Precious Metals

Gold recapitulated its recent advance/retreat pattern, spiking nearly to $912 at mid-morning in New York, then dropping over $30 the rest of the day and finishing at $878.90, up $3.10. For the week, gold was up 0.8%.

Platinum had no run up, only declined steadily throughout the day, falling below $1100 before a little late buying lifted it to $1107/oz., down $64. For the week, platinum lost 2.8%.

Silver peaked at $13.50 at the same time as gold, then also fell, but not nearly as far, as it stayed well in positive territory all the way through and closed at $13.30/oz., up 11 cents. For the week, silver was up 5.4%. (Click here for charts)

It was a day of unsurprisingly mixed results yesterday, as optimism and pessimism over the big bailout plan fought for supremacy. The usual suspects provided little direction, with crude falling and the dollar edging up slightly vs. the euro.

Despite the ups and downs of the paper gold market, physical supply continues to deteriorate. Mark O’Byrne, of Gold and Silver Investments Ltd., provided an excellent summary:

“Some of the largest wholesalers in the world are out of all bullion product except for exchange bullion product - 100 ozt and 400 ozt gold bars and 1,000 ozt silver bars. They cannot supply South African Krugerrands, American Eagles and Buffaloes, Canadian Maples, Austrian Philharmonics, Chinese Pandas, Australian Nuggets (all 1 oz.). They cannot supply 1 oz. or 10 oz. gold bars or 1, 10 and 100 oz. silver bars. And I have confirmed they cannot sell any European or world gold coins such as British sovereigns, francs, marcs, Mexican pesos etc. etc.

“They have confirmed that there is no physical supply at all from the primary marketplace - large refiners and government mints. Worryingly they are being informed that this is not a temporary problem and there are no supply side commitments and there is little in the pipeline for the foreseeable future due to excessive and unprecedented demand. Secondary supply from the public and retailers is nearly non existent as there are nearly no sellers and nearly all buyers.

“Bullion shortages and the confluence of unprecedented demand and limited supply in conjunction with macroeconomic, inflation and systemic factors is leading to extremely bullish conditions for the gold market - probably even more bullish than in the 1970s when gold rose some 3,000% from $35 to over $850 in just 9 years.”

We’re looking forward to it.