Hi Hobbers!

They were saying that investment demand would dry up and gold prices would crash, back when gold was at $500 too. I find the wording of that commentary to be deliberately inflamatory, with the concept of a 'wall of silver' which is a rather ridiculous phrase for an agency that bills itself as independant. They are demonstrating a very clear bias from the comments of their CEO.

The market tells us otherwise. Just look up the quotes from any retail bullion dealer to buy gold or silver. You will see most dealers are paying market price or even a premium to market in order to buy bullion. This means they are having trouble sourcing supply. It is normal market behaviour to pay higher prices when supply is tight. The bullion dealers earn their spread by marketing those bars back to other buyers at a higher sales price. Again, if there were not many buyers looking for gold and silver, then the dealers could not command higher sales prices. The reports from Federal mints also confirm that supplies of gold and silver are tight, and that sales of official bullion products are running near all-time highs.

I doubt the overhang of scrap bullion is as high as GFMS want us to believe, and I doubt that investment demand will decline so much that prices collapse. What is lacking from that report is an explanation on WHY demand is so high in the first place, and there is no follow through on why they believe demand will dry up. Since they have been wrong about the market for the last few years, I do not think they suddenly have it figured out now. And of course, there is not one word from that group about price suppression and manipulation from paper futures. One would have to be completely ignorant not to recognize the ongoing manipulation in metals prices at the COMEX. They either do not have the courage to discuss it, or perhaps they are paid for their 'consulting' to support it.

cheers!

mike