Gold News & Info

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— Gold added 0.3% to close above $1,472 after the weakest Chicago PMI since September 2009 convinced traders that the Fed will vote to extend quantitative easing this week. The Philadelphia, New York, Richmond, and Dallas Fed regions also reported declines in manufacturing. The Dollar Index, which measures the greenback against a basket of currencies, fell to a two-month low on expectations that quantitative easing will continue until the end of the year, if not longer. Tantamount to printing money, QE spurs demand for gold as a long-term store of value because it cheapens the dollar and builds inflation.

At the Comex close: June gold climbed $4.70 to $1,472.10; July silver added 2 cents, to $24.19; July platinum dipped 20 cents to $1,507.20; and June palladium lost $1.40 to $697.80 an ounce.

Despite gaining 5.5% in the last seven sessions, gold closed out April with a 7.8% loss, its biggest monthly drop since December 2011. Silver added 0.1% today but ends the month down 15%. Platinum finished the day virtually flat but lost 4.3% in April, while palladium slipped 0.2% for a 9.2% monthly loss.

Most of the month's losses occurred over a two-day period, starting April 15, when gold tumbled 14% after hedge funds and other large speculators dumped positions in gold-backed ETFs following a call by Goldman Sachs to short the market. Since then, demand for physical gold has exploded around the world while liquidations from ETFs continue. The result has been a remarkable divergence of the physical from the paper gold markets, with the former being comprised mostly of long-term buyers and the latter, in turns out, mostly of short-term speculators.

Among physical buyers the lower prices are causing an impressive gold rush. The U.S. Mint sold nearly 210,000 of the one-ounce Gold Eagle coins in April, the second highest monthly total since they were introduced in late 1986 and more than three times the total for March. Production of the little tenth-ounce Gold Eagles had to be suspended because the Mint simply couldn�t keep up with demand. The British Royal Mint tripled its bullion coin sales over last month. Physical gold inventory in Comex warehouses dropped near a five-year low as investors scramble to buy coins and bars.

Asian markets, particularly in China and India, are even hotter. Bullion volume on the Shanghai Gold Exchange surged to a record last week and premiums on physical gold in India quintupled. Shanghai Gold Exchange volume surged to a record last week while premiums on gold in India quintupled. Premiums on physical gold in Dubai, the largest gold-trading center in the Middle East, jumped as much as eighteen-fold for wholesalers and bulk-buyers! This skyrocketing demand for physical gold augurs well for further recovery in prices, especially as central banks around the world accelerate their money-printing operations.