30
Jun
2015

Greece Shows Importance of Gold as Europeans Buy Coins and Bars

– Demand for physical gold from Europeans surges
– Greek ATMs limit withdrawals to €60 per day
– Greeks panic buy food, fuel and medicine
– European elites threaten Greece with expulsion
– Gold not subject to capital controls or “bail-ins”

British Gold Sovereign Gold Coin

British Gold Sovereign Gold Coin

 

Demand for gold coins and bars from European investors has increased significantly in the past month as the Greek crisis enters a new phase.

As reported in our statement – to which Bloomberg referred in their piece – we saw a significant increase in demand from the U.K. and Ireland yesterday where sales of coins and bars were three times the average of the previous three Mondays.

The Royal Mint said that Greek demand for coins in June was double the average for the last five months and the U.S mint saw the highest sales of bullion coins since January.

Bloomberg report that many buyers want to store their gold outside of the Eurozone, citing Switzerland as an example. We advise our clients to do the same and many have opted for storage in Singapore also.

As the crisis in Greece accelerates the value of owning gold will become more apparent to everyday people.

What is happening in Greece today may well await the citizenry of other developed economies tomorrow – as recently warned by well placed observers in notable institutions such as HSBC, Goldman Sachs and Fidelity.

Greek banks remain closed and ATM withdrawals have been limited to €60 per day. There has been panic buying of various essentials such as food, fuel and medicines across Greece, as reported by the New York Times.

This is in anticipation of chaos and disruptions of supply chains should the country be forced out of the euro and onto a much depreciated drachma.

European elites have threatened Greece with expulsion from the euro currency should Sunday’s referendum – on using austerity as a tool to deal with Greece’s unpayable debt – return a “no” vote.

Greece has fought back with Finance Minister Yanis Varoufakis telling the Telegraph,

“We are taking advice and will certainly consider an injunction at the European Court of Justice. The EU treaties make no provision for euro exit and we refuse to accept it. Our membership is not negotiable.”

What happens next in Greece is unsure. What is assured is the insurance gold will provide going forward. Physical gold, held outside the banking system, is not subject to capital controls.

With the ECB reneging on its responsibility as lender of last resort – not the first time it has used its power to political ends in Greece – Greek banks may soon be forced to “bail-in” deposits – i.e. confiscate the cash of their customers.

American Silver Eagle 1 0z Coin

American Silver Eagle 1 0z Coin

 

Those holding cash “under the mattress” and physical gold and silver coins will be provided a degree of security in such an environment.

Precious metals can be used directly in exchange for goods or are readily converted to cash for the same purpose while retaining their store of value until required.

Should the Greek crisis morph into a full-scale euro-crisis – if, for example, Credit Default Swaps were triggered which provoke a derivatives crunch – gold and silver would still enable you to secure life’s necessities if the value of one’s cash savings should collapse.

The euro, like all paper and digital currencies, is backed by nothing more than the faith in the institution that issues it. Faith in central banks is rapidly evaporating.

Physical gold, on the other hand, is a time-tested and academically proven store of value or safe haven in times of crisis. It will likely be recognised as such by the wider public in the coming months and years.

Must Read Guide:  7 Key Gold Must Haves

MARKET UPDATE

Today’s AM LBMA Gold Price was USD 1,175.00, EUR 1,053.01 and GBP 747.08 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,176.50, EUR 1,060.82 and GBP 749.10 per ounce.

Gold climbed $5.10 or 0.43 percent yesterday to $1.179.20 an ounce. Silver slipped $0.08 or 0.51 percent to $15.72 an ounce.

Gold in U.S. Dollars – 5 Year

Gold in Singapore for immediate delivery ticked lower by 0.3 percent to $1,176.35 an ounce near the end of the day. Gold is on track for a 1 percent decline this month.

Even with Greece just hours from defaulting on its 1.6 billion euro loan from the IMF, safe haven bids for gold are weak. The U.S. dollar gained 0.4 percent against other currencies, while U.S. and Asian stock markets rose.

Greek Prime Minister Alexis Tsipras is calling for a bailout referendum on July 5. The Greek drama is not finished.

In late morning European trading gold is fell 0.20 percent at  $1,176.62 an ounce. Silver fell 0.10 percent at $15.71 an ounce and platinum rose 0.19 percent at $1,079.00 an ounce.

Breaking News and Research Here

 

 

Mark OByrne

  • socalbeachdude

    Nice to see preposterously overpriced junk like gold and silver plunging. Silver is now downto $15.56 and is only $7.56 above its mean of $8.00 per ounce which it will soon blow right down through whereas gold is about $715 above its mean of $456 per ounce which it will rapidly blow down through and head lower on its way towards its official US government price of $42.22 per ounce.

    • President Borat

      It costs $1200 per ounce to make new gold so that seems impossible.

  • socalbeachdude

    As Barry Ritholtz stated so eloquently in response to similar bogus assertions as to the long term value of gold, “The simplest answer to your amazingly stupid question my friend is that if you had a $1 bill in 1793 you would put it in a bank or buy a US T-bill which promises to return it back to you with interest. Even at 4% p.a. which is well below the 222 year average yield on US bonds, you would have today about $5,812. Whilst if you had 1 oz of gold in 1783, at best you would have 1 oz of gold today. In fact, you would probably have paid the entire value of your 1 oz in vault fees and costs over 222 years.”

    http://www.ritholtz.com/blog/w

    Gold at today’s preposterously absurd MANIC SPECULATIVE BUBBLE PRICES is certainly not in any way a “store of wealth” BUT RATHER A GUARANTEED CATASTROPHIC LOSS LEADER as it continues its reversion towards and to its mean of $456 per ounce and then heads lower, and it already has a REAL 38% OF LOSS IN VALUE FROM ITS HIGH OF APRIL 2011.

    • President Borat

      Yeah well that’s about what an ounce of gold is actually worth so it’s not like a t bill is any better. besides the bill would carry taxes and the gold would be just the same gold.
      Even compared to the current suppressed value of gold, an investment that merely triples in over 200 years is paying a very lkw rate. There were many times over that period when holding that ounce of gold was better than the tbill: for example from 2000 AD until even today. Stupid argument.