Gold Coin Demand Is Looking Better (and for good reason!)
US markets will close early today (1300 EST) and remain closed on Wednesday in observance of Independence Day
While gold is ensconced within its trading range of the last nine months, the bulls should find some solace in the metal having been biased toward at least attempting to remain above $1,600 per ounce. Given the sheer volume of developments that can be considered positive for gold, it’s no wonder that gold won’t simply go away, which is what the powers that be (though the Central Banks have been net buyers) and the small time bears would love to see. But gold has always been here as a store of value and won’t be going away anytime soon.
Gold Coin Demand
It has been firm. In spite of whatever anti gold propaganda that you may have encountered, real physical demand is there. The numbers are telling a story – the wise are allocating at least some of their assets to what needs to be considered as long term “financial insurance” and not merely a play on the all too shallow desire to see gold get to $10,000+ ounce.
To briefly go off on a tangent. The $10,000 an ounce-plus get-rich-quick crowd distracts from gold’s ultimate purpose which is for it to be re-recognized as the real form of money over the present paper-money backed by nothing, or fiat debt paradigm that is crumbling by the day. I fully realize that seeing any asset that one owns rise in value is a positive, but I have been looking at gold’s rise over the last decade as an exercise in what is really the dollar falling in value due to its on going dilution from profligate federal spending, trade imbalances, etc. (all of the wrong choices that have led to past empire collapses). At some future point, what gold is valued at in dollars, or yen, or euros, etc., is not going to matter as there will come a day when fiat currency will become impractical and an obsolete experiment gone wrong. Many fear the hyperinflation that is supposed to accompany a dollar that is devalued to little, or nothing and that’s exactly when there will be a “light bulb” moment for society to realize that there can be honor in money by it being backed (at least partially) by metals, or some combination of valuable assets. Let’s hope that light-bulb moment happens and positive action will occur. I am not anticipating a Wiemar, or Zimbabwe repeat of trillion dollar notes since faster inflation from the present unofficial levels of 12% annually to 50%, or more ought to be enough of a jarring future shock to force the world to distance itself from the fiat Ponzi (of course, I could be totally wrong in which case it was nice knowing all of you). Yes, this money stuff is serious, especially when we get to the stage of choosing between survival, or total destruction.
ZeroHedge.com does a bang up job of summing up the U.S. mint stats: “Total H1 2012 demand was at 338,000oz still well ahead of H1 average demand for 2000-2007 period when it was 165,679oz, but down on 531,750oz average for H1 2008-2011 crisis period. Exactly the same picture – return to fundamentals – is seen in the number of coins sold. Consistent with still robust demand drivers, H1 2012 average coin sold contained 0.60 oz, while H1 2000-2007 period average was 0.51oz and H1 2008-2011 period average was 0.76oz.”
THE BOTTOM LINE (and this is important): Premiums are starting to trend a bit higher for gold coins (at least from the perspective of this data set). This is not a sign of moderation in demand and I expect to see the trend gather steam since I am not expecting long term positive outcomes of various financial troubles. Coins, over bars are easy to store and the smart of locking them in now.
Have a Happy 4th!
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Author Jim Kingsland
Market commentator with focus on Gold and Silver after long broadcast career at FNN, Bloomberg, and Fox. #RandomHouse published author on PMs. Jim has also been involved in projects for CAC and Coinplex.
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