By Debarati Roy
April 30, 2013
Sales of gold coins by the U.S. Mint rose to the highest since December 2009 after the price of the metal in April fell the most in 16 months.
Last month, sales totaled 209,500 ounces, up from 62,000 ounces in March, data on the mint’s website show. The amount for December 2009 was 231,500 ounces. Silver-coin sales rose to 4.2 million ounces from 3.36 million in March.
Demand surged at mints from Australia to the U.K. and the U.S. after futures slumped 13 percent in two days through April 15. Gold futures tumbled 7.8 percent last month and dropped into a bear market as some investors lost faith in the metal as a store of value. Perth Mint, which refines almost all of the nation’s bullion, said that demand jumped to the highest in five years after prices plunged, with the factory kept open through the weekend to meet orders.
“People are flocking to buy physical gold,” Todd Dutkevitch, a senior account executive at Los Angeles-based American Bullion Inc., said in a phone interview. “The price drop has made it possible for many retail buyers to add gold.”
Futures for June delivery rose 0.1 percent to $1,473.30 an ounce on the Comex in New York today. The metal is down 12 percent this year, even after advancing 11 percent from a 26- month low of $1,321.50 on April 16.
The U.S. mint said April 23 it suspended sales of coins weighing a 10th of an ounce after demand more than doubled from a year earlier.
The mint sells 22-karat American Eagles of 1 ounce at a 3 percent premium to London “p.m. fixing” prices. A half-ounce coin is set at 5 percent above, a quarter-ounce coin is 7 percent above, and one weighing a 10th of an ounce fetches a 9 percent premium, according to Michael White, a Mint spokesman.
“The 1-ounce gold bullion coins are the most popular,” White said last week.
In Australia, buyers were waiting in lines half a kilometer (0.3 mile) long to get minted coins, and jewelry shops in India and China ran out of gold in a single day, Jason Toussaint, the managing director of investments at the London-based World Gold Council, said in an interview. India and China are the world’s largest consumers of bullion.
Surging demand from Dubai to Istanbul has pushed physical premiums in the region to levels not seen in years as the biggest price slump in three decades lures consumers, according to MKS (Switzerland) SA.
Trading for the benchmark contract on the Shanghai Gold Exchange surged to a record last week, while premiums to secure supplies in India jumped to five times the level before the slump. China and India are the world’s largest buyers.
Consumers in Singapore and Hong Kong are paying premiums of about $3 an ounce, compared with about $2 just after the rout, according to Ng Cheng Thye, the head of precious metals at Standard Merchant Bank (Asia) Ltd.
Still, holdings in exchange-traded products backed by the precious metal tumbled 174 metrictons in April, a record drop, according to data compiled by Bloomberg.
“This drop has made physical gold much more attractive than paper gold,” Dutkevitch said.
Silver prices inched higher Tuesday, but they sank for April even as physical demand for the precious metal soared. Silver futures for July delivery finished the day up 1.9 cents, or 0.1%, to close at $24.19 an ounce on the Comex in New York. Intraday prices ranged from a low of $24.02 an ounce to [...]
9:40p ET Tuesday, April 30, 2013
Dear Friend of GATA and Gold:
Jeff Nielson of Bullion Bulls Canada speculates tonight on the decoupling of the paper and physical gold markets.
Nielson writes: “Clearly, we currently have a bull market for physical gold (and silver). So when Bloomberg and all the rest of the corporate media yammer on about ‘a bear market in gold,’ what gold market are they talking about? That’s right: their own paper market, empirically proven by the recent collapse in demand for paper gold.”
Nielson’s commentary is headlined “Decoupling in Precious Metals Markets” and it’s posted at the Bullion Bulls Canada Internet site here:
Meanwhile, Gene Arensberg says at the Got Gold Report that “as gold was recovering about $45 in price Tuesday to Tuesday, we saw the natural hedgers (and the bullion banks many of them trade through) and swap dealers furiously covering their net hedges, while the speculators, large and small, were actually selling into the gold recovery rally. … In Texas we call that kind of action ‘bass-ackwards.’”
Arensberg’s commentary on the commitment of futures traders, in video format, is posted at the Got Gold Report’s Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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