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Purchases of physical gold accelerating

Now that Europe has reminded everyone that bank deposits are fair game for government confiscation in times of bank or State stress, I’m expecting to see demand for “real hard” assets picking up. And capital flight FROM JAPAN to productive assets to accelerate, including into gold. Quietly at first, then blatantly. (I believe it is already well underway.) So wrote Gene Arensberg in his March 24, 2013, Got Gold Report.

A recent investment advisory from one of the big banks (too big to fail size) noted that according to a study done early this year,

“. . .for physical delivery of gold, three-consecutive quarters saw demand in excess of 4000 tons in 2012.”

According to CPM’s 2012 Gold Yearbook, annual production is stalled right at 120 million ounces, which is about 3,732 tons and means that 4,000 tons a quarter is a huge take down in the physicals market.

Readers who visit will remember a few weeks that Egon von Greyerz talked about Europe’s precious metals refineries running at full capacity.

Further, according to the study mentioned above, there has been

“. . .a 45 percent decline in buyers of gold contracts since the middle of 2011.”

The report concluded

One way to interpret these two distinct markets is that central banks are still purchasing gold, and increasing wealth in many emerging markets has spurred demand for the metal as well. In contrast, “speculators,” who entered the market to hedge against rising prices and take advantage of rising asset prices, may now be switching asset classes that are perceived to be more “attractive.” It appears that this decline in speculative activity may be a key driver behind the recent price movement since October. The question is whether this reduction in speculative purchasing is a temporary retreat or a longer-term trend.”

Here at CMI Gold & Silver Inc. we have been seeing huge orders for months.  No one panics on the price drops, they just buy more.  It appears an acceleration in physical gold purchases has indeed begun.

One Response to “Purchases of physical gold accelerating”

  1. Coin Monger

    Even with the plummet in gold prices, April 15th, 2013, I’m still bullish on gold. The lower prices just allows me to buy more. I love it when gold is hated by the general public. I can go and quietly buy more while the prices though high aren’t completely out of sight. I try to be a contrarian investor. Buy when everyone else is selling. Sell when everyone else is buying.


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