Thanks to gold’s recent price correction and rebound, there has been an explosion of physical precious metals sales around the world. From tiny vendors in Asia to the US Mint, dealers everywhere are struggling to meet demand and manage supplies. The latest, and perhaps most telling, story along these lines came out this week: the gold holdings of CME Group’s COMEX warehouses have dropped to five-year lows. Much of the demand is attributed to Eastern investors looking to avoid the soaring premiums across Asia. All of this ties nicely into Peter Schiff’s latest commentary about the movement of wealth and gold from debtor Western nations to the creditor emerging markets in the East. Read about the Great Gold Redemption in the latest Gold Letter.
“Physical gold stocks held at CME Group’s Comex warehouses in New York have dropped to a near-five year low in a further sign that gold’s price crash unleashed a frenzy of demand as investors scramble to buy bars and coins.
U.S. gold stocks, comprised of 100-troy ounce COMEX gold bars, have fallen almost 30 percent since February, as dealers have switched to selling into the burgeoning Asian market, where prices and demand are higher than in New York.
But the pace of the outflows from vaults has accelerated since bullion’s historic sell-off, falling more than 7 percent last week for its biggest weekly drop since 2005.
Analysts say the sudden recent surge is further evidence of pent-up demand for coins and bar, particularly from China and India, caused by the slump in prices. Investors also appear to prefer to hold physical metal rather than futures, traders said.”
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