plunge in the paper price of gold (and silver) had prompted considerable renewed demand for physical and now it seems the scramble among the “more stable investor base” is increasing. The shake out of ETFs and futures has left the Australian mint short of deliverables and Japanese and Chinese gold retailers seeing a “frenzied” surge in demand. The customers are not just the ‘rich’ or ‘elderly’; in China “they tend to wear water shoes and come directly from the market…;” in Australia, “the volume of business… is way in excess of double what we did last week,… there’s been people running through the gate,” and Japanese individual investors doubled gold purchases yesterday at Tokuriki Honten, the country’s second-largest retailer of the precious metal. The panic selling by a weaker ‘imminent inflation-based’ investor base has sparked physical shortages – “there’s been significant sales made as people see this as great value.” It seems our previous discussions of a rotation from paper to physical were correct and this physical demand will eventually leak back into the paper markets.

The piece goes on to give more specific reports of surging demand and buying activity from China, Australia and Japan.  These are the people who understand they are only in gold and silver if they own the physical metal, not pieces of paper that give title to a quantity of gold to multiple people.  With prices down significantly with the biggest single drop in decades, to sit their lowest level for three years, there is value to be had and the next few weeks look like an excellent time to invest a proportion of your money in gold and/or silver.

To help people, who have not invested in precious metals before, to understand their options, AM’s short guide to Getting into Gold and Silver is nearly finished and will soon be published.

The short guide is designed to provide a quick, simple launch pad that caters for British small investors who want to invest in gold and silver but don’t quite know where or how to start, by compiling some relevant and basic information in one single place so buyers can choose the right products for them and where to purchase them without paying over the odds.  It will pay for itself many times over with the money you will save.  The guide covers:

Why buy gold or silver?
Grading of gold and silver
Pricing, premiums and taxation
Your options – physical ownership, ETFs, Futures and Stocks
Gold and Silver Coins
Gold and Silver Bars
Regular investment in Gold
Where you can buy
Where you can sell

If you are interested in buying a copy of the guide, via Amazon or direct, just drop me an email to register your interest.

4 Responses to “Demand for physical gold and silver contradicts the market”

  1. 1 jones 17/04/2013 at 5:24 pm

    This may be a doom-laden comment but I can foresee a time when a tin of soup or bag of rice will be among the most valuable of items to hold.

    Can’t eat gold.

  2. 2 mac 17/04/2013 at 9:44 pm

    Checked out the price of gold before posting. Apparently the dealers are selling 1 troy oz gold Britannia coin 10% above spot. Usually its 2.5% above spot. They are either making some spectacular profits or can’t afford to go any lower.

    Some dealers have run out of gold and are taking advanced orders.

    The smart people will see which way the market goes. We could be hit with another sell on a Friday after the London close. Its NOT an honest market.

    Gold has only risen about 1.25% ($US) and 1.2% (£) over the last 3 days, so not much of a recovery.

    I think a lot of people have been pushed out of the paper-gold market, which in my opinion is a good thing.

    If Gold starts to rise, its usually a good idea to get into Silver as it tends to rise and fall at a faster rate. But Silver you have to pay VAT.

  3. 3 james higham 18/04/2013 at 8:28 pm

    and the next few weeks look like an excellent time to invest a proportion of your money in gold and/or silver

    If you:

    1. Have the money;
    2. Have no other ongoing projects.

  4. 4 Autonomous Mind 19/04/2013 at 1:23 pm

    As always, James, you make a valid and valuable point. I should have added the caveat.

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