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.
Rather than sitting nervously and passively and awaiting the coming financial dislocations and expropriations, investors and savers need to be prepared for the uncertain financial scenarios that seem increasingly likely.
Hoping for the best, but preparing for less benign scenarios remains prudent.
The mooted savings levy in Cyprus is a form of wealth confiscation on behalf of the EU which is making depositors throughout the Union nervous. There has been no dramatic increase in the demand for gold in recent days. However, this could be a ‘tipping point’ moment when savers realise that they are unsecured creditors of banks and their savings are not sacrosanct.
Retail investors are piling into the stock market again in the false belief that the worst of the economic crisis is over. Alas, those who are not properly diversified may again be in for a rude awakening.
The CFTC’s very unusual announcement through “people familiar with the matter” that it is examining various aspects of gold and silver price fixings in London, including whether they are sufficiently transparent, continues to be digested.
The spectre of stagflation threatens the UK economy due to concerns that sterling weakness will contribute to even higher inflation amid very weak economic growth and the likelihood of a recession – likely a severe one.
Markets are pricing in a jump in inflation as inflation expectations, as measured by the difference between nominal and inflation-linked bond yields, ticked up to near 3.3% yesterday.
Recent poor economic data and the appalling UK fiscal position are rightly leading to concerns of stagflation as was seen in the 1970s. Conditions that make owning gold and silver vitally important to own in order to protect and grow wealth.
The World Gold Council noted that central banks increased gold buying 17% to 534.6 tons last year.
Central banks are among the shrewd investors who buy gold bullion on dips. It was reported that South Korea bought 20 tonnes of gold last month rumoured to be below the $1,600/oz mark. This is the first purchase this year for South Korea, after they purchased 30 tonnes in 2012. Previously they purchased in July 2012 at the same price levels.
Gold is trading flat today near a one and a half week high hit yesterday as Federal Reserve Chairman Ben Bernanke defended the U.S. ultra loose monetary policy.
The selloff in gold ETFs in February underscores the weakness in gold sentiment among retail investors that has been prominent recently.
Gold has come under pressure from heavy liquidation by hedge funds and banks on the COMEX this week. The unusual and often 'not for profit' nature of the selling, at the same time every day this week, has again led to suspicions of market manipulation.
Gold’s ‘plunge’ is now headline news which is bullish from a contrarian perspective. As is the fact that many of the same people who have been claiming gold is a bubble since it was $1,000/oz have again been covering gold after periods of silence.
Gold edged up on Thursday, as bargain hunters showed buying interest and gold was particularly strong in euro terms after data from Europe confirmed the continent remains very vulnerable to economic shocks.
The euro area recession deepened and data showed that the euro area economy shrank the most since 2009 and its three biggest economies, Germany, France and Italy, suffered slumping output.
