Gold Coins (US Mint) In Q1 2012 Show "No Hysteria and No Bubble"

Published in Market Update  Precious Metals Update  on 3 April 2012

By Mark O’Byrne


Gold’s London AM fix this morning was USD 1,674.75, EUR 1,254.03, and GBP 1,044.17 per ounce. Yesterday's AM fix was USD 1,664.00, EUR 1,246.16 and GBP 1,037.54 per ounce.

Silver is trading at $32.95/oz, €24.70/oz and £20.58/oz. Platinum is trading at $1,657.25/oz, palladium at $655/oz and rhodium at $1,350/oz. 


Cross Currency Table – (Bloomberg)

Gold rose $8.80 or 0.53% in New York yesterday and closed at $1,677.00/oz. Gold traded sideways to slightly higher in Asia but has fallen in European trading to $1,674/oz. 

Markets may get direction from clues regarding the outlook for the U.S. economy and hints regarding monetary policy from the minutes of the last U.S. Federal Reserve policy meeting.

Fed officials on Monday signalled little appetite for further monetary steps to stimulate U.S. growth. However with the US recovery fragile, monetary policy is set to remain extremely loose and negative interest rates will continue for the foreseeable future bolstering gold.

Physical demand remains lack lustre with markets in China closed for a public holiday (reopening Thursday) and with the demand drop from the Indian jewellery strike.

Gold’s price resilience is impressive with the global number one and two purchasers of the yellow metal not contributing to global demand in recent days.

Gold Coins (US Mint) In Q1 2012 Show "No Hysteria and No Bubble"

Dr. Constantin Gurdgiev, a non Executive member of the GoldCore Investment Committee, has again analysed the data of US Mint coin sales in  Q1 2012 and has looked at the data in their important historical context going back to 1987. 

He finds that the data regarding gold coin sales in Q1 2012 confirms that there is “no hysteria and no bubble here”.

Dr Gurdgiev finds that while volume of sales in Q1 2012 fell from the quite high levels seen Q1 2009, 2010 and 2011, demand was much stronger than “in the pre-crisis average for 2000-2007.”

Also of note is the fact that despite the worst financial and economic crisis the modern world has ever seen being experienced since 2008 demand has remained below the record levels seen in the aftermath of the Asian debt crisis and unfounded Y2K concerns. 

Interestingly, Dr Gurdgiev finds that the historic data (since 1987) shows that the "gold price has virtually nothing to do with demand for US Mint coins - in terms of volume of gold sold via coins."

He finds that the demand for gold coins has little to do with the price in general and that “something other than price movements drives demand for coins”.

This is something we have long asserted. Gold coin buyers are some of the least speculative participants in the market. They are safe haven and store of wealth buyers who are not guided by price and by making money. 

Their motivation is one of financial insurance and of getting a “return of capital rather than return on capital.”

Dr Gurdgiev concludes that “in recent months demand for gold has been oscillating around the historic trend (as opposed to resting above that trend in August 2008-August 2011 period) is the good news - the current levels of demand are historically sustainable, trend reversion-consistent and show neither hype, nor panic buying.”

This is further evidence that there are little signs of “irrational exuberance” or speculative fervour in the gold market. It debunks the popular perception of a “gold rush” with the “man in the street” or retail investor “piling into gold.”

Nothing could be further from the truth and gold and particularly gold bullion remains owned by a tiny minority of people who are more aware of monetary and systemic risk than the broader public.

Click to read full research and charts from Dr Gurdgiev at True Economics Blogspot.  

OTHER NEWS 

(Bloomberg) -- Morgan Stanley Bullish on Gold, Crops, Sees Drop for Crude Oil 

Morgan Stanley said it remains bullish on the outlook for gold, corn and soybeans, while the bank sees a risk for further declines in crude oil.

Gold will continue to benefit from investors seeking a haven, especially with low interest rates, the bank said today in an e-mailed report. Prices probably will average $1,825 an ounce this year and $2,175 in 2013, the bank said.

Tight supplies of corn before the U.S. harvest will boost prices at least through the early first half of this year, Morgan Stanley said. Corn may average $6.60 a bushel this year, the bank said.

Brent crude oil may average $105 a barrel this year, and may drop as low as $85, Morgan Stanley said.

(Bloomberg) -- Jewelers in India Extend Strike for 18th Day Over Higher Taxes 

Jewelers in India, the world’s biggest bullion buyer, extended a strike for an 18th day demanding the withdrawal of a 1 percent excise duty on non- branded gold ornaments, an industry group said.

About 90 percent of stores across the country are closed, Bachhraj Bamalwa, chairman of the All India Gems & Jewellery Trade Federation, said by phone today.

(Bloomberg) -- India to Set Rules on Gold Jewelry Excise, Economic Times Says

India’s finance ministry will announce new rules for the levy of excise duty on unbranded gold ornaments, the Economic Times reported, citing a ministry official it didn’t identify.

A circular on the duty framework will be issued in a few days to provide some relief to striking jewelers, the newspaper said, citing the official.

Finance Minister Pranab Mukherjee announced a 1 percent excise levy on unbranded jewelery in the March 16 budget, triggering protest from retailers, the newspaper said.

(Bloomberg) -- Turkey’s Gold Imports Were 2.91 Tons in March, Exchange Says 

Turkey’s gold imports were 2.91 metric tons in March, the Istanbul Gold Exchange said on its website. Silver imports were 20.9 tons last month, the data show.

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NEWS

Business Week
Gold May Extend Gain as U.S. Growth Offsets Weaker India Demand

Reuters
Gold edges up on dollar weakness; policy cues eyed

Reuters
Europe stocks, Brent halt brisk rally

Wall Street Journal
Spain Faces Risks in Budget Refit

COMMENTARY

Casey Research
The Critical Number for Gold

Zero Hedge
Marc Faber: "I still recommend to hold gold"

Bloomberg
Euro Was Flawed at Birth and Should Break Apart Now

Bloomberg
The Birth of U.S. Fiat Currency

King World News
Gold Bull Market Set Up for a Spectacular Move


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