Goldfish?
Posted on 10/12/2008 8:36:40 AM PDT by SeekAndFind
Michael Zielinski at the Mint News Blog sent me a note the other day regarding this item he recently published, an item that seems to be making the rounds on the internet over the last 24 hours and for good reason.
Michael wrote:
There’s one aspect to this entire situation that many people haven’t been discussing. The Mint is always citing “unprecedented demand” as the reason for suspensions, production halts, and allocation programs, but in 1999 gold sales were more than 4 times higher and none of these measures were necessary.
The story is not that the Mint is unable to produce enough gold coins, it’s that they are unable to obtain enough gold on the open market. This all plays into the puzzling situation of physical scarcity and high demand for gold, while the market price of gold remains stagnant.
Well, the price of gold wasn't exactly stagnant today - it was down $63!
Naturally, coin dealers are still desperate for inventory (check out the CNI bullion page which now shows American Eagles available at $80 over spot after having been "Out of Stock" for most of the week and probably "Out of Stock" again by the time you call).
Oh yeah, and the SPDR Gold Shares ETF (NYSEArca:GLD) added another five tonnes today after the price plummeted.
You know, I get the part about investment demand only accounting for about 20 percent of overall demand for gold bullion, but the deal with coin shop shortages really is smelling fishier with each passing day, particularly in light of this data assembled by Michael:
The following table shows the ounces of gold sold by the United States Mint in the form of American Eagle Gold bullion coins. These figures are taken from the US Mint website. You can visit the link for monthly data, as well as the figures for Silver and Platinum Eagles.
American Gold Eagle Bullion Sales (ounces)
1986 1,787,750
1987 1,253,000
1988 851,000
1989 839,000
1990 715,000
1991 472,000
1992 638,600
1993 796,000
1994 559,500
1995 600,500
1996 729,500
1997 1,317,000
1998 1,839,500
1999 2,055,500
2000 164,500
2001 325,000
2002 315,000
2003 484,500
2004 536,000
2005 449,000
2006 261,000
2007 198,500
2008 492,000*
*through October 2008
The demand for American Gold Eagles is clearly not unprecedented. What's actually unprecedented is the suspension and allocation of Gold Eagle coins. Even amidst the booming demand of the pre-Y2K years, the US Mint never resorted to suspensions or allocation programs. Why is the US Mint having so much trouble keeping pace with demand this year? ...
With unfulfilled physical demand, why has the market price of gold remained stagnant? I think we will see this situation play out with some interesting consequences during the remainder of the year.
Yes, the consequences could be quite interesting...
A large portion of all the gold ever extracted exists in the form of 400ozt “good delivery” bars, they are not for the average investor and never see the light of day.
Retail forms - individual “fun size” coins and bars that are affordable have seen unprecedented demand relative to their availability pushing up the price compared with the COMEX and other exchanges. So, while the “official” price is currently $849, you can’t actually buy the stuff in hand for less than say, $1,000 or thereabouts.
Don't put Iceland in there please.
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ACORN = OBAMA
OBAMA = ACORN
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STOCK = SOROS
SOROS = STOCK
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Aha, Lehman brothers have been short selling gold?
LOL
Or maybe they have been selling derivitive gold paper?
I am convinced that EuroBanks will buy anything these days.Or maybe the Chinese are holding an escrow vault full of our Gold as collateral security for our national debt?
In any event. I wish we had the Tim Iacono's theories on interesting consequences of which he speaks, because many Freepers are joining the Gold Rush when they should not be.
LOL. No, you go to your local coin store, not the bank. You might pay a small vig at the coin store, but there will be no record of your purchase, and the coin store guy will have a bad memory. The bank employees, not so much.
Coin show report: Nobody was selling silver for anything less then $14. which is 10x face value for the junkiest of junk silver. (eg; 1962 quarter sells for $2.50) Bullion products such as 10 oz or 100 oz bars were for sale for $15, but it was strnge, few dealers showed them. It was as if they didn’t to sell at that price. Silver Eagles, no cheaper than $18.
I couldn’t find any gold below $910. or $925.
There is a weird anomaly between the paper and physical markets going on.
I’m not selling nor buying. I’d buy if I could buy silver anywhere near the spot price.
I also think that whatever spectcular gains one might get from holding gold will be matched by holding and wielding green cash. Without the huge buying spreads.
So in your opinion, is this a good time to buy physical gold, or should I wait for this “gold bubble” to pop? I’ve been looking at gold a lot lately and wondering if now is the time to move on it, but the lack of availability worries me.
I bought 20 American Eagle silver coins Friday at a coin shop in Grand Forks, ND and paid $15.00 per coin (goldsilver.org showed spot at $9.99). Just another data point, folks.
I like those companies and have owned them, rode GG from 12 to 35, 39, and 42. That took years. Traded AUY from 9 to 12 at least 4 times. That took months each time. PAAS = decimated.
I’m not that keen on getting back into these, just my opinion. They are, after all, equities. GG pays a small div, monthly, but divs are a canard here.
It is true these cos are priced back where they were when gold was say $450-$600, but I’m still not convinced they are anything but trading buys at this juncture.
I like the metals, I have plenty of physical silver. I am not confident in the valuations of the equities which, as equites, are still priced very high relative to their earnings (eg; have high PEs)
Basically, to me, the stock market and the world financial mess have too many bizarre things going on to regard current pricing on these stocks as “low” or “high”. I like those companies and will probably trade them again at some point, but it will be a trade only.
That’s a screaming price!
How can there be a unified market for “paper” gold? I would think that 1ozT of paper gold from some companies would be worth a lot more than 1ozT of paper gold from others. So what is the meaning of a “market price” for 1ozT of “paper” gold?
Ammunition would be more liquid and probably hold more value in such a dire scenario.
Good point. Probably need both.
Indeed. I’m thinking about getting a gun... I’m thinking a .45 or a 22. (Though, to be honest I _LIKE_ the PS-90!)
Just a thought. Much lighter weight than gold too.
Assuming two things: You can actually buy such drugs before the crash, and you pick the drugs you end up needing.
As for choosing the right ones if it's for personal needs you ought to know what those are. Anti-biotics are just basic. As an investment any drug that is a necessity and has a high demand would be valuable. Insulin is the first thing I think of but there are many others that fit that bill.
There is ample evidence that many institutions are hoarding gold. Given the hoarding, one would expect the price of gold to be higher. However, the interesting thing is that a lot of institutions are forced to sell gold to cover recent market losses.
Goldfish?
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