Gold buyers smash records

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switters's picture
switters
Status: Platinum Member (Offline)
Joined: Jul 19 2008
Posts: 744
Gold buyers smash records

Gold Buyers Smash Records

Gold demand has in fact exploded, and not just here and there.
Everywhere. Around the world, customers have been queuing up to strip
coin shops’ shelves bare. Mints have been running 24/7 and still have
been forced to ration coin shipments to their dealers. ETF vaults are
bulging.

Now, the World Gold Council has confirmed the trend with hard numbers
for the third quarter of this year. In a page-and-a-half press release
summarizing 3Q2008 activity, the WGC had to use the word “record” ten
times. Some highlights:

  • Dollar demand for gold in Q3 was a record US$32 billion, 45% higher than the previous record, set in 2Q2008.
Identifiable
investment demand, which incorporates demand for gold through
exchange-traded funds (ETFs), bars and coins, rose to $10.7 billion
(12.3 million ounces), double year-earlier levels. Retail
investment demand rose 121% to 7.5 million ounces, with strong bar and
coin buying in the Swiss, German, and U.S. markets. Europe as a whole
saw an all-time record 1.64 million ounces of bar and coin buying.
France became a net investor in gold for the first time since the early
1980s. Gold ETFs
posted a record quarterly inflow of 4.8 million ounces in Q3. After the
collapse of Lehman Brothers in late September, ETF inflows shot higher
by an unprecedented 3.6 million ounces in only five days. Demand
for gold jewelry hit a record $18 billion. Leading the way was India,
which witnessed a rise of 65% in dollar value (1.3 million ounces)
compared with 3Q2007. The Middle East, Indonesia, and China all
experienced increases of more than 40% in value or 10% in weight, year
over year.

From this article.

Interesting that with all of this buying the price is still 20% off its record high.

SteveS's picture
SteveS
Status: Gold Member (Offline)
Joined: Sep 6 2008
Posts: 358
Re: Gold buyers smash records

So why isn't the price going up?

Woodman's picture
Woodman
Status: Diamond Member (Offline)
Joined: Sep 26 2008
Posts: 1028
Re: Gold buyers smash records
SteveS wrote:

So why isn't the price going up?

The premium on physical gold is up right? 

The thing that scares me if one were to hold gold is manipulation on gold prices out there that I don't understand.  Would appreciate some goldbugs to post what might be going on.

switters's picture
switters
Status: Platinum Member (Offline)
Joined: Jul 19 2008
Posts: 744
Re: Gold buyers smash records

Lots of speculation on this all over the web.  Theories range from intentional manipulation of the gold price by banks, effects of institutional funds dumping metals to raise cash for margin calls, COMEX fraud, etc. etc.

What seems clear is that gold is tracking equities very closely right now.  Equities up, gold up.  Equities down, gold down.

How long will that last?  Will gold resume it's perceived role as money?  Will gold perform well in deflation?  Nobody really knows.

If you're interested in reading some "gold bug" perspective, I'd suggest Safe Haven and Financial Sense.  They both have RSS feeds and within a few days you'll see more gold bug articles than you can get your head around.  

BN37's picture
BN37
Status: Bronze Member (Offline)
Joined: May 17 2008
Posts: 39
Re: Gold buyers smash records

I'm concerned with the speed that gold is being snatched up. PM dealers are already scraping the bottom of the barrel. My business is in the process of being sold right now, but the sale won't be final until February or so. I want my dollars in gold before the inflation takes off so my plan is to buy gold with most of my profits. I'm very concerned that it will be outrageously expensive if I can find it at all.

fujisan's picture
fujisan
Status: Gold Member (Offline)
Joined: Nov 5 2008
Posts: 296
Re: Gold buyers smash records
SteveS wrote:

So why isn't the price going up?

 

Ten Reasons Why Gold Isn't Above $1,000

Central Bank gold lending – distorting the market

mono's picture
mono
Status: Martenson Brigade Member (Offline)
Joined: Nov 13 2008
Posts: 70
Re: Gold buyers smash records

Hi Steven,

 

a probably huge Dollar dive seems inevitable. It is likely that China and Japan will buy less Dollars in the future,

which may be the start of the Dollar crisis.

Over here we think, the repatriaton of american money leeds to a weak Goldprice (and Euro), but once these sales are finished, Gold, physical Gold of course, will indeed have a high potential upwards. 

This is a european view. I´m an interested amateur who tries to add 1 plus 1.

switters's picture
switters
Status: Platinum Member (Offline)
Joined: Jul 19 2008
Posts: 744
Re: Gold buyers smash records

I'm well aware that physical gold is selling for a significant premium over spot (and that silver is selling for an even high premium). 

I'm curious to know how much coin shops and online dealers are paying for gold though.  Are they actually paying sellers a higher price than spot, or are they just paying spot and profiting from the higher spread themselves?  I would think the latter is true.  If that's the case, for anyone who owns gold and wants to sell it (not sure why they would, but...) the effective price is still spot regardless of the premiums private buyers are paying.

Unless of course one bypasses these dealers and sells directly to buyers on eBay.  That might be the best choice for a seller.

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