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US Mint Gold Coin Data And Research Casts Doubt On ‘Gold Bubble’
From GoldCore
US Mint Gold Coin Data and Research Casts Doubt on ‘Gold Bubble’
Gold is trading at USD 1,790.10, EUR 1,300.60, GBP 1,114.30, CHF 1,606.20, JPY 139,690 and CNY 11,362 per ounce.
Gold’s London AM fix this morning was USD 1,794.00, GBP 1,114.49, and EUR 1,301.51 per ounce.
Yesterday's AM fix was USD 1,764.00, GBP 1,102.78, and EUR 1,286.65 per ounce.
Gold remains firm in all currencies after yesterday’s sharp gains which saw gold rise 2% in dollar and euro terms and nearly 4% in Swiss franc terms.
Gold appears to be breaking out after another period of correction and consolidation. We have now had a higher monthly close in October and two consecutive higher weekly closes. This strongly suggests the short term trend is again aligned with the long term trend of a secular bull market.
Record nominal highs seem likely given the strong fundamentals and improved technical picture – possibly as soon as before the end of 2011.
US Mint Gold Coin Sales Data and Research Casts Doubt on ‘Gold Bubble’ Thesis
US Mint gold coin sales fell in October leading to further speculation that this was another sign that the gold bull market was over.
Rather than idle speculation it is important to look at the facts and analyse them.
Dr Constantin Gurdgiev, a non Executive member of the GoldCore Investment Committee, has analysed the data re US Mint coin sales in October and has looked at them in their important historical context going back to 1987.
Dr Gurdgiev writes “In recent weeks there was some long-expected noises coming out of the gold 'bears' quick to pounce on the allegedly 'collapsing' sales of gold coins by the US mint. I resisted the temptation to make premature conclusions until the full monthly sales data for October is in. At last, we now can make some analytical observations.
The thesis advanced by the 'bears' is that October sales declines (for US Mint sales of new coins) are:
1. Profoundly deep
2. Consistent with 'gold bubble is bursting at last' environment and
3. Significantly out of line with previous trends, and
4. Changes are reflective of buyers exiting the market on the back of high gold prices
Dr Gurdgiev concludes that “we are seeing a well-predicted reversion to the mean along upward trend in demand. We are also seeing, in my opinion, gold coins doing exactly what gold in general is expected to do - providing long term hedge instrument against risks associated with other asset classes.”
The data since 1987 until today and the evidence from the US Mint regarding the behaviourally anchored, long term demand for gold coins as wealth preservation tool for retail investors does not support the view of dramatic over buying of gold or piling into gold by ‘Joe Public’, the shoeshine boys or the fabled speculatively crazed retail investor that some commentators suggest is happening today.
The man and woman in the street in the western world continues to be a bigger seller of gold (jewellery into scrap) than buyer as seen in the western world phenomenon that is ‘cash for gold’.
The excellent research on US Mint gold coin sales in October and going back to 1987 by Dr Constantin Gurdgiev can be read here.
China’s Gold Imports Jump Sixfold
Chinese gold imports from Hong Kong rose 30% month on month in September to a record 57 tonnes.
Since May, shipments to the mainland have risen a massive six fold, according to data from the HK Census and Statistics Department.
China’s demand for gold is a game changer which is as of yet largely unacknowledged. It has not been reported on at all in the non specialist financial media. The vital fact that the per capita consumption of 1.3 billion people is increasing from a near zero base is still not appreciated.
Gold ownership in China remains very small vis-à-vis their neighbours in India due to the banning of gold ownership in China from 1950 to 2003. Therefore, the huge increase in demand seen in recent years is sustainable and will continue to be seen in the coming years due to the very important cultural affinity Chinese people throughout the world have for gold.
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NEWS
(Businessweek) -- Gold Drops After Reaching 7-Week High on European Debt Risk
http://www.businessweek.com/news/2011-11-08/gold-drops-after-reaching-7-...
(Reuters) -- Gold steady on mounting Italy debt worry
http://www.reuters.com/article/2011/11/08/us-markets-precious-idUSTRE7A0...
(Financial Times) -- China’s Gold Imports Jump Sixfold
http://www.ft.com/intl/cms/s/0/2dca01d8-093d-11e1-a20c-00144feabdc0.html...
(Businessweek) -- UN Report May Show Iran Is Moving Closer to Nuclear Bomb
http://www.businessweek.com/news/2011-11-08/un-report-may-show-iran-is-m...
(Bloomberg) -- Oil Rises to Three-Month High on Signs of Shrinking U.S. Stocks
http://www.bloomberg.com/news/2011-11-07/crude-rises-a-fifth-day-in-new-...
COMMENTARY
(True Economics) -- Dr. Constantin Gurdgiev - US Mint Sales for October
http://www.goldcore.com/commentary/07112011-us-mint-sales-october
(Mineweb) -- The More Gold the West Sells the More China is Buying
http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=139070&sn=Deta...
(Mineweb) -- Gold and Silver - Positive Outlook for Sometime to Come
http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=138998&sn=Deta...
(ZeroHedge) -- China Takes Advantage Of September Price Drop; Imports Record Amount Of Gold
http://www.zerohedge.com/news/china-takes-advantage-september-gold-price...
(ZeroHedge) -- Where Are We Now? A Comparative Timeline Approach
http://www.zerohedge.com/news/where-are-we-now-comparative-timeline-appr...
(Jesse’s Cafe American) -- GATA: The Men In the Arena
http://jessescrossroadscafe.blogspot.com/2011/11/gata-men-in-arena.html
(321Gold) – Richard Russell We Love You, Get Well Soon
http://www.321gold.com/editorials/russell/russell110211.html
(Wall Street Journal) -- Gold Dealer Accused of ‘Bait and Switch’
http://blogs.wsj.com/totalreturn/2011/11/07/gold-dealer-accused-of-bait-...
»
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“we are seeing a well-predicted reversion to the mean along upward trend in demand. We are also seeing, in my opinion, gold coins doing exactly what gold in general is expected to do - providing long term hedge instrument against risks associated with other asset classes.”
Exactly. Other 'assets' are now perceived for what they are: liabilities.
Buy Gold, hold it your filthy little hands and observe the thrilling sense of right about it. Obtain it with the idea, you are not going to spend, for a while. China is hoarding for a reason, so should we.
i love the solid heavy feel of gold in my hands
like the loaded magazines of thiry cal i keep stacked on top of it
it has weight and power
if a silver bullet kills werewolves, what does a gold bullet kill?
-central bankers, the most evil creature of the dark
smarmy slimy slithering evil incarnate bloodsuckers
Gold is approaching $1,800 again.
It's hard to believe that I actually sold a week before the correction started and bought it back only a week before the correction hit bottom. My timing is normally terrible, but not this time.
I guess I can't be wrong all the time.
Well.... sales numbers are down partly because many folks are tapped out. I would be buying plenty if I had some cash.
This.
We all know it's them "crazed retail investors"
Ranks right up there with:
We never knew
National security
He did it
Lone gunman
The tapes are missing
The digital recordings are missing
We found it in the East Wing
I wasn't there
I have an excuse
Nobody saw me
Nothing to see, carry on
CNBS
Paul Krugman
Maureen Dowd
Tom Freidman
The dog ate my homework
And best of all:
Seemed like a good idea at the time
The mint was out of gold too.
the chinese and indians must be giggling at the consistently low price. well...i am too.
be buying when the masses are selling.
When we establish a gold referrenced monetary system with no foreign currencies on the asset side of the balance sheet, everything will change with respect to world trade.
You cannot have a huge player like China with such a low standard of living vis a vis the West and still balance your trade. They have to acquire gold, and we in the West have to have a lower standard of living. That's what's going on.
TPTB believe they are doing it for your own good, but motivations don't matter, only actions. You must own physical gold or see your wealth transferred to those with gold. In general, that means a giant sucking sound into the coffers of the central banks and into Asia.
Motivation for kicking the can: Central banks are moving to 100% gold on the asset side of their balance sheets and are currently @70% depending upon the country and how believeable their numbers are. China is way behind, but their numbers are completely phoney, and yet, those numbers show a six fold increase in purchases in the last 3 months, outstriping their purchases during all of 2010. Can anyone say End Game? Public bickering over using gold reserves as collateral for bailouts is another indication that the conspiracy is about to end, as are using up all the tools in the toolbox and resorting to markets driven on rumors of rumors. It's getting really close. My guess is 3 months or less.
Mom and pop selling gold and silver. Old coins, jewelry, etc. Most folks, especially baby boomers, do not "get it" and think at current prices it is a great idea to get rid of stuff they feel there is no need to continue holding onto anymore. Maybe starting to sweat retirement security (if not already in an outright panic).
Folks on the side of the street with signs that read "Cash for Gold" ought to be a warning sign instead.
Mom and Pop always do the right thing, until it is no longer the right thing. Mom and Pop invest like gamblers during a bull market, and then go right off a cliff, unlike their smarter counterparts, the bears, who huddle under their beds and miss all the fun just for the sake of saying "I told you so." In the end, both types of investing is wrong.
Mom and Pop are selling gold right now because the stateroom is so much more comfortable than that drafty old lifeboat. That worked well in the past, but then again, the ship wasn't sinking in the past. It's sinking now.
Unfortunately, my "mom and pop" fall into this category. Mid-sixties baby boomers that are happy to have a few hundred dollars for "junk" gold and silver jewelry. When you are on a fixed income, I suppose you have fewer options. Not only do retirees lose purchasing power to (food prices) inflation, but they frequently sell off real assets (their only inflation hedge usually) such as gold and silver to cover the cost of necessities. It's an insidious process that makes those subject more dependent on government. Nauseating.
Or perhaps they just need to eat? I doubt these people are selling their Jewelry to go buy LCD TVs. More likely to pay bills and food for the month.
To bad these folks don't realize that any refinery will pay them at least 90% of spot.. instead they are selling it for 50%..to the local "gold buyer" ( which is probably a proxy for the Government ).
My brother is a Jeweler and has been to the offices of one of those large buyers you see advertising on TV. You send them your Jewelry and they send you a check... I can't recall the exact percentage but I believe they pay under 50% of spot. When you receive the check, if you are not satisfied with the amount, you simply send the check back and they will return your gold...
According to what they told my brother, know one ever sends the check back... He said there were barrels and barrels of Jewelry in the warehouse.
My personal theory is the refineries melt it down and sells it to the government.
All the gold mined in the history of the world is estimated to be 5.3 billion ounces - worth about $9.5 trillion. Maybe about half that gold is available as bullion. Let's say it is worth about $5 trillion.
"According to the China Economic Weekly magazine, property prices are currently so high that the total value of land in Beijing, estimated at 130 trillion Chinese yuan (US$19.74 trillion), surpassed the United States' gross domestic product of US$14.5 trillion for 2010." January 26 2011
How can land in a single city in this world be worth 4 times the available gold bullion in this world? The bubbles in real estate and debt are orders of magnitude larger than any gold bubble.
Gold is likely to go much higher.
Land will always be worth more than gold. That's the wrong comparison. It's like comparing gold to food.
The only comparison that matters is gold to currency. You should be asking how there can be so much more currency in the world than gold?
"Land will always be worth more than gold. That's the wrong comparison."
We are comparing bubbles here. So it is a valid comparison. If you think that the real estate bubble is similar to the gold bubble when land in Beijing is worth 4 times all the gold bullion in this world, then I must disagree with you.
The bubble in real estate is orders of magnitude larger. And gold has many advantages over real estate.
When the G20 wanted Germany to provide assets, they wanted German gold and not some German real estate. Gold is wealth - real estate can be a bubble and illiquid when you need it.
Not that I'm saying the China bubble is not real, but it is like comparing apples to oranges. the total asset value is different than the intermediary (i.e. exchange of value: currency or gold or whatnot). i would not consider gold an 'asset', just a store of value, there is a difference. An asset has productive value or in other words makes money for the owner. For the same reason a house shouldn't be considered an asset but just a place to live. I would guess the definition is different for most economists.
For comparison, the US notional net asset value is something like $200T. There is no where near that much money in circulation whether it be gold or dollars. The currency is the means of transferring title to assets between people. When someone has a house that is worth $200k, they actually don't own $200k dollars, they just have a house. When they sell it, then they get the $200k in dollars which transfers title to the new owner who now doesn't have $200k in dollars but now has a house.
I forgot to add that owning gold and silver is a hedge against inflation or devaluing of the currency, which at this point seems to be an inevitability. Thus, the store of value part.
Precisely right.
Gold is money. Money has no value until it is universally accepted for everything else. For thousands of years, that's the role gold played until they replaced the measuring stick for a paper one.
The current measuring stick, fiat currency, is about to die. There is so much of it, that it is losing its universally accepted quality due to debasement. Central banks are therefore acquiring as much of the old measuring stick as possible to change back to a system resembling the old gold based system.
Unfortunately, there is so much of the former measuring stick (fiat), that the replacement measuring stick has to be just as plentiful (which is impossible because gold is scarce).
That leaves us with only two possibilities. Either the price of everything relative to gold has to fall dramatically, or the value of gold has to rise exponentially. We are liable to see both, but driving gold to Mount Olympus heights involves less political strife than letting the price of everything drop 90%.
I guess holding dollars or any other fiat currency as a store of wealth is a good idea?
Pleazzzzzzzzzze.
The ONLY asset that has kept its value over many decades is physical gold. The fact that the Weimar Fed has devalued the US dollar by about 95% since 1913 shouldn't bother anybody [much].
If they are from government, and their lips are moving, they are lying.
http://vegasxau.blogspot.com
Tradition took a bow, but never left the stage.
www.pmbug.com
Above charts are telling but don't show silver sales which have been the replacement of small fractional gold coin sales. http://i55.tinypic.com/15pflug.png
Silver is the new cool.
Cool chart. Thanks for sharing
Why does the Chinese government tell its people to invest in gold?
Are they up to something? Same with the Indians.....
If real estate in China is worth say $150 trillion now. You know it has to deflate. The best way to deflate is to deflate it into tangible hard assets like gold and silver which have represented wealth throughout human history.
The US real estate bubble deflated into autos and large screen TVs and vacations and, maybe, college degrees at expensive private colleges - assets that do not provide lasting value.
China wants its people to do the right thing - have something of value after the bubble.
Trade based on credit, the dollar, is about to come to an end. For China to have a healthy trade balance with the West, its citizens have to have a higher standard of living and the West has to have a lower standard of living. That's why mom and pop in China are being encouraged to buy, and you are being discouraged to buy. That's why prices rise during their markets, and prices fall during our markets. China and the West are coordinating their margin hikes, this is a mutally agreed upon plan.
A possible explanation: http://www.youtube.com/watch?v=YPXncTuwFIE
A variation on Hugo Salinas Price's article "Silver money for China"?
Thanks for the link.
The majority of gold is possessed by govt, bank, and ultra wealthy. Control of, will be exercised upon the commoners, as in Europe during the silver to gold standard change.
The value of gold will greatly increase. The usage of, restricted. (ex: China 1950 - '03)
Purchase consumed precious metal.
Do not solely rely upon elitist hoarded metal.
Silver Bitchez!
Is that even possible? How can one "over buy" something?
Some one over sold it to them.
The vital fact that the per capita consumption of 1.3 billion people is increasing from a near zero base is still not appreciated.
What's a four-letter word for 'wealth transfer'...?
4 letter word= fkyu as in us
Anybody who understands money knows gold can't be in a bubble. The gold is in a bubble shills are just rothschild agents. Gold can go to infinity against the dollar and still not be in a bubble.
Focus on the criminal elements that control the entire world through their fiat ponzi scheme. Until you rid the world of this we will only be their slaves.
I wouldn't go THAT far.
I would say that anyone who knows anything about gold knows that gold can't be in a bubble without a MANIA by the sheeple. And there is no mania.
Who was doing all the buying back in '98-'00?? That is the most interesting thing in the chart, at least to me...
It was me. I admit it.
Yeah, me too. Sorry.
That was when I became an accumulator instead of just a metals dealer. The writing was on the wall. I was reading Bill Buckler's The Privateer as well. I had a mentor (since passed away) who helped keep my spirits up in the drastic downturns. Like when the metal bobbled around $400/toz. Boy those were fun days! I thought I must be crazy later on buying gold at $500! Who would be such a fool? Paying $500+ was gut-wrenching.
True "smart money"?
Y2K
Agita over the meltdown in emerging markets + LTCM implosion + Y2K anxiety disorder.
Gold a bubble, sell our gold. As long as we continue to have the "brilliant ones" here on Zero Hedge advise us how stupid we are and how the bubble is over, well, will just smile.
And we are selling a lot of jewelry for scrape my bride just does not need or wear anymore, and we will turn it into gold or silver coins.
Nothing has changed and will not change until....I have no idea. Lets move on.
I believe you are reading this wrong, the general consensus of this article is that gold is NOT in a bubble. Tyler know what he's talking about.
You are going to get murdered on the spread. The dancing chicken in front of the "we buy gold" shop does not have YOUR interest in mind.
Yet another victim of the public education system who can't read his/her own diploma.
The bubble peak would be when flavor flave sells his teeth.
I thought it was spelled "teef"?
Love those guys with their eyes bugging out of their heads from way the fuck too much crack.
Ever see that one being interviewed by Babwa Wawa about his fried chicken (seriously, folks) chain? She asks him how he makes it and he says; "We rools de chiken in de special spice, puts it in de boilin' oil an wemoves it when it be done."
(I was waitin' for him to add "Bitch" and he's got thses two blood shot rhumey humongoloid MartyFeldmanesque eyes rolling all over the place.)
Jesus
my personal view of the Chinese government purchasing gold is that it's deflationary--diverting the states resources away from a liquidity starved marketplace and into a resource as you so rightfully point out "is rare." And rising in price as well.
OR - http://www.youtube.com/watch?v=YPXncTuwFIE
'Heads' they retain the purchasing value of the Yuan, 'tails' they retain the purchasing power of gold.
Once they make the Yuan convertible into gold, they are restricted in printing more Yuan, but....if the Yuan is used to buy and sell international commodities, demand for Yuans increases, and the Chinese become the new beneficiaries of the reserve status, i.e., we start making tennis shoes for them.
So not only is the Chinese govt buying gold in preparation, but they have a billion citizens helping. A time to sow, and a time to reap. And for the West: A time to rape, and a time to sew.
They have a choice in what to do with the dollars they receive for their exports: 1) Buy U.S. Treasury Bonds 2) Buy gold and natural resources (real assets) 3) Repatriate it for yuan (works against their currency peg).
Gold is purrrty. Do you need another reason?
On July 13, 2011 Chairman Bernanke explained: "The reason people hold gold is protection against tail risk, really, really, bad outcomes. To the extent that the last few years have made people more worried about the potential of a major crisis, then they hold gold as a protection."
As stated by the Chairman of the Federal Reserve, gold is an asset.
Any asset that the government does not have control of is good.
As stated by the Chairman of the Federal Reserve, gold is protection.
Who does not need protection, especially now?
'Nuff said.
The total value of all gold roughly equals the total value of all currency in circulation (bills and coins).
Please someone tell me where I am going wrong:
Vicious nets of intertwined counterparty risk infect all non-cash economic instruments. Eventually, ineveitably they will all become worthless, sooner perhaps than later.
This wanton and ineveitable destruction of paper wealth is nothing less than massive catastophic deflation.
Gold indexed in current fiat monetary terms is meaningless, unless you need to access the domiant medium of exchange to pay something like your electric bill. The gold will retain its purchasing power regardless of its transitory valuation in current fiat money.
Massive catastrophic defaltion means that eventually and 20-dollar gold piece will be worth 20 dollars. But don't worry, you didn't lose anything. If you have a 20 dollar banknote, it will be just as good as gold. Of course the catch is that most people won't have either.
I'm building a water-powered grist-mill so that my community will be self-sufficient in food production. We all have our survival strategies, good luck with the gold-hoarding thing.
Not only false, but demonstrates a lack of understanding of "value". The biggest fallacy in this kind of reasoning is the fact that gold was money before paper was money and that the "value" of gold measured in paper only goes up because the value of paper goes down.
Good luck with your barter economy.
so the 1% that own 'everything' have 99.99999999% of their money in the form of electrons....not gold and when the electrons freeze when the machines turn off...how rich are they...? gold in a bubble...thats just too funny.
The fly in the Gold ointment: Executive Order 6102
Maybe US savers are buying silver instead? where is the data on that PM? Incomplete study except to say that the US is not jumping into Gold in a big way.
messnonster, amount of gold=amount of currency? c'mon, admit it, you're just pulling that out of your ass
The amount of gold has to equal the amount of currency to smoothly transfer from a fiat to gold referrenced monetary system. The only way to take a finite amount of gold and swap it for trillions upon trillions of paper is to stretch gold prices to fit.
A possible example would be the markets being closed down and gold being traded in grams rather than troy ounces. The current spot price is $1792, so that price x 31.103 grams per troy ounce =$55,736 per ounce when the exchanges are reopened. That would mean the value of the gold on the asset side of central bank balance sheets would be worth 31 times what it was before, a boon to their solvency after all the bail outs and an instant tax on anyone who doesn't own gold, because the value of everything relative to the new yardstick of wealth will fall by 31 times.
Now, we all know that price fixing doesn't work, because it bucks reality and trade will just move to another location. However price fixing works just fine when it really is just the cessation of manipulation and moves prices in the direction of reality. For 100 years, everything went up in price and gold and siver were held down. This price fixing will restore gold and silver to a place that is closer to their true value, it will make the banks solvent, and it will restore a more stable system of money and trade.
Unfortunately, it will destroy the finances of anyone without gold, but you can't make an omlet without breaking a few eggs.
Besides being a U.S.-centric analysis, what's missing is the supply made available by the U.S. Mint. The mint routinely runs out of coins to sell.
I love traditions and barberous relics.