European Gold Buying 'Remarkable'
Here's National Numismatics' Tom Cloud with a quick dealer-level view of gold and silver:
DollarCollapse: Hey Tom, it's been an eventful few weeks. Precious metals pierced your worse-case downside targets and then bounced a bit. What's going on out there?
Tom Cloud: Once gold broke the $1,320 it didn't stop till $1,180, which I did not think it would do. It went all the way down to our long-term support line. Looking forward, July is usually a neutral month and August is when things pick up. Gold and silver usually make about 2/3 of their profits during the last four months of the year, but this time gold should start moving in July because the correction was so severe. The worst-case scenario is that it bounces off of $1,180 again, but it looks very oversold at these levels; the charts have turned extremely bullish.
DC: How tight are supplies?
TC: For gold, there's pretty good availability right now. We've got some gold coins that can lock in and ship today.
DC: Silver premiums remain high though. What's different about that market?
TC: When silver goes down the costs of buying and producing it make the premium go up in percentage terms. They usually change the premiums every two or three months. So the high premiums can be explained in part by the continued shortage of popular coins and in part by unchanging production costs.
DC: So silver supplies remain tight?
TC: May broke all records for silver eagle sales, and you're still looking at 2-4 week delays for eagles, maple leafs and even buffaloes. Comex silver bars are really hard to get. Johnson Matthey is six weeks behind. In normal times, it would take 3-5 days for delivery. The Royal Canadian Mint is keeping up, though, so we can get those bars.
DC: What about the recent central bank gold buying?
TC: The bounce was facilitated by a 580-ton purchase by European central banks on Friday. The rumor is that they're going to buy another 500 next week. There's only 2200 tons a year mined on average, so that would be remarkable.