Gold Bullion Demand Surges - Perth Mint and U.S. Mint Cannot Meet Demand
- Perth Mint sees surge in demand and cannot keep up with demand
- “Our biggest restriction is the amount of unrefined gold we’re getting in from producers”
- Very high demand for Perth Mint coins, bars coming from Asia, U.S. and Europe
- U.S. Mint sees highest sales of gold coins in over 2 years
- U.S. Mint restrictions on silver coins due to very high demand
- Gold sentiment has moved from despondency to depression (see chart)
- Current negative sentiment despite strong demand is good contrarian indicator
Depressed prices have led to the usual market response, a surge in physical demand for coins and bars globally.
Treasurer for the Perth Mint, Nigel Moffatt has said that the mint has seen a surge in demand for physical gold since
the price dropped below $1,100 per ounce.
In an interview on Bloomberg’s “First Up” show he said “Our biggest restriction is the amount of unrefined gold we’re
getting in from producers”, adding, “everything we get in is going straight out the door as soon as we refine it.”
He does not see the price of gold dropping a whole lot further given the cost of production, although he believes that
we may see a fall to $1000 before the price moves upwards again. It now costs on average around $1,000 to mine one ounce
of gold.
On July 7 The U.S. Mint was forced to suspend sales having exhausted its inventory which suggests there was either a
shortage in physical silver blanks or of physical silver bullion that makes the blanks. However, they have placed
restrictions on sales and sales remain “allocated” to wholesalers in order to maintain some supply.
There has been an unprecedented barrage of negative publicity towards gold in recent weeks. This negativity is not
supported in any way by the activity in the markets for physical gold where shortages are showing up despite falling
prices.
We believe this to be a good contrarian indicator that gold’s recent bout of weakness is drawing to a close and that the
bull market may be set to resume once the current period of weakness runs its course and the forces of supply and demand
reassert themselves.
Shortages, delays in delivery and rising premiums suggest that the long awaited short squeeze may be developing.
ENDS