No surprises here – gold was not allowed to close above $1,200, just like we told you would be the case. Gold finished the day at $1,197.80 and the Cartel was (barely) victorious. There were about 18,000 open calls at $1,200 that finished out of the money.
Almost immediately after the close, gold jumped above $1,200 and as I write this, is resting at $1,201.50. Free markets? Fair markets? Not in the gold and silver pits.
But there is good news in all of this. There were another 5,000 open calls at $1,150 and the Cartel could not take gold down far enough to sterilize them too. Yes, they won, but they had one heck of a fight on their hands. It is getting harder and harder for the Cartel to bully gold. It is rising, along with the Dollar, and that is a real sign of strength since gold is denominated in Dollars, when the Dollar rises, gold should fall. If gold is rising along with the Dollar, it demonstrates that there is STRONG buying coming from Europe and Asia – all physical gold, of course.
“Speculators are buying gold faster than the world’s biggest producers can mine it,” reports Bloomberg News, “as analysts forecast a 27% rally that may extend the longest run of annual gains since at least 1920.”
Mine supply has fallen in five of the last eight years, according to GFMS, the London-based consultancy.
ETFs and similar gold-backed products now sit on a record 1,938 tons of metal. Only four of the world’s central banks hold more. The buying has accelerated all this month, a pace not seen since the first quarter of 2009.
For the first time in nearly 30 years, Investment demand for gold now exceeds jewelry demand.
Central banks have switched sides from sellers to buyers. That hasn’t happened since 1988, and the amount they accumulated was the most in 36 years.
Thomas Kaplan of Tigris Financial said, “I’ve reached a point where I feel the only asset I have confidence in is gold,” he tells The Wall Street Journal. He has almost all his holdings in gold and gold mines, totaling $2 billion.
The U.S. market for bullion coins remains on track for a record.
“Precious metals had a disastrous week,” reports CoinNews.net, “yet U.S. Mint-authorized buyers ordered more bullion American Eagle coins during the third week of May than in each of the prior week’s when metals were rallying.”
For the first three weeks of this month, orders totaled 139,500. As we forecast, this pace will see a new monthly record – surpassing the one set in December 2008.
What’s more, if you combine American Eagles and American Buffaloes, “nearly one-fourth of all gold bullion coin purchased from the U.S. Mint this year were made during the past 13 days,” according to the website.
If buying doesn’t slow down, we could see a repeat of the shortages of the Fall of 2008. Here is a quote from the Mint from May 13, “demand spilled over into certain types of collectible coins. In the United States, proof and uncirculated U.S. Gold Buffaloes sold out. In South Africa, Mandela commemoratives flew off the shelves.”