Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Stock Review : Markets : News Wire : Quotes : Radio : Silver : Stocks - Main 
  
 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Unprecedented Skepticism
By: Andrew Hoffman

Everything You Need to Know on the Swiss Gold Referendum
By: Visual Capitalist

Gold: Now What?
By: Mary Anne & Pamela Aden

Marin Katusa: Winter is Coming—How Investors Can Win in the 'Colder War'
By: Marin Katusa

Parabolic Moves Do not End Well!
By: David Chapman

The Best Metric For Gauging When to Get in and Out of the Market
By: Graham Summers

Four Horsemen of the Apocalypse or the New Dawn
By: Gary Christenson

Seabridge Gold Expects Substantial Expansion of Deep Kerr Resource at KSM
By: Seabridge Gold

Inca One Resumes Test Milling, Nearing Completion of Plant Expansion, and Closes Final Tranche of $5.5 Million Bond Financing
By: Inca One Gold

Ebola Remains a Risk - Deaths in Nebraska and New York
By: GoldCore

 
Search

GoldSeek Web

 
Buy Gold NOW



-- Posted Tuesday, 30 April 2013 | | Disqus

By Jeff Clark, Senior Precious Metals Analyst

You've undoubtedly read about the dramatic increase in demand for gold and silver bullion products since the big correction two weeks ago. Supply has gotten tight, premiums are rising, and inventory is hard to come by, especially for certain silver products.

But it's worse than you may know. Many of these reports come from the retail side of the business, including those from sovereign mints. This information is indicative, but more important is the activity among the wholesalers. It's possible the retail trade is just experiencing a giant bottleneck, which would come with a different set of conclusions than if behind the scenes the wholesale industry is seeing net sales.

So we decided to talk to the wholesalers directly: the bullion banks, traders, and refiners. These entities typically deal in wholesale trades only, exclusively in large amounts, and solely with major entities that include dealers and investment funds.

There was a catch, however. In speaking with these entities, we realized one thing: they won't publicly reveal themselves. So we can't tell you who they are, and in fact, they wouldn't speak by phone, only in person. This means you have to take our report on trust – or not – as you wish; we simply don't have permission to reveal names (we did ask). We can say this, though: we spoke with almost all the major ones.

Here's a summary of what they told us occurred during the week of April 15-19 (the 15th was gold's 9.3% selloff)…

  • Bullion Banks. As a group, there were roughly four times as many buy orders as normal. Generally speaking, the buy/sell ratio was nine to one. Inflows (buying vs. selling) were net positive across the board.
     
  • Bullion Traders: There were twice as many trades placed as usual – and the buy/sell ratio was a whopping 95:1. One anonymous dealer told us it had 995 buy orders that week and just five sell orders. Reports like this were consistent among the group. What's interesting is that all traders reported higher volume. That the increased buying occurred on large volume instead of small volume means the buying was not a fluke. It also confirms the bull market isn't over.
     
  • Precious Metals Refiners: These entities deal in large trades only. None would reveal the quantity of their orders, but two stated they had no sell orders. A third told us they had one sell order out of 100 transactions.

What we learned from these big players is that no one was a net seller. There was across-the-board purchasing, and on significantly increased volumes. We heard more than once that "We've never seen anything like this." And that includes the 2008-2009 period.

While some of this may sound familiar to what we've heard on the retail side, keep in mind that these are the entities that supply your local dealer. So if your favorite shop found it difficult to access product last week, their woes are unlikely to let up.

What we conclude from this research is that the availability of bullion is likely to get worse before it gets better. If so, it also means premiums will continue to rise. Remember that in early 2009, at the peak of the last big supply deficit, premiums for silver Eagles reached as high as 90-100% before coming back down. In that light, a 25% premium for a silver Eagle today doesn't look so bad.

The disconnect between the paper price of gold and the demand for physical metal is so great that we want to bring this to your attention so that you can make an informed decision about whether or not to buy gold now. You should know that supply among wholesalers is as every bit as tight as the retail side, that dealers will probably continue having difficulty meeting demand, that premiums will likely continue to rise, and that delivery times aren't going to shorten right away. If you're a bullion buyer, purchasing now could save you some money and hassle over waiting.

The catch is, where do you go? Delays are commonplace; we're hearing five to six weeks from some dealers, and a few websites show certain products are "out of stock." Further, premiums are still climbing, in some cases daily.

Because of its extensive network, bullion is still available at the Hard Assets Alliance for a reasonable premium with minimal delays. Access to a greater number of dealers has increased the Alliance's ability to continue accessing metal (when one dealer is low it can turn to another one) as well as maintain low premiums, since there's competition for your order. You can check out premiums by opening an account, which only takes about five minutes. You'll probably be pleasantly surprised.

HAA is seeing record demand, too, but so far, it's been able to meet it. As of Friday, orders are being filled in about a week, and about two weeks on the more popular products. Premiums remain among the lowest in the industry. Note that some dealers are using the supply crunch to raise their fees, so be careful of anyone who's charging more than the rest of the industry. I can tell you that HAA's markup is from the wholesaler only. And news flash: HAA lowered the minimum to $5,000 (from $10,000) for US vaults or delivery.

The important thing to realize that if gold and silver were to see another leg down, we fully expect buying physical metals to get more difficult and expensive, not better. At this point, there is no evidence that supply is easing up. Even – or perhaps especially – at lower spot "paper gold" prices, it could become very difficult to get your hands on bullion. And you'll pay even higher premiums on items with the tightest supply. We don't care to predict how long delivery times could get.

Don't be fooled by what happened in the futures market. The retreat is a buying opportunity for physical metal. If you wish you'd bought tech stocks in 1990 or real estate in 2000, you now have a moment like that in gold.

So yes, we are buying right now, and recommend it to our readers, too.

We also recommend storing some of your gold and other assets outside of your home country. To help you get started, Casey Research has produced Internationalizing Your Assets, a timely web-based investors' summit that features Doug Casey, Peter Schiff, and other experts in international diversification. The event premiers tomorrow – April 30 – at 2 p.m. Eastern time. Registration is free. For more information, please visit this web page.


-- Posted Tuesday, 30 April 2013 | Digg This Article | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2014


© GoldSeek.com, Gold Seek LLC


GoldSeek.com Supports Kiva.org

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Disclaimer

The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.
OilSeek.com