Physical Precious Metals Sales Surge

[FarmerD]

During last week’s gold massacre, I kept checking the premiums gold dealers are charging.  Weirdly, premiums have actually risen the more precious metals have dropped in price, particularly for silver.  At Goldmart, Silver Eagles premiums went from $2.59/coin to $4.49/coin.  Silver Maples from $2.09 to 3.79, and now all junk silver is sold out.  That says that even with PM prices dropping off the table, physical PM sales shot up. Apparently the massive selling by Wall Street paper gold gamblers and margin traders overwhelmed physical sales.

US Mint Sells Record 63,500 Ounces Of Gold In One Day
http://www.zerohedge.com/news/2013-04-1 ... ld-one-day

I remember a January article by Gonzalo Lira which basically said there are actually 2 markets for PM’s.  Whether you like him or not I think there is some merit to this argument

Why Isn’t Gold Higher
Hint: Because it’s the Credit Default Swap of the Next Financial Crisis

“….as more than one precious metals commentator has pointed out, there is more paper issuance of gold than actual gold bullion.

What does this mean? It means that the global precious metals markets are essentially a game of musical chairs, with far fewer seats than players—far less gold than gold holders.

And market participants collectively know this. Which is why they don’t trust their counterparties. Which is why gold isn’t rising like a shot.

There is only one market in gold, not two. There is no way to segregate gold bullion holders from gold certificate holders, and thus create two markets, one for the real thing, one for the paper thing.

Thus the current spot price of gold is reflecting market uncertainty as to who has actual gold, and who has worthless paper certificates of gold.http://gonzalolira.blogspot.com/2013/01 ... igher.html

Though most of this rout seems to be due to Wall Street gamlers/speculators, one has to wonder  how much of the current selloff is attributable to counterparty risk.

[Libertarian666]

During last week’s gold massacre, I kept checking the premiums gold dealers are charging.  Weirdly, premiums have actually risen the more precious metals have dropped in price, particularly for silver.  At Goldmart, Silver Eagles premiums went from $2.59/coin to $4.49/coin.  Silver Maples from $2.09 to 3.79, and now all junk silver is sold out.  That says that even with PM prices dropping off the table, physical PM sales shot up. Apparently the massive selling by Wall Street paper gold gamblers and margin traders overwhelmed physical sales.

US Mint Sells Record 63,500 Ounces Of Gold In One Day
http://www.zerohedge.com/news/2013-04-1 ... ld-one-day

There's nothing weird about that at all. In fact, I expected exactly that result when I saw the recent raid by the PPT. Whenever they do that, strong hands snap up bargains in the physical market, which causes shortages of actual metal, leading to higher premiums. In 2008 (IIRC), I had some available funds, but when I went to buy gold, the only physical metal I could find were 1 oz. wafers at Kitco, for which I had to pay 10%(!) over spot, or $880 each. A few days later, they were sold out of those too.