Tags: gold | demand | Mint | dealers

Gold-Price Plunge Sparks Demand That Surprises Dealers

By    |   Tuesday, 07 May 2013 07:49 AM

With the steep price declines in gold in April, a physical gold rush followed that surprised even some long-standing bullion dealers.

In mid-April the gold market crashed, with the price falling over $200 in a two-day period. That led analysts to downgrade their outlook for the metal, and many money managers vocally expressed a vote of no confidence in gold.

Investment advisers urged extreme caution when not outright directing investors to the sidelines. And investors of exchange-traded funds, many of whom were already offloading their holdings in SPDR Gold Trust, continued doing so at a rapid pace.

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Even after the slump, Warren Buffett said the metal still was not appealing. "If it went to $800, I wouldn't be a buyer," he told Bloomberg.

Undeterred retail buyers did not share these negative views. Around the globe, people raced to purchase gold bars and coins. Surging demand was reported in markets such as Dubai, China and India.

"In nearly 30 years of business at Dillon Gage, this is the busiest we have ever been in terms of physical demand for gold and silver," Terry Hanlon, president of Dillon Gage Metals, one of the largest international precious metals dealers in the United States, told MarketWatch.

Precious metals investment firm Blanchard & Co. said in April 1 oz. gold American Eagle sales rose 400 percent compared with March sales.

"We have not seen demand like this since the fourth quarter of 2008 after Lehman Brothers collapsed," David Beahm, executive vice president of the firm, told MarketWatch.

And it was not just bullion dealers who found themselves overwhelmed by the sudden surge. Renowned bullion fabricators were also challenged by the physical gold demand.

So great was the demand for 1/10 ounce gold American Eagles that the U.S. Mint suspended sales. Still, the buying continued, with gold seekers snapping up larger coins. By the end of April, the U.S. Mint's gold coin sales reached the highest level since December 2009, according to Bloomberg.

Australia's Perth Mint witnessed such strong demand that it stayed open through this weekend. Ron Currie, sales and marketing director, told Bloomberg that sales in April doubled or tripled. He also compared the appetite for physical gold with the demand seen during the 2008 financial crisis.

The price crash in April "knocked [gold] to such a low level that bargain hunters everywhere have been jumping on board to buy physical metal," James Turk, founder and chairman of GoldMoney, an online precious metals dealer, told MarketWatch.

Gold touched a low of $1,361 during the crash, but has now recovered some of the losses and is currently trading at around $1,466.

Even though prices have retraced much of the big decline, demand for physical metal remains strong, Turk said.

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With the steep price declines in gold in April, a physical gold rush followed that surprised even some long-standing bullion dealers.
gold,demand,Mint,dealers
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2013-49-07
Tuesday, 07 May 2013 07:49 AM
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