The Silver Bug: Intense demand for physical gold has continued into 2014. The U.K Royal Mint has recently stated that due to the continued low prices in the precious metals, they have experienced “exceptional demand”.
This “exceptional demand” has lead to the U.K Royal Mint completely selling out of its sovereign gold coins. This story as reported by Bloomberg enforces a point I, and others in the precious metals community, have pointed out since the price plummeted last April. There are two markets in precious metals: the fake paper market and the real physical market. The paper market has been horrendous, while the physical market has seen incredible demand, which shows no sign of slowing down. Higher prices would be the remedy for this.
Below is a brief excerpt from the Bloomberg article showing how lower prices have led to incredible physical demand:
“The U.S. Mint sold 56,000 ounces of American Eagle gold coins in December, the most since June and contributing to a 14 percent gain in annual sales, data on its website show. Australia’s Perth Mint sold 41 percent more gold in 2013 and Turkey’s imports climbed 64 percent last month to the highest since July, data on the Istanbul Gold Exchange’s website show.
“Since the dip in the price of gold we have seen increased demand for our gold bullion coins from the major coin markets, and this presently shows no sign of abating,” the U.K.mint said in the statement. “The Royal Mint continues to supply to its customers and is increasing production to accommodate the higher demand.”
Coin stock availability has gone up and down in the past, according to market demand, the mint said in a separate e-mail. Gold climbed to a three-week high of $1,248.51 onJan. 6 as physical demand increased, particularly in China.”
Reports are coming in that inventories are being drained around the World. The question is how long can these artificial prices be maintained at these levels? Demand is intense and shows no signs of abating.