In my post early today, Paul Craig Roberts said “The orchestrated attack on bullion in the paper gold market took the spot prices of gold and silver down on Friday and Monday, but actual physical purchases rose during this period. The sales were of paper claims, not of real metal. The demand for physical possession of bullion rose so strongly that large wholesalers such as www.tulving.com and large retailers such as Gainesville Coins reported sold out items. Also, dealers raised the premiums above the spot price that is charged for coins. From Friday to Monday the premium on Silver Eagles at the large online retailer, Gainesville Coins, rose from $3.75 to $5.99 above the spot price of silver. The percentage increase in premium was larger than the percentage decline in the silver price. Thus, the price of a silver one Troy ounce coin did not drop despite the drop in the spot price. Today (April 16) the price of a silver eagle purchased with a credit card from retailer Gainesville Coins is $30.36. You would never know that the market had fallen out.”
Check out all the following stories on what is also going on across Asia - including Australia which backs up the above claims re demand of physical metal. It seems all this gold takedown has done is scare the crap out of traders but not long term investors of the physical metal. The price fall has had the opposite effect on them. Those buyers- especially jewellery but also gold coins/bars are much more likely to hold on longer term than buyers of ETF’s. So this shakeout is moving gold from traders’ hands to investors’ hands. When the price rises again there will be less gold in traders’ hands so the rallies, when they come, may be met with much less profit taking. With the level of buying described below, you have to wonder how long this correction can last. If physical metal was in short supply before, the buying of physical described below might be soaking up the supply from ETF’s. Not the result intended by the manipulators described in the Paul Craig Roberts article.
“As gold plunged 13 per cent in the two sessions through April 15, retail sales tripled across China on April 15-16, the China Gold Association reported.” “Volumes of gold products sold surged 150 percent in Hong Kong and Macau during the April 13 weekend compared with the weekend prior, Dennis Lau, director of sales operations at Chow Sang Sang Holdings International, said yesterday. Customer traffic rose as much as 40 per cent on April 16 from a week earlier, with gold bracelets popular with shoppers, said Kent Wong, managing director at Chow Tai Fook. Tokuriki Honten, Japan’s second-largest gold retailer, said purchases doubled April 16 as prices slumped” “India and China accounted for more than half the world’s gold demand in 2012, according to the London-based World Gold Council. Jewellery was 43 per cent of global bullion demand, and bars and coins 29 per cent, according to the industry group. More than 60 per cent of gold demand last year came from Asian nation’s including India, China, Thailand, Vietnam and Indonesia.” “Some people have been waiting for an opportunity like this as gold has been trading above $US1500 an ounce in the past two years,” Zhang Bingnan, vice chairman of the China Gold Association, an industry organisation representing mining, refining and retailing, said yesterday from Beijing. “Chinese consumers still widely accept gold as a wealth protection.”
“Bullion held in exchange-traded products decreased for an 11th day to 2377.8 metric tonnes on April 16, the least since June, according to data compiled by Bloomberg. Holdings have slumped 9.7 per cent from a record 2632.5 tonnes in December.” (Looks to me like all that is being achieved by all this is an acceleration of the transfer of gold from the West to Asian hands)
“Gold sales from Perth Mint, which refines nearly all of the nation’s bullion, have surged after prices plunged, adding to signs that the metal’s slump to a two-year low is spurring increased demand. “The volume of business that we’re putting through is way in excess of double what we did last week,” Treasurer Nigel Moffatt said, without giving precise figures. “Chow Sang Sang’s gold-jewellery sales increased 50 per cent last weekend from the weekend before after prices slumped on April 12, Hong Kong’s Ming Pao Daily reported today, citing Lau Hak-bun, the company’s sales director.”
”Australia's largest independent bullion trader has seen buyers lining up in record numbers outside its Sydney offices to take advantage of the dramatic fall in the price of gold.” “ABC Bullion chief economist Jordan Eliseo said despite the recent fall in the price of gold, its sales had risen by 347 per cent on a weekly comparison basis and that for every person selling gold there were 99 people wanting to buy.” http://www.dailytelegraph.com.au/business/bargain-hunters-look-to-cash-in-on-gold-price-slump/story-fn7ki9jk-1226623478579
“KOLKATA: Gold buyers made most of the dramatic fall in Gold prices, picking up 10-15 tonne in the past three days, double the normal sales. Jewellers say the trend is likely to continue on Thursday, an auspicious day in the Hindu calendar.
"During this time, buying generally happens on account of Akhshay Tritiya and wedding season. But as prices have fallen, we are seeing that the demand has doubled compared to the past year during this period. In all our 80 retail stores across Karnataka, we are witnessing hectic buying," Siddharth Mehta, chief strategist, Rajesh ExportsBSE 0.86 % told ET.”
Maybe ABU will get much better than the $500 margin that would have resulted from a $1300 POG using Ord Minnett’s estimate of $825 “all in cash cost” for ABU.
Looks like the Indian and Chinese gold dealers are the big winners.
(20min delay)