Gold Coins, Bullion Sales Go `Gangbusters’ as AIG and Lehman Fall

September 19, 2008 by · 2 Comments
Filed under: Economic News 

Bloomberg reported a huge increase in the purchases of physical gold and silver bullion. The matches with my own research in calling a number of bullion dealers that have confirmed a significant increase in sales and a limited availability to delivery on the spot and is creating a 2-6 week delay for delivery on anything except the smallest order (under 10 ounces). After these unprecedented moves by the U.S. federal government in the market to prevent a financial crisis which normally would happen in a free-market system. With this uncertainty on the direction this serious situation is going to take people are taking too the time-test haven for wealth since the dawn of modern civilization….GOLD.

The biggest question I have is will this be inflationary with this huge increase of liquidity in a program to buy these “toxic financial products”. I have a worry that they are going to allow these credit-default swaps or CDS that are unregulated and also unbacked so this could create a situation where we have a huge increase in the U.S. dollar monetary base which will lead to price inflation unless we somehow have growth for the same amount during the same period which seems highly unlikely.

News Piece:

While TV camera crews staked out American International Group Inc.’s Wall Street headquarters following its takeover by the U.S. government, Jules Karp was quietly trading gold coins in “unbelievable” numbers from his basement dealership across the street.

Karp, 61, has traded physical gold, including one-ounce Canadian Maple Leafs, American Eagles and South African Krugerrands, since 1974. Demand has “hit a crescendo,” he said yesterday while an assistant prepared the special packages used to send gold coins to a growing list of mail-order customers.

Read more

U.S. Mint suspends sales American Eagle gold coins

August 21, 2008 by · Leave a Comment
Filed under: Economic News 

This is an interesting development with what happened last week. Last week we saw a major disconnect in the precious metals markets. The price dropped by double digits in one day but this is the paper market dropping with investors on margin and when the price drops so quickly you can see “margin-calls” that will create forced selling. I called some bullion dealers to ask them if they were see people running in too dump their physical metals in conjunction.

To my surprise two of the largest dealers told me that not only is no one selling their metals but the demand has never been higher and there was a 4-8 week delay on delivery and because they see to market disconnecting that there was a possibility that if the market continues to operate like this that they would suspend sales as well because of a growing lack of confidence in other dealers to be able to make their deliveries as well. What does this announcement mean with the economy heading south and bailouts happening across the board?

Read more