GoldCore's blog

Driving the sentiment was the report that U.S. jobless benefits decreased to their lowest rate since 2007. Philadelphia Fed President Charles Plosser forecasted that day unemployment will drop to 7% by December 2013 and he favours reducing the Fed’s $85 billion monthly bond purchases next month. Plosser however has no vote on Fed policy this year.

While hedge funds are seeing outflows of $20.8 billion from gold funds this year, BlackRock Inc. the world’ biggest money manager is still bullish, reported Bloomberg.

As the global economic slump continues central bankers, such as Mario Draghi, and politicians have vowed “to do whatever it takes” to get economies back on track. Such policies while having near term benefits are considered extremely risky in the longer run by many commentators as they could beckon runaway inflation or stagflation, with ruinous results.

Shinzo Abe unleashed his plan with the blessing of the Bank of Japan to begin aggressive government bond purchases. This has led to a massive growth of 60% on the Nikkei and is deflating the yen and boosting their exports.

Jewellers across the world are seeing a surge in jewellery purchases because consumers are taking advantage of the price drop and purchasing investment pieces that will grow in value over time.

In the USA with Mother’s Day approaching this weekend, consumers like Whitney Court who would normally buy flowers instead wants to purchase something that won’t wilt: a silver necklace. 

Physical demand for coins and bars internationally continues and is the strongest since the immediate aftermath of the Lehman Brothers collapse on September 15, 2008, and the consequent global financial crisis.

Government mints, refiners and bullion dealers internationally are reporting demand as high as in the aftermath of the Lehman crisis.

There continues to be difficulty in securing physical bullion in large volumes, particularly in the small coin and bar market and particularly in the silver market. 

In a remarkably candid interview, the President and Executive Chairman of CME Group Inc, Terrence Duffy,  told Bloomberg TV that today gold buyers "don’t want certificates ... They want the real product".  

"What’s interesting about gold, when we had that big break two weeks ago we saw all the gold stocks trade down significantly, we saw all the gold products trade down significantly, but one thing that did not trade down, was gold coins, tangible real  gold.  That’s going to show you, people don’t want certificates, they don’t want anything else.  They want the real product."

The slight rebound in prices from multi-year lows has as of yet failed to dampen the global appetite for bullion, causing a shortage in the physical supply of gold coins and bars.

Gold has surged 4.9% in dollar terms so far this week and is headed for its biggest weekly gain in one-and-a-half years. Gold has recovered in all currencies and is up by 4.8% in euro terms and 3.7% in sterling terms. 

Therefore, gold has recovered nearly half of its recent sharp decline and is now just 7% below its price ($1,560/oz) prior to the futures induced sell off on April 12th and 15th.

There are growing supply issues and a range of gold and silver coins and bars are in short supply internationally and premiums are rising globally. Many smaller dealers have been cleared out of their bullion inventories.

Gold prices are expected to recover in the coming weeks and months according to the Reuters Precious Metals Poll of analysts.

Most of the 29 banking and brokerage analysts and consultants polled expected prices to find support and stay above the $1,400 mark. The majority of analysts, 20 out of 29, expect gold to end 2013 above $1,450 per ounce and 6 analysts, including GoldCore, saw gold above $1,650/oz by the end of 2013.

Interestingly, the majority are bullish at these price levels with average price forecasts for the year of 2013 much higher than today's prices - at a mean of $1596/oz and a median of $1627/oz.  

Government mints, bullion refineries and dealers around the world report a dramatic increase in demand for coins and bars.

Bullion refiner, MKS said that “physical demand is extraordinary.”

In terms of transactions, gold buyers outnumbered sellers by a ratio of nearly five to one yesterday. In terms of volume, gold buyers outnumbered sellers by a ratio of nearly nine to one yesterday. Meaning that there were more buyers than sellers and buyers were placing larger orders than those selling and this trend has continued today.

U.S. gold coins sales have been at record levels this week. Lower prices and the tragic events in Boston may have contributed to increased buying due to concerns about the risk of terrorist attacks.

Premiums are rising in Europe and the U.S. and there are delays of a few weeks on some smaller coins and bars showing the growing tightness in the market.

Soros’ yen “avalanche” would appear to have begun with the yen having fallen by 9.5% against gold in 5 trading days since last Thursday leading to record nominal highs in the yen at over 0.1577 million yen per ounce this morning.

The higher gold prices have led to a curious anomaly in Japan where the public has again been selling gold in cash for gold schemes, often due to being under financial pressure, while some Japanese investors and savers have diversified into gold coins and bars both of which have seen an increase in demand in recent days.

The CEO of Unicredit Federico Ghizzoni said yesterday that uninsured deposits could be used In future bank failures. He said that the savings which are not guaranteed by any protection or insurance could be used in the future to contribute to the rescue of banks who fail and that uninsured deposits could be used in future bank failures provided global policy makers agree on a common approach.

Gold rose 1.1% in March, its first monthly rise in six. 

For the quarter, gold was 4.5% lower in dollar terms and 1.4% lower in euros. However, signalling that the demise of gold is greatly exaggerated, gold is 3.7% higher in Japanese yen and 2.6% higher in sterling.

As one astute financial journalist said to me “ ‘cash in the bank’ doesn’t have quite the same ring to it anymore.”

An increase in safe haven demand, particularly in periphery European nations such Spain and Italy will likely support gold. Citizens in these countries are alarmed by how depositors in Cyprus were treated and the more aware and prudent ones are taking the requisite action in order to protect their families and businesses from the growing possibility of capital controls.

Whether to sell Italy's national gold reserves is an interesting question. A perhaps as interesting question and more important question in the light of the Troika expropriation of bank deposits is will Italians begin to diversify some of their savings in Italian banks into gold bullion?

^{Importantly, Cypriots and other Eurozone citizens who own gold saw the value of their holdings rise 2% in euro terms.}

The demise of gold and the "death of the gold bull market" is "greatly exaggerated" says Mr. O’Byrne.

^{He said that while the risk from Cyprus has abated, in the light of capital controls in EU country and the treatment of Cyprus, there are now huge question marks over the future of the European Union itself.}