Investors Pick Physical Gold Over ETFs In Q1; Comex Registered Silver Just Hit A Fresh All Time Low

Tyler Durden's picture

According to an update in gold demand trends released by the World Gold Council earlier, Q1 saw a divergence in purchasing intentions in the gold market as investors focused on physical and shunned paper instruments such as ETFs. Per the WGC: "Global gold demand in the first quarter of 2011 totalled 981.3 tonnes, up 11% year-on-year from 881.0 tonnes in the first quarter of 2010. In value terms, this translated to US$43.7bn, compared with US$31.4bn in the first quarter of 2010, an increase of almost 40%. This was largely attributable to a widespread rise in demand for bars and coins, supported by an improvement in jewellery demand in key markets. On the other hand, ETFs and similar products witnessed net outflows of 56 tonnes ($2.5bn). Redemptions were concentrated in January. Despite the outflows, the collective volume of gold held by global ETFs by the end of the quarter was in excess of 2,100 tonnes equating to more than $95bn. It is useful to realize that ever more investors see gold as not so much a speculative product, and merely as an intermediary between a fiat start and endpoint, but as a wholesale alternative to the fiat system. Obviously the best way to express this view is to focus on the physical market instead of the paper one (which as some investors in SLV have learned the hard way). And speaking of silver, a quick glance at today's Comex holdings update indicates that while total silver continues to flirt with the 100 million ounce total on the downside (hitting a record low yesterday at 100.5 million ounces), following yet another reclassification from Registered to Eligible silver at the Comex vault for a total of 496k ounces (or 6.3% of the vault total), true physical in the Comex just dropped to a new all time low of just 32.2 million ounces.

First, some more from the WGC:

Marcus Grubb, Managing Director, Investment at the World Gold Council commented:

“The resilience of gold during recent volatility in the commodities market exemplifies the strength of the global gold market and its unique demand drivers. High levels of investment demand across the world, strong demand in India and China, the continued strength of the technology sector together with central bank purchasing demonstrates gold’s diverse demand drivers. We anticipate continued strong demand during the rest of 2011.”

Albert Cheng, Managing Director, Far East at the World Gold Council commented:

“Chinese appetite for gold has increased rapidly over the past few years. In March 2010, we predicted that gold demand in China would double by 20201, however, we believe that this doubling may in fact be achieved sooner. Increasing prosperity in the world’s most populous country coupled with their high affinity for gold will serve to drive demand in the long-term. Near term inflationary expectations are likely to support the investment case for gold.”

  • Global gold demand in the first quarter of 2011 totalled 981.3 tonnes, up 11% year-on-year from 881.0 tonnes in the first quarter of 2010. In value terms, this translated to US$43.7bn, compared with US$31.4bn in the first quarter of 2010, an increase of almost 40%. This was largely attributable to a widespread rise in demand for bars and coins, supported by an improvement in jewellery demand in key markets.
  • The quarterly average gold price hit a new record of US$1,386.27/oz (London PM Fix), its eighth consecutive year-on-year increase. Despite a period of price consolidation in the early part of the quarter, it climbed to record highs throughout March and has continued to achieve new highs in April and May.
  • During the first quarter of the year, investment demand grew by 26% to 310.5 tonnes from 245.6 tonnes in the first quarter of 2010. In value terms, investment demand was US$13.8bn. The main growth came from bar and coin demand which increased by 52% year-on-year, to 366.4 tonnes. In value terms, this represented a near-doubling of demand to US$16.3bn from US$8.6bn in Q1 2010.
  • Central bank purchases jumped to 129 tonnes in the quarter, exceeding the combined total of net purchases during the first three quarters of 2010.
  • ETFs and similar products witnessed net outflows of 56 tonnes ($2.5bn). Redemptions were concentrated in January. Despite the outflows, the collective volume of gold held by global ETFs by the end of the quarter was in excess of 2,100 tonnes equating to more than $95bn.
  • Jewellery demand in the first quarter of 2011 registered a gain of 7% from year earlier levels of 521.3 tonnes to reach 556.9 tonnes. This equated to a record quarterly value of US$24.8bn. India and China, the two largest markets for gold jewellery, together accounted for 349.1 tonnes or 63% of the total, a value of US$16bn. China’s jewellery demand reached a new quarterly record of 142.9 tonnes ($6.4bn) up 21% from 118.2 tonnes in the first quarter of 2010.
  • Technology demand remained steady in the first quarter at 113.8 tonnes ($5.1bn). A revision to the fourth quarter figures now means that 2010 was the highest year on record for gold demand in electronics at 326.8 tonnes or $12.9bn.
  • In Q1 2011, gold supply declined by 4% year-on-year to 872.2 tonnes from 912.1 tonnes in the first quarter of 2010. This decline was due to a sharp increase in net purchasing by the official sector and a fall in the supply of recycled gold, which was down 6% on year-earlier levels to 347.5 tonnes from 369.3 tonnes in the first quarter of 2010. Mine production increased by 44 tonnes year-on-year, a growth rate of 7% from year earlier levels, with negligible net producer de-hedging.
  • Central bank purchases jumped to 129 tonnes in the quarter, exceeding the combined total of net purchases during the first three quarters of 2010.

And next, a quick glance at the Comex happenings, where the recent silver rout has done nothing at all to moderate the ongoing collapse in reigstered silver (and luckily we are not holding our breath until that predicted by some reverse reclass from Eligible to Registered silver occurs).

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Arrowflinger's picture

Darned. I wanted to buy silver at  $25 again.

Gonna have to make what I have accumulated do.

 

Quixotic_Not's picture

Don't lose hope, there's probably gonna be a couple of very expensive pseudo-corrections still coming courtesy of the TBTF Banksters and their stooges Timmay &  Banana Bernank.

After the lies and rampant manipulation has petered out -- about the time .gov will be forced to hyper-inflated debt to keep with their check kiting scheme - then it'll be off to the races!

Don't think we'll hit $25, but $30 spot is a definate possibility...

Good luck finding some poor stooge desperate enough to sell his physical for less than a 20% commish!

JW n FL's picture

i will buy the whole way down.. the lower it goes! the more i buy!!

 

gold and silver!

f16hoser's picture

Concur. Many of my buddies are saying one more dip into the high 20's. Get your powder ready. If I see 28-30 I'm rolling-in HOT!

tmosley's picture

There was never a chance you would be able to get silver at that price.  Paper, perhaps, but not real metal.

Diablo's picture

why is that? because dealers will just jack up their premiums? or something else?

(im a noob, just asking)

 

tmosley's picture

Physical demand remains.  If the paper price falls, premiums will either rise, or the dealers will fast run out of inventory, as we have seen even with this dip, which only took us back to March prices.

Texas Gunslinger's picture

Sorry, but that's just nonsense! 

The only reason you're paying a premium is because it's easy for the retail coin stores to jack the small, naive, easily duped, retail investor for profit.  The "pitch" of imminent currency collapse, or death by inflation, or JP Morgue, or "price doesn't matter" are fantastic sales pitches and smokescreens to jack the dumb money for profit.  Let's be honest, paranoid doomers are great customers because they're the most emotional; emotion is the salesperson's best friend. When you see a huge difference between physical and paper, it means you're getting jacked.  

Even Sprott admitted yesterday (or day before?) on that Max Keiser interview posted on ZeroHedge that he could buy all the physical he wanted at spot price.  

Paper = physical, at least in terms of price for the real players in the silver market.  The highly jacked prices you're paying is a rip off, but you can't see that because you're so blinded by emotion. You are the quintessential example of an investor who is far too emotionally attached to his investments.    

The silver carnival barkers (which you seem to be the ring leader) have convinced everyone that premiums on physical are a result of distrust in paper.  That's RETARDED! You're paying premiums at your goofy coin store because you're so damn emotional about it, and the retail coin market knows this.

 

 

 

ffart's picture

Sprott was talking about "junk" silver bags. Which I have no idea why they aren't more popular. A $100 face bag of dimes would be way more tradeable than some 5oz american the beautiful coin.

Al Gorerhythm's picture

Weren't you on the other day saying that your two main mentors are your coin dealer and your hope dealer (pastor)? I thought that that was where you divided your time, unless he is one and the same person.

Can you ever make a post that is backed by researched analysis not just opinionated conjecture or assumptions? Your posts are a waste of time and argumentative jibes.

Edit: I can't recall Sprott saying that he could buy plenty of it at spot. From my take he said he had a hard time finding it. I am about to watch it again. 

ZapBranigan's picture

Don't waste your time AG, Tex Shitslinger is an epic failure.  Period.

He's just a reincarnated username of one of the fucktroll posse members, possibly Smailes or Hamy.  When he first showed-up, he acted all humble and bumpkin-like, exspousing the virtues of his coin-dealer and the Biiiiible Belt, (Bill Burr emphasis) but now, within weeks, he's a full-blown (no DSK emphasis) fucking expert on everything and a major paper-ophile. 

Two words: Uber Troll. 

Three more words: Immediate Junk Click.

smlbizman's picture

going to miss you after saturday...

tmosley's picture

As if anyone believes you, or ever believed you, dog food troll boy.

You were an epic troll when you first got here, but you tried too hard, and now you are just a failure.  Too bad :(

Al Gorerhythm's picture

"Even Sprott admitted yesterday (or day before?) on that Max Keiser interview posted on ZeroHedge that he could buy all the physical he wanted at spot price."  

That is a huge mislead from you Tex. Your post is obviously antagonistic toward the retail investor. You claim that retail investors are being Jacked at the checkout because the nasty coin shop operator or bullion dealer is ripping investors off by charging a premium over spot spot. Can you please advise us where we can conveniently buy silver at spot?

Back to Mr. Sprott. Nowhere in that interview does he say that there are ample supplies at spot. It took him 6 weeks to get his silver and he stated elwhere that the silver was freshly poured, not a scratch on them. He was stating that his company can buy at spot. Nothing more.

Further more, he stated that he doesn't trust the numbers from the traditional (two) major suppliers of those supply figures. They are unreliable and poppycock. How can you trust numbers that show that supply meets exactly demand, year on year, down to the ounce? Silver is the only commodity on the planet that has had a ablance for years. Not one ounce over demand was mined!

Silver demand is a world wide phenomenon, encluding China and India and 2.5 million extra investors on the planet than the last bull.

Little guys don't move the market but they do save themselves from the mismanagement (if you could call it that) of fiat currencies.

This past price bust was about saving the short speculators. Micro managed to start the decline in after hours trading and then slam the price with 5 margin hikes.  

Ratio should be 16:1 using his research.

Describes using simple math that the Comex is overselling silver with paper promises to deliver. If 3% of traders demanded delivery, the Comex would default.

States clearly that there is simply not a surplus of silver.

 

His last statement was that new investors at the margin would exacerbate the SHORTAGE that we already have.

You either missed all of this other evidence or cherry-picked his statement that he could buy at spot and used it as the establishment of your rant (thesis).

I am not able to give you the benefit of the doubt over this as your previous post have been written in the same vein.

I call bullshit and confirm your tag of Troll.

 

tmosley's picture

Good post, but one minor correction.  Little guys DO move the market.  The US Mint moves twice as much bullion as the COMEX each year, and that is just ONE mint.  All of that stuff is going to the "little guy", and for 100% cash.  Why is a product that moves at a rate that is TWICE that of the COMEX trading anywhere and everywhere for such a huge premium?

Why are retailers basically OUT of secondary market products?

The answer is simple--no one is selling.  If no-one is selling, then whence cometh the price decline?

Confuchius's picture

"Silver demand is a world wide phenomenon, encluding China and India and 2.5 million extra investors on the planet than the last bull."

 

We'd guess your investors number is too small by a factor of 1,000.

Al Gorerhythm's picture

Yup, should have read 2.5 billion. Thanks.

Confuchius's picture

"Silver demand is a world wide phenomenon, encluding China and India and 2.5 million extra investors on the planet than the last bull."

 

We'd guess your investors number is too small by a factor of 1,000.

lix333's picture

Im in the jewelry business and I can purchase silver or gold close to spot. It comes in raw form, tiny pellots. People out there are paying a premium to purchase gold or silver in coin form. If anyone is interested in buying silver or gold close to spot they should head to the closest jewelry district and look there. Casters are buying silver and gold and any raw metal at close to spot daily. 

akak's picture

Yes, but you are only able to do that because you are not, and you CAN NOT, resell that silver or gold in that form --- it is unverifiable.  That is what the premium on a coin or well-known bar is, the price of verifiability (also the cost of fabrication as well).

lix333's picture

true and not so true. I can resell that silver and gold any time I want. Does it need to be assayed? yes, but the cost is minimal to do so. Much cheaper to do it this way then to purchase coins. It is against the law for any pawn shop or person that is "buying gold for dollars" to sell gold immediatly but they do it anyways. And, you can go into any "buying gold for dollars" shop and sell your gold or silver there, immediately.  Again all in the jewelry district. 

 

lix

lix333's picture

Also dealing with coins it sounds like you are vulnerable in price depending on the dealer you go to.  When dealing in raw form you buy and sell at spot +/- some fees that go with assaying. 

jpalm's picture

Not trying to be sarcastic. I truly want to know where I can buy silver at spot. Please share the info with the rest of us. Thanks.

Citxmech's picture

Buy what at close to spot? There's a big difference in the premium between say 1k oz. bars and 1 oz. Maples.  Like most things - the more you buy - the better deal you get.

Also, the higher premium stuff is typically a little easier to move - which helps justify the price.

 

akak's picture

Texas Gunslinger,

You were much more entertaining when you were pretending, just three weeks ago, to be an ignorant and semi-literate rube who couldn't find his "CAPS LOCK" key, and whose greatest financial concern was the rising price of dog food at Wal-Mart.

Bay of Pigs's picture

That's just totally incorrect. Gold and silver have been rising and in a bull market since 2001 and QE began in 2008. Seven years later. Your argument holds no water. Real interest rates are negative and are not going up anytime soon. Epic fail in logic and with historical facts.

Move along sonny...

 

sgorem's picture

the asshole just wants your retort. don't waste time replying to the trollster.......

Shock and Aweful's picture

QE 2 may end...and there may not be any QE3 for a while....but the damage is already done.  We will still have alomost tripled the amount of money sloshing around the system in 3 years...and we still will have 0% or negative real interest rates...and the last time I checked, these are the exact conditions that force precious metals to go higher.

If the price of metals is completely dependent on the QE programs...then why did gold move from $280.00 an ounce in 2001 up to $900 an ounce in 2008....before any of the QE bullshit?  Why did silver go from $4.00 to $20.00 before the crash in the fall of 2008...before the massive money printing and zero interest rates?

 

 

If you are so sure that the prices are completely corelated to the QE programs...then why not predict that it will be a 75% wipeout...or a 90% wipeout....remember..."it only takes $5.00 to dig it out of the ground - and you can't even eat it"

Come on....if you are gonna be a troll...at least be one with some hairy troll balls....

 

I personally think your full of shit...and you don't know what the fuck you're talking about....so, please do us all a favor and troll elsewhere.

 

Or....How about this....if we don't get the "big wipeout" in 1-3 months as you predict...you go away and don't come back?

 

Tyler Durden's picture

Reading a post is recommended before engaging in copying and pasting

FOC 1183's picture

Apparently not when you're Spalding Smailes. But, it's okay, he'll "have nothing and like it."

akak's picture

This Spalding just HAS to be a psyops bot --- his every post consists of a non sequitur one-liner , followed by a barely or mostly irrelevant, but invariably anti-precious metals, cut-and-paste quote.  This is NOT the pattern of a real poster, much less an honest one.

tickhound's picture

Book it boy!  Welcome back... So a re-copy re-paste?

You still holding to your $1150 top in gold?  Or your 1250?  Or is it your $1350 BOOK IT top?

There's a "back in the day" Gaddafi "Line of Death" desperate feel to your posts.... "Ok, if you cross this line, you're f'd... Ok, I see you crossed, I draw new line now... Ok, new line... Oh, now you rrrrreawy in twouble."

Still waiting for your BAC BOOK IT rocketship to do anything. 

You're pure fluff.

Chuck Walla's picture

Anyway, Soros is a well known liar, which, being one yourself, I would think you would acknowledge some professional courtesy.

Urban Redneck's picture

What has been Soros doing in Africa recently?  Trying to get gold access cheap or get oil access cheap or help the poor people?

ZapBranigan's picture

No, he's getting his 'DSK-On'.  Soros hates competition.

sgorem's picture

"According to recent reports, the legendary hedge fund manager sold nearly $800 million worth of the yellow metal in the first quarter of 2011, representing a huge reversal in sentiment on gold."

listen dildo for brains, WE invest in, read my lips, PHYSICAL GOLD & SILVER. WE do not worry about ass wipe paper iou's. AND! If ole George did sell $800 million worth of his holdings in the first quarter, JUST WHO WAS ON THE OTHER SIDE OF THE TRADE? SEEMS SOMEONE SPENT $800 MILLION TO, READ MY LIPS AGAIN, BUY IT! 

Citxmech's picture

No shit - and certainly didn't see any corresponding collapse in price in that timeframe either.

Quixotic_Not's picture

Junk it up like a tonka truck!

adeptish's picture

A dot from you gets more junks than 99% of us have ever had...

Could you be more of a clueless wanker?

Turd Ferguson's picture

"Next, a quick glance at the Comex happenings, where the recent silver rout has done nothing at all to moderate the ongoing collapse in reigstered silver."

"Following yet another reclassification from Registered to Eligible silver at the Comex vault for a total of 496k ounces (or 6.3% of the vault total), true physical in the Comex just dropped to a new all time low of just 32.2 million ounces."

32,200,000 divided by 5,000 = 6,440

This is all anyone needs to know as we head into June.

Quixotic_Not's picture

Did someone just drop a turd in the punchbowl?

Spalding_Smailes's picture


Just borrow more fiat and more gold a cometh ....

 

CARACAS -(Dow Jones)- CVG Minerven, Venezuela's state-run gold miner, is asking the government for 300 million bolivars ($70 million) to boost production after a significant decline in output last year.

The request is the latest sign of the country's struggling mining industry that has been hit by low investment, worker strikes and illegal smuggling of the South American country's vast supply of precious metals.

Luis Herrera, president of Minerven, said the funds are needed in the short term just to bring annual gold production back to its target of 4 metric tons after the company produced only 1.7 tons last year. Minerven would need around $ 300 million to upgrade its facilities and bring output to 8 tons a year, Herrera said.

"We are in conversations with the Central Bank of Venezuela to activate the operations because it has been difficult to get financing through private and public banks," he said in comments published by state-run newspaper Correo del Orinoco.

JW n FL's picture
by Spalding_Smailes
on Thu, 05/19/2011 - 21:58
#1294248

 

 

Just borrow more fiat and more gold a cometh ....

 

****************************************************************

 

http://www.youtube.com/watch?v=o3mW1eGBeoE&feature=player_embedded

Strike Back's picture

That second chart is astounding.