My name is Shawn Ozbun, and our goal is to keep you up to date with what’s going on in the world of Gold and Silver by providing you with current news and precious metals pricing.
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Welcome back to the SilverTowne Vault Cast. Lately I have just been covering 1 or 2 articles instead of the normal 3 to 4 articles and I’ve been doing a lot more talking and giving my opinions and things of that nature. I’m hoping that you are liking this format a little better, I know I certainly do.
Today we are going to talk a little bit about physical gold vs paper assets and I’m sure you already know my opinion on this matter, but I’m going to share it anyways. We are also going to talk a bit about the central banks and their relationship with gold.
Before we get into all of that, let’s look at today’s precious metals pricing.
Gold - $1384.33 Down $6.02
Silver - $21.81 Down $0.24
Platinum - $1443.00 UP $0.50
Palladium - $723.00 Down $4.50
Physical Gold vs Paper Gold – the implications for bullion ownership
Mr Macleod says that Western attitudes towards gold have changed, and this is having important consequences: ‘Western economists have taken a gamble that gold is no longer money, just another commodity. In disparaging gold, we in the West are massively outnumbered and outgunned by China, India, the Middle East and even Russia, whose governments and peoples are accumulating the gold we do not want. The disparity in valuation between “us and them” has had the inevitable result of a shortage of physical gold in the West. This poorly-understood and vital geo-political issue has important implications for the international banking system and also for paper currencies themselves.’ Read More...
Central Banks' Love-Hate Relationship with Gold Bullion
INDIA, the biggest consumer of gold bullion, is witnessing over-the-top demand—to the point where the government is trying to curb demand, writes Profit Confidential publisher Michael Lombardi.
The Finance Minister of India said last week, "Banks have a role to play in dampening the enthusiasm for gold. I think the RBI [Reserve Bank of India] has advised banks that they should not sell gold coins."
He added, "I would urge all banks to please advise their branches that they should not encourage their customers to invest in or buy gold." (Source: "P. Chidambaram hints banks likely to stop gold coin sales to curb demand," The Indian Express, June 7, 2013.)
The appetite for gold bullion by Indian consumers has forced its government to increase the import tax on the yellow metal to eight percent—it has increased this tax rate twice in the past six months!
But the Indian economy isn't the only one experiencing a surge in gold demand.
The acting director of the US Mint, Richard Peterson, was quoted last week saying, "Demand [for gold bullion] right now is unprecedented…" (Source: "US bullion coin demand still at unprecedented levels-US Mint Chief," Reuters, June 5, 2013.)
Looking at the sales of gold bullion coins from the US Mint, demand has more than doubled. In the first five months of this year ending in May, the US Mint sold 572,000 ounces of gold bullion in coins. In the same period a year ago, the Mint sold only 283,500 ounces of gold bullion. (Source: The United States Mint web site, last accessed June 7, 2013.)
Dear reader, the numbers are speaking louder than the words. Even when there's a significant amount of downward price pressure toward gold bullion, demand is doing the opposite and increasing sharply.
Aside from what I have written above, I still believe central banks will eventually be the major force driving gold bullion prices. Countries like Russia, Turkey, and Kazakhstan continue to add gold bullion to their reserves.
Central banks want stability in their reserves and gold bullion does the job perfectly.
Now ask this question: as the most conservative investors, why would central banks be willing to hold the US Dollar in their reserves when the Federal Reserve just keeps printing more of them? Central banks are worried about paper currencies, thus, they are looking at gold bullion again as the alternative to reserve stability.
The Japanese economy is a prime example of what happens when central bank–infused "economic growth" crumbles.
Quantitative easing may have been needed in the US economy when the financial system was on the verge of collapse, but artificially low interest rates and vast amounts of paper money printing could be creating major troubles for our future, just like it did in the Japanese economy. Read More...
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[Disclaimer] Shawn Ozbun is not a licensed financial adviser, there is risk associated with all investment including gold and silver. You should seek advise from a licensed financial expert before making a purchase.
