Getting Physical Gold

Getting physical gold and silver bullion is getting impossible again. This seems like another nail in the deflationary coffin-as if that were really needed. That argument by the way is very wishy washy, highly dependent on the definition of inflation. One definition of inflation has do to with increasing the raw amount of money in the economy. Another definition is the amount of money issued by banks in the form of loans, but it's all just stagflation to you and me because no matter how much money they supply the system with the price of your house is still going down, while the price of gold and silver (is constant I know, but takes more paper money to buy it) keep going up. But the thing about the physical shortage of precious metals is how over the top it all is as you can read for yourself in the Australian.

With retail and wholesale clients around the world stocking up on the precious metal, the Perth Mint has been forced to suspend orders.

As the World Gold Council reported that the dollar demand for gold reached a quarterly record of $US32 billion ($50.73 billion) in the third quarter, industry insiders said the race to secure physical gold had reached an intensity that had never been witnessed before.

The Perth Mint is not the first mint forced to shut down due to a lack of the physical shiny stuff. As we all remember the US Mint was forced to do the same for the same reason in September of this year. It was considered unprecedented at the time.

Gold and Silver investments director Mark O'Byrne said the supply of gold and silver
available for small retail investors suffered a dramatic deterioration within hours on Friday, as wholesalers reported that government mints and refiners, the primary suppliers of the metals, had stopped offering new supplies.

‘‘It’s absolutely unprecedented,” said O’Byrne, who said the shortages were likely to drive up the costs of gold and silver in the secondary market.

Now back to the Australian Perth Mint piece.

Perth Mint sales and marketing director Ron Currie said the unprecedented demand had forced the Mint to cease orders until January, with staff working seven days a week, 24-hour days, over three shifts to meet orders.

He said Europe was leading the demand, with Russia, Ukraine, Middle East and US all buying -- making up 80 per cent of its sales. One European client purchased 30,000 ounces for $33 million.

"We have never seen this before and are working right at capacity. And we are seeing it from clients in the shop buying one ounce, right up to 30,000 ounces from overseas clients," Mr Currie said.

And you can argue many things, but never that the capacity will never exceed the supply. On the COMEX however they let you leverage, or naked short sell, resulting in many short positions that can not be filled. It may happen that with physical demand so high that many of the December contract holders will demand delivery of a the stuff in warehouse pile instead of simply rolling over the contracts. But if you still don't believe that the COMEX is rigged, explain why it is that gold and especially silver have cratered since March of this year even as the rare metals got rarer!

Robert Jaggard, manager of bullion and rare coins dealer Jaggards, said business had picked up strongly and he expected it to increase further.

"All around the world there has been a heavy run on physical gold and there is a shortage of supply," he said.

Mr Jaggard, who has been dealing in gold for 40 years and is an agent for the Perth Mint, said some clients were buying up to $1million worth of gold, paying a premium above the spot price.

Late yesterday afternoon, spot gold in Sydney was trading at $US747.30 an ounce, up $US8.15 on Thursday's local close.

Yea you don't pay over the spot price if you can just go to the spot market, COMEX in this case, and buy it.