Gold Investments Market Update – Bundesbank Favours Gold while U.S. Government Mint Sells Out of Gold Coins and Suspends Sales

Gold

Gold finished trading in New York yesterday at $833.30, up $23 and silver was up 73 cents to $13.76. Gold and silver remained firm in Asian trading and have given up some of the gains in early European trading. Gold is trading at $831.30/831.70 per ounce (1100 GMT).

Gold surged yesterday on concerns regarding Russia – NATO tensions, surging oil and commodity prices and confirmation that the US Mint is suspending sales of American Eagle gold bullion coins (1 ozt) due to an inability to meet surging demand (see News and Commentary). Gold was significantly oversold and this was as expected given the myriad of strong fundamental macroeconomic and geopolitical factors favouring gold at the moment. These strong fundamentals could see gold have its strongest weekly gain in 7 years

The shortage in the physical bullion markets is perhaps the most important story facing the precious metals markets today. Bullion retailers, wholesalers, bullion banks (such as UBS yesterday) refiners and mints (US and Canadian) have been experiencing difficulty in supplying their respective customers due to an unprecedented level of demand. The fact that for the first time since its inception, the US Mint, part of the Treasury Department, halted the sale of gold bullion coins last Friday is highly important and was reported on by the Wall Street Journal, Bloomberg, Bloomberg TV, the Financial Times, Reuters and regionals such as the LA Times.

Buyers of bullion coins and bars are long term buyers and diversifiers most of whom buy bullion as financial insurance against macroeconomic and systemic risk. Very few will be selling their bullion until the current global economic crisis has abated in a number of years time and when gold is likely above its inflation adjusted record high of over $2,300 per ounce.

Gold and particularly silver are tiny markets in terms of global stock, currency and bond markets, and if even a fraction of the big money internationally picks up on this story and decides to take positions in the precious metal markets (which seems very likely) we will see a surge in prices that will make the 1970s look very tame.

Also of importance is the news that the Bundesbank has reaffirmed its belief in the importance of retaining significant holdings of gold bullion in their monetary reserves.

The Bundesbank has said that gold reserves are more important than before and has rejected calls that it should sell some of its gold reserves to help boost the slowing German economy. The Bundesbank said that financial and political uncertainty make the reserves even more important than before. The Bundesbank is the world’s second-largest holder of gold after the US Federal Reserve, and has sold just 20 tonnes out of total reserves of over 3,000 tonnes in the past five years.

“Gold sales are not a suitable way to sustainably consolidate the public accounts,” the Bundesbank said after a query about trade union proposals that it sell gold to fund some of a 25 billion euro ($37 billion) economic stimulus package. “National gold reserves have a confidence and stability-building function for the single currency in a monetary union. This function has become even more important given the geopolitical situation and the risks present in financial market developments.”

Today’s Data and Influences

Focus will remain on the dollar, oil and gold markets ahead of the key note speech from the Fed’s Bernanke later today. He is due to speak on the topic of financial stability. He is not expected to provide any fresh insights on the policy front. There are no US data due for release today so movements in oil and stocks are likely to influence direction.

Mark O'Byrne

Also on news-goldcore-com

Videos

New Russia/China Gold Backed Currency Imminent

This Little Known Indicator Says Gold Is Still Set For A Major Rally In 2022

David Hunter Stock Market Prediction – DOW 45,000 In 2022

Blog posts

New Russia/China Gold Backed Currency Imminent

We were delighted to welcome Simon Hunt to GoldCore TV this week. David Russell interviewed the expert economist and global observer to ask him about the Russia-Ukraine war, central bank tightening, and the future of the US Dollar hegemony. This is a sobering interview where investors will be interested to hear his take on market […]

READ MORE

Is Gold Starting to Behave Itself?

Gold is doing what it is supposed to do!  Equity markets are tumbling, “NASDAQ 100 Rout Erases $1.5 Trillion in Market Value in 3 Days” reads one Bloomberg headline. The big names such as Apple lost over US$225 billion, Microsoft almost US$200 billion, Amazon and Tesla each lost US$175 billion market value over the three […]

READ MORE

This Little Known Indicator Says Gold Is Still Set For A Major Rally In 2022

If you’ve been looking at the gold and silver prices lately and wondering when the broad-based asset sell-off will take the pressure off, then you will enjoy this week’s offering on GoldCore TV. This week David Russell has been speaking to Patrick Karim of NorthStarBadCharts.com, the website that provides technical analysis for the inspired. Patrick […]

READ MORE

Featured

Rick Rule- Should You Invest In Gold 2022

READ MORE

Jim Rogers- The Worst Bear Market is Coming

READ MORE
Newsletter
Category
Archives
Popular

No posts available

Videos

New Russia/China Gold Backed Currency Imminent

This Little Known Indicator Says Gold Is Still Set For A Major Rally In 2022

David Hunter Stock Market Prediction – DOW 45,000 In 2022

Blog posts

New Russia/China Gold Backed Currency Imminent

We were delighted to welcome Simon Hunt to GoldCore TV this week. David Russell interviewed the expert economist and global observer to ask him about the Russia-Ukraine war, central bank tightening, and the future of the US Dollar hegemony. This is a sobering interview where investors will be interested to hear his take on market […]

READ MORE

Is Gold Starting to Behave Itself?

Gold is doing what it is supposed to do!  Equity markets are tumbling, “NASDAQ 100 Rout Erases $1.5 Trillion in Market Value in 3 Days” reads one Bloomberg headline. The big names such as Apple lost over US$225 billion, Microsoft almost US$200 billion, Amazon and Tesla each lost US$175 billion market value over the three […]

READ MORE

This Little Known Indicator Says Gold Is Still Set For A Major Rally In 2022

If you’ve been looking at the gold and silver prices lately and wondering when the broad-based asset sell-off will take the pressure off, then you will enjoy this week’s offering on GoldCore TV. This week David Russell has been speaking to Patrick Karim of NorthStarBadCharts.com, the website that provides technical analysis for the inspired. Patrick […]

READ MORE

Featured

Rick Rule- Should You Invest In Gold 2022

READ MORE

Jim Rogers- The Worst Bear Market is Coming

READ MORE