Thursday, April 18, 2013

Scramble for Physical Gold and Silver Continues

The scramble for physical Gold and Silver continues. After I reported on Tuesday night that there appeared to be a rush for precious metals occurring, news has continued to flow in. I've lost track of many articles read over the last two days, but notably Perth Mint reported buying activity in excess of double the week prior:
“The volume of business that we’re putting through is way in excess of double what we did last week,” Treasurer Nigel Moffatt said, without giving precise figures. “There’s been people running through the gate.” SMH
Zero Hedge reports on a record number of Gold coins sold at the US Mint:
According to today's data from the US Mint, a record 63,500 ounces, or a whopping 2 tons, of gold were reported sold on April 17th alone, bringing the total sales for the month to a whopping 147,000 ounces or more than the previous two months combined with just half of the month gone. Zero Hedge
And just released minutes ago was this transcript from an ABC report earlier today:
"It's hot, stuffy and cramped. I'm standing in a crowd of about 70 people in a hallway outside the Australian bullion company in Sydney's CBD. This quiet chaos is the new gold fever."

"Every now and then a woman opens the door to let out a customer. The crowd surges forward only to be pushed back outside. Those at the front say they've been waiting FOR at least two hours."

"ELLESA THROWDEN: According to the Australian bullion company's chief economist Jordan Eliseo, Mr Waldock makes up just 1 per cent of customers today who are selling.

JORDAN ELISEO: Of all the traffic that we've had over the last few days, and we've had queues like this since Monday, as well as our internet and phone orders running off the hook, the ratio between people buying and selling physical is, and this is no exaggeration, basically 99 to one."
I have heard from a follower on Twitter that normal activity in this store is around 2-3 customers, compared with a lineup of 70 outside the store today and apparently they had no stock so customers were having to pay in advance to pick up later.

Ainslie Bullion have had to close their web store, with this excerpt from the message on their home page:
It is with regret that the web shop is closed until further notice.  We will reopen as soon as possible.  This decision has not been taken lightly.  If we don’t have it, we don’t sell it.  We would not close the web shop if we had sufficient stock to offer for sale, no matter the price.

Our current stock is almost exhausted.  In the last week we have had 30+ clients waiting to be served personally, at any given time during the day.  Online orders are being received faster than they can be processed. Ainslie Bullion
Gold Stackers had reported earlier in the week on their Facebook page that sales activity was roughly five times the norm:
If you're feeling a bit bummed about the drop in the spot market - retail volumes are through the roof, investors are voting with their wallets and buying physical like crazy, physical sales are about 5x normal levels. The fundamentals have NOT changed. Gold Stackers
I'm tweeting many of these stories out as I find them, so if you want the latest, follow me on Twitter (@BullionBaron).

It's going to be very interesting to see how this "Gold rush" develops and whether it translates into a bottom forming in Gold as physical demand surges.

I haven't been able to add much to the physical stack recently, but did pick up an Olympic 2000 Silver Kilo Coin today and a 1997 Coca Cola Sovereign (24k) a few days ago:

Click Image to Enlarge

Click Image to Enlarge
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  1. Nice coins!

    I am generally comforted that my fellow Australians have not fallen for the Reserve Bank of Australia's empty rhetoric.

    1. Such ridiculous comments from Debelle. I'm surprised they haven't just done away with the final 80 tonnes if his comments reflect the views of those at head of the RBA.

  2. Apmex is now completely wiped out of 100 ozt silver bars. First time I've ever seen that.

    1. Indeed, crazy times, last night when I checked they were also out of kg and 500g Silver bars except for 1 style which had a huge premium on it. Dealers are getting cleaned out!

  3. The silver price may as well not have crashed if you buy from Ainslie in Brisbane. Their coins are like 9 dollars over spot. What a rort. Anyone with half a brain would shop elsewhere.

    1. @anon, I think that's the principle behind a market (i.e. go somewhere else if the offered price is not suitable), but yes, pricey :)

      Personally I'm glad I'm not a bullion dealer in this current market -> one would have to be nimble to keep the fluctuations from eroding the gain from the spread.

    2. This week I've become interested in the story between physical (retail product) demand and the bigger markets ... trying to figure out which is the dog, which is the tail and who is wagging who.

      Spoke with a local bullion dealer (not Ainslie) who said they have been selling at a loss for the last week or so. I asked whether they hedged their sales & purchases with futures or other similar mechanics - answer is 'sometimes', paraphrased: it's difficult to set up if you're a small player.

      Interesting market. It has been observed that retail is often left 'holding the bag', but I don't really think that applies here.

    3. I agree, I don't think the rush to buy that we've seen is the 'uninformed public', it's much more likely those who already own precious metals or have done their research and waited for an opportunity to buy are all converging at once. Completely different environment & feel to the physical shortage (retail sizes) and lineups we saw in 2011 as Silver spiked higher.

  4. Well, with the prices at its low, physical gold and silver will
    continue to be a hot chase as compared to paper
    What we have now is a game of chicken between the physical buyers and
    the paper shorters.