News Header

 

Demand for Physical Gold and Silver Remains Strong

Release Date: 
Friday, June 7, 2013

Gold prices breached $1400 per ounce this week before falling on Friday to close at $1385.60, down $3.70. Silver continued to trade within a fairly narrow range before closing slightly lower at $21.79, down $0.58 for the week.

Silver To the Hundreds, Gold to the Thousands, Says Embry

John Embry, Chief Investment Strategist for Sprott Asset Management LP, recently celebrated his 50 year anniversary as a portfolio management specialist. As he reflected on the changes he’s seen over fifty years, Mr. Embry told King World News why he sees significantly higher gold and silver prices.

“I firmly believe we are going to pay an enormous price for what’s going on now because I don’t think there is any price discovery going on in these markets.  It’s all being manipulated to the extent that they are trying to create an impression with the public that everything is alright, and as you know, everything is anything but alright…But I’m focused on the fact that there is hundreds of dollars higher coming in the price of silver and thousands of dollars higher still to come in the gold price.The bottom line is there is minimal on the downside at this point and the probability of the upside occurring is 98%.   So this is the end game, and I’m glad I’m playing my hand and not theirs because I firmly believe that our hand is the winning hand.” (“Gold & Silver Soaring As Embry Hits 50 Years In The Business,” King World News, 6//3/13.)

Hedge Fund Manager: “No Better Time to Buy Gold”

Doug Kass, president of Seabreeze Partners Management Inc., offered his reasons why the gold bull market should continue including global currency weakness, “inevitable” inflation, and rising physical demand for gold. “There is probably no better time to consider diversifying one's portfolio into a depressed asset class (e.g., gold) than when the crowd is optimistic about a vigorous and self-sustaining global economic recovery and when the world's stock markets are at record high prices," (“DOUG KASS: This Is A Great Time To Buy Gold,” Business Insider, 6/3/13.)

India’s Gold Consumption Expected to Rise

Demand from India, the world’s largest consumer of gold, is expected to rise by 150% during the second quarter of 2013 as compared to one year ago, said the World Gold Council. This increase, which the Wall Street Journal states is supported by government data, is more than expected and suggests the recent price drop is having a longer term effect on demand. While some analysts have speculated demand may be abated in the future, “many investors are wagering that moment is far off. Hedge funds and other money managers increased their net bullish gold bets by a third to about $6.6 billion in the week ended May 28, according to the U.S. Commodity Futures Trading Commission.” (“A (Gold) Key to Metal's Lot,” WJS, 6/3/13.)

China May Increase Gold Reserves to 10%

Financial planner and financial newsletter editor Michael Lombardi wrote this week about central bank purchases and their role in support gold prices. “The gold bears fail to realize there are fundamental forces at play behind the gold bullion bull market. Central banks around the world are looking at gold bullion as an alternative to the currencies they hold in their reserves. It is well documented in these pages how major central banks like the ones from Russia and Turkey continue to buy gold bullion.”

Mr. Lombardi also noted that if China increased its gold reserves, which currently account for only 1.6% of its total reserves, to 10%, it would require another $344 billion worth of gold. China increased its reserve by $128 billion in the first quarter, making it the biggest increase in reserve since the second quarter of 2011… My bet is that most of that reserve is in U.S. dollars, which China would desperately like to get rid of. With that said, China doesn’t have as much gold bullion to back its reserves as countries like the U.S., Germany, and France have. As a matter of fact, the Chinese central bank only holds 1.6% of its reserves in gold bullion, compared to 75.6% for the U.S. and 72.0% for Germany… To bring its total gold bullion holdings to 10% of its reserves, the central bank of China would need to allocate about $344 billion of its reserves to buy gold bullion.” (“China to Buy $344 Billion Worth of Gold?” Yahoo! Small Business Advisor, 6/6/13.)

Demand for Physical Gold and Silver Remains “Unprecedented”

The Director of the U.S. Mint reported that demand for physical gold and silver continues: “Demand right now is unprecedented. We are buying all the coin (blanks) they can make…” (“U.S. bullion coin demand still at 'unprecedented' levels : Mint,” Reuters, 6/5/13.)

 

Goldline provides a wrap-up of the week's precious metals news along with important commentary on the American Advisor Week in Review audio program. Click here to listen.

 

News Footer

 

†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

You should review Goldine's Account Agreement along with our risk disclosure booklet, Coin Facts for Investors and Collectors to Consider ®, prior to making your purchase. Goldline has a spread or price difference between our selling price, called the "ask", and our buy-back price, called the "bid". That spread varies depending on coin or bar you acquire. Spreads on 1 oz bullion coins, 90% silver dimes and quarters, and one ounce and larger bullion bars are 13%. All other coins have a spread of 28%. There is also a 1% liquidation fee when you sell your coins back to Goldline. The market must go up enough to overcome this spread before an actual profit is achieved. Precious metals and rare coins can increase or decrease in value. Past performance does not guarantee future results. Coins are a long-term, three- to five-year, preferably five- to ten-year investment. We believe precious metals are suitable for 5% to 20% of the average investment portfolio though others may recommend a different percentage.

To receive free information package on gold and precious metals investing, call Goldline at 1-800-963-9798.