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Gold Bear Market or Physical Gold Discount Sale??
Back in 1980, just as the gold price blasted upwards past $800/oz, buyers reportedly lined up in droves at various bullion dealers to participate in the rally. Investment analyst Jay Taylor writes, “I remember 1980… there was panic buying of gold by people in the streets of New York City. They were lined up around the block to buy gold and Krugerrands at that time.” That flurry of buying ended up representing a classic top. As gold failed to move higher, the speculative frenzy soon reversed into a despondency that dragged gold into a twenty year bear cycle. For those investors who bought at the top, it was a hard lesson learned.
Fast forward to today, and in the days that have followed this past Friday’s (and Monday’s) incredible gold price smash, the strangest thing has happened: physical buyers have come out in droves, but this time they’re buying immediately following an unprecedented $200 price decline.
Consider the following:
The US Mint reported selling 63,500 ounces (2 tonnes) of gold on April 17th alone, which brought total April month-to-date sales up to 147,000 ounces – more than the previous two months of gold sales combined.1 The US Mint’s year-to-date sales are now up 79% from the same period in 2012.
Coin dealers in Tokyo and Dubai reported an immediate spike in sales following the gold smash this past Friday. Reuters writes, “A week ago, as the yen-denominated price neared a new peak, jewelry stores and gold merchants across Japan saw long lines of mostly older Japanese looking to cash in on unwanted jewelry and other items that they had held for years… But on Tuesday, buyers outnumbered sellers by a wide margin. At Ginza Tanaka, the headquarters shop of Tanaka Holdings, gold buyers waited for as long as three hours for a chance to complete a transaction.”
In Dubai, jewelry outlets reported they are now temporarily out of gold coins and all sizes of gold gram “biscuits”.2
In India, retailers also saw an immediate surge in demand following the price decline, prompting some retailers to predict up to a 50 percent spike in sales volume in the upcoming marriage season.3 The Wall Street Journal quoted a jewelry salesman in Mumbai’s Zavery Bazar, who stated, “We have not seen such strong demand in many years. Our order books are already 30%-40% more than last year’s festival day… We don’t have enough staff to keep up with this kind of mad demand.”4
We have also seen the same reports coming from the Perth Mint in Australia, and even here in Toronto, where the line-up at Scotia Mocatta’s bullion desk numbered more than one hundred long on Wednesday. A colleague confirmed that virtually all participants where there to buy more bullion, rather than to sell.
This phenomenon clearly appears to be happening globally. A friend of the firm had this to report from Hong Kong: "Went to Hang Seng bullion counter yesterday. The line was out the door. It took an hour wait to see a teller. When I asked if people were buying in the dip or selling in panic, she told me that they haven't had one ounce of gold sold back to them all day. She told me they have sold more gold in 24 hours than they normally do in three months. Yes, there was a lot of extra security. The guy in front of me bought over $1 million USD in gold. He paid in cash and walked out of the door with the bullion in a Nike bag. Amazing."
Regardless of one’s view on gold, one must admit that this kind of buying frenzy defies the traditional rules of investor psychology. After two days of what looked like outright panic selling from precious metals futures participants and ETF holders, we wouldn’t expect to see such a massive surge in physical bullion demand from individuals across the world. When gold fell precipitously in 2008, there was no such reaction.
For now, all we can conclude is this: There is definitely a striking psychological disconnect growing between the buyers of physical gold and silver, and the financial community that trades precious metals through ETF’s and futures contracts. While the latter have ostensibly turned their back on gold (see the plethora of negative sentiment expressed by various pundits over the past three days), the former group has been spurred into action as if they know something the other group does not. Certainly we wouldn’t expect individuals to be buying these metals if they believed the price was going to drop further, or perhaps they don’t care either way and simply want to own something tangible. Nonetheless, it is a wholly peculiar phenomenon, and it is definitely not the same investment behaviour we have seen before.
We still don’t know what entity chose to crush the gold price with a 400 tonne sell order last Friday. Certainly no rational group would dump that much paper gold on the market without a pre-established desire to torpedo the gold price. Their efforts clearly worked in the short-term, but the reaction from physical buyers strongly indicates an official bifurcation between physical metals investors and the exchange-oriented investors who trade gold through financial products.
The days to come will prove if this surge in physical demand is an aberration, or the beginning of a new chapter for the physical gold market. If it represents the latter, precious metals investors may be wise to ignore the ‘paper’ price of gold altogether. The line-ups in 1980 represented the top of the gold bull market. But what do line-ups for gold represent when the price has already fallen 30% from its all-time high? That’s the question, and we’re guessing it means this current gold bull market isn’t close to being over.
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2 http://gulfnews.com/about-gulf-news/al-nisr-portfolio/xpress/gold-in-short-supply-in-dubai-1.1171987
4 http://online.wsj.com/article/SB10001424127887324493704578430083162803860.html
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If the guild navigators are prepared to destroy almost all of Europe to stop the flow......................ask yourself........
The Italian family runs out of cash flow.
They sell their gold,............
Not only that but they don't buy any Asian products now.
The Asians will in some time in the future run out of cash flow also as their export market dies.
I dropped by Scotia banks bullion desk in Scotia Plaza on Thursday Apr 18th about 1pm to see for myself what the lineups were like, there were 25 people in line. Interesting only 2 were in a suit.
Friday I dropped by Arcade coins at King and Yonge in downtown Toronto and when I asked if they had silver maples they resisted laughing. Said they had been cleaned out and the sporatic supply they were getting could easily be gone in 15 minutes.
LOL!, I was trying to browse AMPEX silver products this morning and they are out of most products.... I was looking to buy again this month.
What good is a $23 paper price if you can't buy physical product?
Since I am working and making a decent salary the lower the price of PMs go, the more my discretionary savings will be spent on PMs.
Back in 1980 there wasn't "paper gold".
BTW $800 gold in 1980 adjusted for inflation would cost $2271 today. Hmmmm...
Or is it...
http://research.stlouisfed.org/fred2/series/AMBNS
The internet has made the public more informed and better at economic transactions than the bankers. The bankers only have an edges at free money, unlimited paper margin, and rigging exchange mechanics. But they are unable to compete with the public at truly economic transactions. It is no surprise that the public is buying low while bankers sell low. That is how it works now.
That was one of the scenarios postulated. All viable.
One was for bullion banks, ETFs to load up on silver/gold at a lower prices. Two to help a bullion bank settle cash at a lower fix. Three to protect the USD and rates by scaring people out of gold.
But the net result whatever the purpose of the raid is to reveal that there was a curtain and man behind it...to the effect that individuals in addition to countries and organisitation are rushing to bullion in increasing volume thus making the physical even more difficult to get their hands on.
So if they try the same again...will they find physical gold to actually load up on. Watch out greater fools, you may have to go out and buy the real stuff...and it will be more expensive than you sold your contracts for.
banksters didn't suppress the price because they are afraid of what it might reveal - that is a most naive notion....nor are they worried about loss of prestige or utility of their paper mache currency....they have legal tender laws to deal with that although sustaining them will soon resemble pushing a string.
they smashed the price so that they could loot more gold....the etfs are being raided and quite frequently for the personal accounts of banksters....banksters = crimals....plus there are some very angry large customers who are demanding delivery of their gold with threats of personal survival attached....this was a classic shakedown using paper gold....400 tons? why not 4000 tons? when it's paper, the sky is the limit.
the gold market is going physical....the gold derivatives market is on its death bed. comex is a corpse - hence the need for severe margin hikes...assayed tonnage is at least 2000usd per ounce - hence the smashdown was a government sponsored arbitrage play....anyone with gold is being raided mafia style..
we are all abn amro now. we will all be cyprus tomorrow.
The important thing is not the price of gold now but at some unknowable future time that will come because the present situation makes inevitable some future chaos.
Gold gets slammed $200 ... huge smack down, the entire MSM and investment advisers talking down gold as much as they can....YET people buying gold and silver like never before.
Message for TPTB....you showed everyone the man behind the curtain... the games up.
It wont matter how much you slam gold - China, India, Russia, Thailand, SE Asia, South America....will buy every freaking ounce of it, the cheaper the more they will gorge.
And if TPTB slam gold another $200 will that mean we could buy gold and silver at that price...LoL We will end up paying $200 premiums / ounce.
TPTB have not only revealed the man behind the curtain but made Gold a must have insurance product.
And bad news for the TPTB...banning gold ownership in the USA will make no difference to the price of gold...just make Americans poorer and Asia richer. The physical gold price is being determined not by Americans.
Limiting gold in India would lead to riot. Thailand impossible, has been a cultural activity all the way to now.
The physical price of gold is out of the hands of the USA unless they want to dump 8,000 tons of real gold that they don't have.
The stupid thing about the Fed and cartel banks. If they really wanted to control the price of gold / silver the best bet would have been to NOT manipulate it but let normal market forces/cycles deal with it with the occasional smack down. But these guys cant help themselves, they have to manipulate it every day in the same manner at the same times...like clock work.
Gold at $3,000 / ounce would make it less attractive to the average person, reducing volume of buying by individuals across the globe. People would by fractions of ounce, not dozens of ounces.
Another $200 drop would prove that the TPTB are totally corrupt and scared shitless
Buying Would increase even moreI
But TPTB are so stupid that they could try the same thing over and over the East will say thank you and physical gold and silver dissapear
Another 200 drop would stop the main street 'buying' .. another 200 drop would start the main street 'selling', the only question will be, who will sell first, the big players or main street? If spot is at 50% of where it is now, what will be the actual cash selling/buying price? Sell - spot -10% and buying available at spot.
Speak for yourself - most physical buyers who bought on this drop will continue to buy until the next shoe drops, and paper gold movement ain't a shoe anymore. The ETF herd may stampede but that isn't a bug - it's a feature.
Gold flow will stop if its price falls below production cost and would cause shortage and price to spike.
If Gold fell to $750 it would be the easiest buy to make money, until the new LBMA and cartels start their games anew.
If deflation comes it will be after the system undergoes its high (to stave off deflation) inflation test and breakdown where fiat devalues and Gold explodes. And there is nothing left butt to do it right and start again.
they will then be on the right track and the need to hold Gold to preserve wealth less of an issue unless of Course their answer includes a Gold backed currency.
There will one day come a transition period once things blow up and the reality will be starting again from a new low base with at first slow growth.
So people are probably right that once we are past the end game and restarting gold will be less necessary and will fall in price to some new Iow, probably a low that is much higher than today's high
The trick will be the timing of conversion of Some Gold to fiat during that transition period during chaos and crash. PS I'm talking about AUD as that is where I am.
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Gold doesn't mind deflation. Juicy real rates are bad - fat chance of that coming any time soon..
Ding ding ding - phys buyers are not moved in this rate environment. MSM vomiters talk up the 80's spike and drop, but conveniently forget the interest rate part of the equation. Phys holders double dog dare 'em to do it again...
The MSM and all the investment advisers trying hard to keep people out of Gold.
The Motley Fool in his emails very keen to DISS Gold.
Sometimes these people are so captured by the stock market and prevailing paradigm that they are Unable to think for themselves and can only Sing from their stock market hym book.
His advice and discussion on gold really steeped in ignorance. Could just see him in Zimbabwe telling all 'Don't buy Gold' - much better return on Zimb. share market.
They can only think in a linear fashion with a 3 Second Memory,
I
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I hate to break it to all you stackers, but gold is going to 750 in the next decade. Deflation is just getting started and gold will not be left out of the carnage.
I hate to break it to you but during the great depression my father informed me that you could buy a nice house for an ounce of gold. Trouble is no one had any. And just as a reference a guy bought up all the waterfront property in Sausalito CA for almost nothing during the depression and today is worth a fortune. You avoid the real issue. What will that one ounce buy?
May all be, but in the end we still can produce gold just in small amounts whith heavy and expensive tools. So what do I trust more physical reality or virtual reality of fiat-money?
It's your choice as it is mine, and you can see what I decided upon in my nick.
thanks, skippy
sure right after the doller is revallued 500 old to 1 new fiatso
I hate to break it to all of you who think gold suffers during deflation. Gold does even better during deflation than during inflation. So what you have in today's world of fiat currencies is a win-win no lose deal. I would tell you why, but you would just argue. So look at history and see why TPTB sell the deflation lie. Tell me when gold purchasing power went down during deflation.
Yes, a total and complete replay of the 1980s peak. Right down to the 20 percent overnight lending rates.....
Am I right...
Lulz...
If this is what lines are like when gold and silver hit a 2 year low...
Then the panic at the coin shops when the next peak hits is going to make last years iphone stampedes at the Apple store look pretty tame.
posted again
Heavy, long deflation first - then inflation! China will deflate?
added
Copper willl test 2800 just fuck up JPM then they will buy larger and start their 40 million new home domestics construction.
do dealers in HK really have hundreds of pounds of bullion in inventory that people can pay in cash for and walk out with...?
Yes. I walked into a local bullion dealer in HK on Thursday and bought $50k US silver bars. No problem. There were guys walking out with backpacks straining...
yeah, million bucks in a Nike bag...sounds fishy.
any time the price of something collapses, there are those that rush in; sucker rally?
Thats 44 pounds of gold..they sold that much to one person?
I thought you geniuses already agreed it was "hundreds of pounds"? Have you seen the Hang Seng or are you referencing the pawn shop reality shows you watch in your underwear?
Sprott lost all credibilty with those sales
Yeah - he's a billionaire idiot who can't even construct a decent bullshit story.
Just out of curiosity what prices are people seeing charged over spot right now for gold and silver bullion coins? I'm doing some shopping and I figure the best place to ask is here for some rough numbers.
Local dealer said he had bought silver in his last order at a $3.80 premium . today his wholesaler offered to buy it back for $5 premium. New orders were at $10 premium.
Thanks for the reply, I've seen up to $10 so far depending on the type of silver bullion, 1oz bars being the cheapest at about $3 - $4 right now. Gold I can find locally at 5% over spot right now, supply is limited but the local shops have it in stock.
It's not a question yet of whether the US public will continue to accept US dollars. Overseas it will happen first leading to an increase in prices and shortages in many things. Imagine the ammo and gold shortages extending to food and gasoline. That will be coming.
Au:Ag >60:1
There is a VERY SIMPLE EXPLANATION:
People who buy physical do their own shopping in emerging markets where price rises are significant, while traders who sell futures know only the CPI in a debt ladden countries as ~inflation~.... and they can not comprehend that Gold exists outside of their own borders.
THere is is large price increases in the emerging world, while in the West excess debt and devaluation. The West think of itself as an island and like we were in 1930s where the West (US - Europe) and Japan dominated the world GDP in %.
The West is self-focused and does not realize that demand outside of US- Europe and Japan is quite fine.
Even CHina, while they have a property bubble, there are still a huge amount of unfullfilled needs of decent infrastructure in the interior. One just needs to go there to realize that in the interior it is far from being up to scratch in terms of mass transit, metro, water utilities, basic necessities...
So the Western central bank, obsessed with their ~lessons of the 1930s~ do not see that they are printing way too much money and will end up in a stagflation of the ages, and Japan possibly hyperinflation....
I recall the 1980's lines of people selling their silver flatware and candleholders for scrap, not lines of buyers. The lesson is that one simply does not trade a wealth preservation asset. You buy and hold and add when you can.
I recall the 1980's lines of people selling their silver flatware and candleholders for scrap, not lines of buyers. The lesson is that one simply does not trade a wealth preservation asset. You buy and hold and add when you can.
on April 10, before the big drop, jesse reported that Sprott had sold a big chunk of interest in his Silver Fund/s. This was sort of kind of suggested as being done to raise $ for charity.
It is surprising to have seen no nada zilch comment on such wonderful timing after the fact.
What did he know and when did he know it?
http://jessescrossroadscafe.blogspot.com/2013/04/insider-sales-on-sprott...
Gold and the Eight Standard Deviation Move
.....................So Friday was a 4.88 standard deviation move in the price of gold. For simplicity sake let’s call it a five standard deviation move. Statistically we get a five standard deviation move approximately once every 4,776 years. So we should not expect another move like this out of the price of gold until May 17, 6789. That is the first (and probably the last) time I will every use the number 6789 as a year....................
http://www.cboeoptionshub.com/2013/04/15/gold-and-the-eight-standard-dev...
prices don't take random walks. and precision should not be confused with accuracy. iow, baloney.
This only applies to random moves.
I'd like to see a correlation develop between the fed's bond buying and leakage into the gold market. Not that price will matter because for now they can manipulate that, I mean buying volume. Hopefully soon as stocks become so detached from economic reality we will see almost dollar for dollar of fed printing matched with physical gold buying.. print 85 billion? watch 85 billion leak into the physical world.
The Secret World Of Gold (Documentary)
Was braodcast yesterday to Canadian only audiences. Now can be streamed here in three parts:
http://news.goldseek.com/GoldSeek/1366397576.php
good videos, thanks