The premiums that buyers put on physical forms of gold and silver indicate the level of interest for the most conservative forms of gold and silver. High or rising premiums indicate strong buying; declining premiums show declining demand; low premiums can indicate low interest but not necessarily. Sometimes demand can be strong but supplies are sufficient to meet demand.
Mineweb.com reports that concerns about Euro zone debt have pushed gold bar premiums to two-year highs in Hong Kong, where gold bars are offered at a premium of $3 to the spot London prices. $3 premiums on gold bars in Hong Kong were last seen in late 2008 at the height of the global financial crisis.
Concerns about Portugal seem to be the driver behind Hong Kong buying; and, with gold off its historical high of $1,430 in December, many investors see gold as cheap at the $1,375 level. Later this week, Portugal will go the bond market to raise funds. If unsuccessful, Portugal will be the third PIIGS nation to turn to the EU and IMF for financial aid.
Of interest, is China’s entry into the Euro debt market, a development worth watching. China’s buying of Euro debt, especially PIIGS debt, could more political than for investment purposes.
Greece and Ireland were the first and the second PIIGS to require bailout money. Spain is adamant that it will not need a bailout, but credit rating agencies think otherwise. Concerns about Italy are muted at the moment.
Adding to bar demand in Hong Kong is strong demand from China where refineries have been closed for the holidays. Still, concerns about Portugal are on the forefront. Even if Portugal finds buyers for its debt, the rate it has to pay will be indicative of the marketplace’s concerns about Portugal.
Presently in the US, premiums are normal, which means that such items as Gold Eagles and gold bars can be bought at premiums that reflect normal markups by wholesalers and by retailers. Presently, Krugerrands can be bought about $15-$17 cheaper than Gold Eagles. At times, Rands are as much as $20 cheaper than Gold Eagles.
It’s a very interesting development, thanks for the update. This is only the beginning of the rise of gold and silver.
I’m going to disagree a little with ZilverGoudWinkel.
The beginning of this gold/silver bull market was early in the last decade of the 20th century, when gold and silver made solid rises from their bottoms, gold starting at about $252 and silver starting just above $4.00. I believe gold and silver now to be in the early stage of phase two of a classic three-phase bull market. I do agree that both have a long way to go.
Bill,
Your blog alerts are always saying that gold and silver are hot items in the world and the Chinese and Indians are buying in droves. But, for months now, I’ve seen gold have a hard time staying up. More than anything, I keep seeing it go down with little spirts upward. Silver does seem to be trying to edge upward.
What’s going on? Your info does not jive with what we are seeing. I tend to believe that gold and silver should be even higher considering how the FEDs and Banking Cartel are creating currency like the mafia. But explain please. Is this criminal manipulation of the spot, or is the Cartel dumping reserves on the market? Are some Financial’s dumping their reserves to make payroll or something?
All of these huge movements of metals makes me very uncomfortable as to some unseen scam about to rear it’s head up. Like governments luring the small people to buy and then making private ownership illegal in the next year in order to back the NEW WORLD CURRENCY. What do you see coming? This Health Bill with it’s 1099 section, tells me they intend to tax the hell out of private ownership. The only way to survive with metals is the ability to cash out when you need the money. I cannot see using bullion as currency.
You cannot honestly believe the Obama administration will allow private ownership of metals in the face of complete economic collapse about to fall on the country, do you?
To the contrary, gold is having an easy time “staying up.” A year ago, gold was $1,100; today, it’s $1,360 after a high of about $1,420 in early December. This is a strong bull market run, a normal bull market run.
As for the government’s “intend to tax the hell out of private ownership,” it has always been the governments intent to tax the private sector. This time is no different.
You say you “cannot see using bullion as currency.” Why not? Gold and silver are the only two currencies that have stood the test of time. Why would they not again be “used as currency” when people refuse to accept debased dollars? It would a natural transition.
“In the face of complete economic collapse,” when people would be fighting for survival, how would the government stop the “private ownership of metals?” Go door to door? Not likely. Gold and silver are too easy to conceal.
Bill Haynes, do you mean that you think that the gold price will drop after this third phase? And are you talking about a classic three phase bull market? What happens in phase three?
At this point, it appears to be a classic three-phase bull market.
At the end of phase three, which I believe could be as far out as a decade, we will see a drop in the price of gold (who knows from what level) if the dollar remains our currency. There is the possibility that the massive inflation (QE1, QE Lite, QE2) we’re now experiencing and the massive inflaiton we’re likely to suffer with QE4, QE5, etc. will destroy the dollar as a functioning currency. If the latter happens, you will convert your gold and silver into whatever currency we choose to use. However, gold and silver themselves may become currencies, with transactions being denominated in gold and silver.
The debt crisis in Europe is really causing big problems to the whole Union. Really, countries like Portugal, Greece and Ireland should pay more attention to their finances and their fiscal policy.