“They Don’t Want Certificates, They Want the Real Product” – CME President on Gold

Today’s AM fix was USD 1,469.50, EUR 1,113.60 and GBP 942.95 per ounce. 
Yesterday’s AM fix was USD 1,472.75, EUR 1,126.13 and GBP 950.04 per ounce.

Gold climbed $5.60 or 0.38% yesterday to $1,476.00/oz and silver finished down 0.27%.


Cross Currency Table – (Bloomberg)

In a remarkably candid interview, the President and Executive Chairman of CME Group Inc, Terrence Duffy,  told Bloomberg TV that today gold buyers "don’t want certificates … They want the real product".  

When asked by Cristina Alecci at the Milken Institute 2013 Global Conference in Los Angeles on Bloomberg Television’s "Street Smart."about gold, Duffy says

"What’s interesting about gold, when we had that big break two weeks ago we saw all the gold stocks trade down significantly, we saw all the gold products trade down significantly, but one thing that did not trade down, was gold coins, tangible real  gold.  That’s going to show you, people don’t want certificates, they don’t want anything else.  They want the real product."

"I think that is the value of gold."

"Whether you are going to own mining stocks are anything else. I think the coins are probably of more value than anything else."

The CME Group Inc or Chicago Mercantile Exchange is the world’s largest futures exchange company. It owns and operates large derivatives and futures exchanges in Chicago and New York City, as well as online trading platforms. It also owns the Dow Jones stock and financial indexes, and CME Clearing Services, which provides settlement and clearing of exchange trades.

The CME’s President’s comments were noticed by Mike Krieger of Liberty BlitzKrieg and featured on Zero Hedge.

Slowly but surely, gold coins and bars value as safe haven assets, unlike gold futures and other paper and digital forms of gold, is being realised.

All paper forms of gold, particularly leveraged ones, should be avoided due to counter party and systemic risk. 

The exception to the rule regarding certificates are Perth Mint Certificates. They are in effect warehouse receipts which are fully backed by physical gold, silver and platinum – ounce for ounce – from the AAA rated government of Western Australia.

Mints from the U.S., Great Britain and Australia have all seen a surge in demand after gold futures fell 13% in mid April.

The U.S. Mint’s gold coin sales have reached their highest level since December 2009.


Gold in USD, 5 Year – (Bloomberg)

Gold coin sales at the U.S. Mint in March were 62,000 ounces, while in April sales reached 209,500 ounces and back in December 2009 they recorded 231,500 ounces of coins sold.

Silver-coin sales in April were 4.2 million ounces up from 3.36 million in March.


Silver in USD, 5 Year – (Bloomberg)

The price drop has shifted investor sentiment out of gold backed ETF’s and into physical gold.

The yellow metal has fallen 12% this year, even after an 11% gain from $1,321.50/oz on April 16.

Demand was so strong after the price retracement that the U.S. Mint ceased sales of its .10/oz gold coins on April 23.


Platinum in USD, 5 Year – (Bloomberg) 

In Australia, consumers were cueing in lines ½ of a kilometre to purchase gold coins.  In jewellery stores in China and India they had their stock depleted in a day, according to The World Gold Council.

The heightened demand brings premiums that investors are paying to have the precious metal in their hands. 

In India they are paying 5 times the amount before the price drop in April.  In Singapore and Hong Kong consumers are paying nearly $3/oz, said to Ng Cheng Thye, the head of precious metals at Standard Merchant Bank (Asia) Ltd.

In the U.S., the Arizona Senate passed legislation to make gold and silver accepted as currency, and it now goes to the governor for approval. This is a further step by citizens to protect themselves against the lack of control and collusion in the current international monetary system.


Palladium in USD, 20 Year – (Bloomberg)

NEWS
U.S. Mint Sales of Gold Coins Jump to Highest in Three Years – Business Week

Gold edges down, investors cautious ahead of Fed – Reuters

Gold ETP Holdings Cap Record Decline Wiping $17.9 Billion – Bloomberg

Arizona lawmakers pass bill making silver, gold legal tender – Reuters

COMMENTARY
CME Chairman On Gold: “People Don’t Want Gold Certificates, They Want the Real Product” – Bloomberg

‘There will be more wealth confiscation, without a doubt’ – The Telegraph

The ‘monarchs of money’ and the war on savers – CBC News

Eurozone risks Japan-style trap as deflation grinds closer – The Telegraph

China Goes Gold Crazy. Why Now? – Forbes

Structure in Gold and Silver Spread Fluctuations – Social Science Research Network

For breaking news and commentary on financial markets and gold, follow us on Twitter.

 

Mark O'Byrne

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