Seriously? “Simon Black” (it’s a nom de plume) wrote an article titled “Demand For Physical Is Collapsing.”  He focused on retail bullion demand numbers. To claim that the global demand for physical gold is collapsing is seeded in either ignorance or mal-intent.
The Black article purports the idea that retail bullion sales represents global demand for gold and silver.
Nothing could be further from the truth:

 

From PM Fund Manager Dave Kranzler:

Seriously? “Simon Black” (it’s a nom de plume) wrote an article titled “Demand For Physical Is Collapsing.”  He focused on retail bullion demand numbers. The headline and the content is largely fake news as it focuses on the demand for minted coins vs the paper gold market. We’re not really sure about the intent of article, but the content was devoid of any relevance to the actual global demand for physical gold.

While the retail minted coin and small-size bar demand is down from last year’s levels, there’s two factors to explain this.
First is price. The price of gold and silver was lower in early 2016 than it is now. The price of gold in February 2017 averaged $1230-$1240 while the price of gold a year ago February averaged $1175. Retail buyers of gold/silver coins are highly sensitive to price and tend to chase the price higher, up to a point. On this basis, it’s not surprising that more minted coins were sold a year ago compared to this year.

This “price effect” on the demand for retail gold and silver coins likely explains about 25% of the demand comparison between 2016 and now.

The second factor is the economy. Remember, the end user of minted bullion products is largely the retail buyer.  In the first two months of 2017, real wages have declined. Even more negative for retail sales of any sort is the fact that real disposable income has been declining on a year over basis since December 2015:

While we at the Shadow of Truth do not consider buying and owning bullion to be “discretionary,” retail sales, including sales of gold and silver bullion coins, is highly dependent on the relative level of real disposable income. Thus once again it should not surprise, based on just looking at retail demand for physical bullion, that retail bullion sales are falling.

On the other hand, the Black article purports the idea that retail bullion sales represents global demand for gold and silver. Nothing could be further from the truth. Retail demand at the margin has no affect on price other than maybe the price premiums in the coin market based on mint supply and retail demand.

The majority of gold bullion demand comes from the jewelry industry, eastern hemisphere Central Banks and sophisticated wealthy and institutional investors. India and China alone import more gold than is produced from mines globally. This is why Black’s “paper gold” price is rising. It’s why the BIS and western Central Banks have failed to eliminate the significance of gold in the global monetary system.

Gold imports into India jumped 175% in February from February 2016 to 96.4 tonnes (LINK). In fact, official gold imports into India have been rising since December.  And that does not include dore bars or smuggled gold.  179 tonnes of gold was withdrawn from the Shanghai Gold Exchange in February.  This is 60% higher than February 2016.  The Russian Central Bank gold reserves have been rising almost monthly since mid-2007.

To claim that the global demand for physical gold is collapsing is seeded in either ignorance or  mal-intent.  But either way, the assertion is outright idiotic when the facts are examined, which we do in today’s episode of the Shadow of Truth:

2 oz Silver Queen’s Beasts Red Dragon
Intro Pricing: $2.69/oz Over Spot!

    • Berwick is ranting about how he’s made many “Bitcoin millionaires” over the past several years. He said anyone that got in when he told them to has done extremely well. I guess he is right about that. But I can’t take the guy seriously. He comes off as a clown to me.

    • I’m pretty sure that’s a BS claim on his part. He’s really just started schilling bitcoin in earnest in recent months. Probably he’s taken a large position in it that he’ll convert to fiat when he’s snake-oiled enough chumps through the turnstyle.

    • About two weeks ago Patriot Trading Radio (long standing dealer with their own radio show) stated they were able to offer a gold coin deal with premium less than when gold was $250 / oz range back in the late 1990’s.  That should tell you there’s a rapidly slowing appetite for gold due to all the manipulation.

      I agree about Bitcoin.  It’s the alternative coins to watch and will be the big winners over the next few years.  You can slam Berwick and Clif High all you want but their calls for Bitcoin have made their listeners a shizzz load of money.  I continue to kick myself for not listening to them 6 years ago but instead listening to people like Willie, Holter, Sinclair, Hoffman, Bo, etc.  One group became wealthy while the other group got led to ruin!!

      Ultimately this could be good for stackers.  The manipulation only works with a market that is quasi-healthy.  It doesn’t work on a dead patient.

    • @PowerBall …Yeah, the Patriot Trading Group is just down the road from me here in Phoenix. Done several trades with them. They specialize in pre-1933 $20 Saints and Libs. Nice material. Good guys. Used to listen to the show when Eric Cedarstrom owned the company.

  1. I am buying a lot of physical silver personally. But my coin dealer in central California says there has been tons of panic selling. I buy mint proof coins at melt value right now because of the lack of market for physical. Personally I am bullish based simply off industrial demand in the future. and am happy to buy more on dips. I think numismatics are the smarter way to play this time. Also on Ampex or whatever you call it the premiums are really low on proof coins compared to in the past which to me indicates weak demand. Just my 2 cents worth.

    • Dirk…They’ll be no extra value in “proof” bullion when the financial system locks up. Value will be solely in the metal. If you live in the U.S., then stick with ASE’s and AGE’s as they are very recognizable and offer the potential for very favorable capital gains tax treatment in the future. Generic bullion has no chance at future favorable capital gains tax treatment. Several states have passed legislation or have legislation pending to declare U.S. minted gold and silver coins spendable money and being “money” they will not be subject to capital gains taxes. Should gold/silver skyrocket then expect a windfall profit tax on the sale of your generic bullion rounds.

    • @UglyDog

       

      Excellent points, as usual.  🙂

       

      “If you live in the U.S., then stick with ASE’s and AGE’s as they are very recognizable and offer the potential for very favorable capital gains tax treatment in the future.”

      Great advice, UD.  But not only that, these coins are among several that are not reported to the IRS by bullion dealers when they are sold to them by retail customers… in any quantity… although their is a dollar denomination limit that will require another form to be sent to the IRS if it is exceeded.  It’s not that the IRS has a soft spot for US coins but that these coins did not exist back when the list of reportable coins was made up.  I suppose that the list could always be updated but so far not.  Currently, those selling ASEs and AGEs plus some others can do so in amounts of less than $10k per day (in aggregate) with only their conscience as their guide on whether or not to report the sale to the IRS.

      JM Bullion has a nifty info page on all this at:

      https://www.jmbullion.com/reportable-bullion-transactions-infographic/#

      Anyone who owns high cost bullion can sell it, claim the tax loss on the difference between what they paid for it and what it brings, wait 31 days, and buy it back again.  If the amount is substantial, a very nifty tax loss can be established that will help erase at least some of their future gains.

      Personally, I really don’t much care for generic silver rounds or bars, even though I do have some bars and the generic Morgan dollars and a few others do look decent.  They are OK but not anything that I enjoy pulling out of the stack to admire.  But, as with any form of collecting, to each their own.  🙂

      Love the fact that a number of states are now discussing and even passing new laws on gold and silver coins that could very positively affect the tax status of highly appreciated gold and silver US bullion coins.  IMO, these coins are money and there is no tax on swapping one form of money for any other form of money.  We can all change a $100 bill for 2 $50 bills, etc. with zero tax consequences.  swapping fiat paper for gold and silver and back again also should have zero tax consequences.  In time, this is likely to be the case.  Now, however, it is not and a hefty 28% collectibles capital gain is charged on any such swaps that result in a profit.  While this legislative action is currently proceeding at the state level and most capital gains taxes are paid at the federal level, if enough states pass laws that are tax friendly to gold and silver, it is likely that the US Gov will follow suit at some point.

      Although it is a very minor point, Trump seems to really like gold, so who knows what the future holds for taxes on gold and silver bullion sales?  🙂

       

    • I feel ASE’s are terrible advice. When the system collapses, and industrial and investment demand boost the market, do you honestly think ASE’s will somehow be “money”, and generic rounds will fetch less? An industrial doesn’t care whether an ASE was melted down, or a generic round/bar. In fact, the lower premium Maple Leafs and Kangaroos, both .9999 , will be in demand even more for direct medical applications.
      Proof at spot, those are great if you make A REAL EFFORT to flip them for MORE SILVER before you shuffle up in line at the melter.
      ASE’s will only be a better investment, despite theirreally high premium, in highly hypothetical instances that may well to be present for only a short amount of time. Hard to get out and make a profit somehow versus MUCH cheaper (10+% more volumous) silver at the same dollar cost.

      The argument of being well recognized, what’s that worth it it’s also the most counterfeited coin? Who’ll even WANT to be seen with a American Terror Eagle by the time the worldd population enlighten the heck up? Swastika decorated Reichsmarken are doing well NOW, but good luck selling them anywhere right after WW2.

      ASE’s are a US Treasury ploy to REDUCE silver demand. You’re being suckered into buying them over superior, lower premium, alternatives. They’re too numerous to flip them for more silver. At the same cost you get a limited edition RCM coin with an animal on it, so far 100% success rate in flipping them nicely, to hold more silver than had the cash originally bought generic silver in stead.

    • @XC Skater

       

      You seem to be a bit of a flipper, nothing wrong with that I guess, but some of us if we venture an opinion may just go with the Insurance aspect of the deal and try to get the biggest bang for our Buck and in the most easily converted after any reset/collapse/event.

       

      It takes a lot of thinking to get to a position where we are happy we have as many bases covered as possible.  After all, there is 104 years of damage done since the last real GOLD STANDARD, of which I think we may return WTSHTF.    

       

      By gold standard I am not referring to the ‘BRETTON WOODS’ agreement or the ‘gold exchange standard’ up until 1971 when Nixon defaulted on the U.S. promises to redeem $#!T currency for gold.                 _JOHNLGALT.    

       

       

  2. Not only has gold sales declined because people have less disposable income but the dollar has gained strength against most other currencies and most commodities are quoted in dollars which makes the price much higher in foreign markets which causes demand to fall. I have read several articles by those who promote metals claiming that the price is soaring in euros for example implying demand is soaring when in fact the currency is just collapsing against the dollar. The retail market is simply too small to effect price.

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