Posted on: Friday, October 03, 2014
Written By:"The Elemental Economist" Jim Purnell
The Sydney Morning Herald reports: [ Every month a property investor walks into Neil Tremaine's gold vault and deposits $250,000 worth of bullion. Why? The investor hopes it will act as a hedge against a plunge in an overheated property market.
He is not alone. Demand for the precious metal is growing among the super rich, who are snapping up gold coins and bars.
Neil Tremaine of Guardian Vaults says gold can provide immediate liquidity. Photo: Eddie Jim
At Perth Mint – Australia's only gold refinery and the world's second biggest producer after China – sales of gold coins and minted bars rose to 68,781 ounces in September, their highest since October last year.
Minted bars, which range from 1 gram to 100 grams, took the lion's share of the increase, rising 37 per cent to 12,238 ounces, with investors in Germany and the US the biggest buyers.
"It's at the price now ... where some of the investors are coming back into the market again."
The Perth Mint is not the only gold business to notice a surge in demand. The US Mint revealed this week that sales of gold coins more than doubled last month to 58,000 ounces, the highest since January.
Mr Vance is surprised the price has continued to linger at nine-month lows, considering interest from investors is increasing and tensions in the Middle East are rising. (The gold price normally spikes during times of global uncertainty because it is traditionally considered a safe asset).
"That demand has been off, probably up until the last month. Premiums were quite low and there wasn't a lot of interest," Mr Suchecki said. "But as soon as prices weakened down to these $US1200 levels, we have seen a real pick-up in the demand for 1 kilogram bars out of China, so premiums have recovered quite strongly."
"The typical investor looks at it from an insurance perspective," Mr Tremaine said. "They like the smaller bars and coins because they can provide immediate liquidity in the event that something goes wrong and they have the bigger ones as an insurance policy. "They hold them in case ... the market collapses."
He said one of his clients, a property investor, was buying about $250,000 of bullion a month as hedge against a plunge in the housing market. ]
For added perspective on the jobs report zerohedge.com reports: [ While by now everyone should know the answer, for those curious why the US unemployment rate just slid once more to a meager 5.9%, the lowest print since the summer of 2008, the answer is the same one we have shown every month since 2010: the collapse in the labor force participation rate, which in September slid from an already three decade low 62.8% to 62.7% - the lowest in over 36 years, matching the February 1978 lows.
And while according to the Household Survey, 232,000 people found jobs, what is more disturbing is that the people not in the labor force, rose to a new record high, increasing by 315,000 to 92.6 million!
And that's how you get a fresh cycle low in the unemployment rate.
And from Silverdoctors.com: [ Surprise, surprise! After hearing the bobbing heads on MSNBC for the last several years, all denounce gold and silver as a giant tombstone for your cash, we see that people are still flocking there now in droves. More precisely, for the first time in months, Western investment demand is raging like a lion that’s just escaped captivity!
These are the sales numbers for 2014, in silver eagles from the U.S. Mint’s website.
Silver * Month
(One oz. coins )
“Pay careful attention to September’s sales month above: 3.375 million oz of silver (or over 100 tons) in a month. That’s the largest monthly sales figure of silver eagles since late Spring of this year. The pattern though, which isn’t apparent in this chart, is that most of this month’s demand has come in only the past two weeks!”
See that ^ above paragraph, and that scratched out number, shield brother? I wrote that yesterday, on the last sales day of the month, thinking that there was likely no way that they’d sell (or report) any more silver eagles in September. Now, take a gander at the new number before you, which was updated just last night! LOL
4,140,000 Holy Silver Default, Batman!]
So we have a record high on the DOW @ roughly 17,000 & yet the headlines report billionaires pulling billions out of stocks & buying 400 oz. gold bars valued at roughly $500K each bar & the demand is up over 230% year over year for these 1/2 million dollar gold bars? And to add to the confusion, Bloomberg reports that a survey of 3,000 multi millionaire investors revealed that they have pulled approximately 19.65% of their respective net worths out of stocks & are holding on average $600,000,000.00 IN CASH at home in expectation of a massive stock correction?
This is a carbon copy match of the Fortune 500 companies & wealthy investors behavior ahead of the 2008 housing crash & is a real cause for great concern. These investors prior to the housing crash all moved out of harms way months before the housing collapse, allowing them to watch the average Joe flop around like a fish out of water as they rode the stock correction down which resulted in the average investor losing 46.2% of their net worths in the crash. These “forewarned wealthy investors” then pounced in the first quarter of 2009 & bought stocks for pennies on the dollar, allowing them to make millions upon millions in profits by exploiting the devastation that clobbered the middle class.
Why is George Soros holding a massive bet that the S&P 500 will collapse by the end of the year? Why is Warren Buffet dumping his stocks over the past couple years & buying hard assets such as the Sante Fe Railroad which are truly inflation/correction proof assets?
So wealthy investors are running away from stocks as we meander towards what can only be a lackluster Christmas shopping season while Obama starts what he predicts to be a “decade long war” against ISIS, or IS, or ISIL or whatever Al-CIA-da is being called this month. Should the average Joe maybe take something away from this phenomenon? Don’t forget this is all happening against a backdrop of forcibly driving the price of gold & silver down through the futures market by the big banks in hopes of deterring investors from seeing the danger on the horizon & moving to hedge themselves in precious metals such as gold & silver bullion.
And a closing thought . . . . . now that the massaged employment data is suggesting the FED hit their employment target this will tip the rate hike debate heavily towards the rising of interest rates & this historically is bad news for stocks & bonds while very beneficial for the precious metals. Maybe this is why the wealthy are running to cash, gold & silver while the talking heads on TV are trying to keep you watching the DOW bubble bounce off the highs with 8 straight days of triple digit swings following what has been touted as the greatest IPO in history. Wouldn’t this ordinarily be when you should begin to slowly peel away from a market at all time highs & shift into a correction proof asset, especially if its at a 4 year low?!? Remember that the DOW kicked off 2014 at a staggering 17,100 thanks to the talking heads on TV screaming about record retail sales & huge consumer spending over Christmas which turned out to be a big nada. But investors were assured that they had to stay in stocks in Q/1 thanks to the recovery starting the new year in solid 3% growth territory as proof the economy had finally recovered. I also must remind you they ended up, as usual, revising the Q/1 3% GDP down to –2.9% & the only excuse we got for this grotesque miss was that a bean counter “must have forgotten to carry the 1” when tabulating the GDP, ooops!
When war is in the air, gold & silver are smart hedges. When the stock market is struggling to hold the price it started the year at 10 months ago AND THE FED IS SUPPOSEDLY STOPPING THEIR PROP UP THE MARKETS MONEY PRINTING AFTER 6 YEARS, gold & silver are smart hedges. When inflation is starting to grow, gold & silver are smart hedges. When the 5 decade long monopoly of the global dollar oil payment system is under attack & being phased out, gold & silver are good hedges. Its time to see the writing on the wall or at least be cautious with your asset allocation. The secret to investing is buy low & sell high, you can now sell stocks at record highs & buy gold & silver bullion at record lows.
View the entire SGM Metals Blog Here