Gold: Drop In Paper Price Results in Surge of Physical Purchases

Following what appears to be an end to gold’s 12-year bull run, investors are seizing on the chance to buy up as much of the physical stuff as they can while prices are still low.

In Australia, for example, the “volume of business that we’re putting through is way in excess of double what we did last week," Australia’s Treasurer Nigel Moffatt told Businessweek by phone yesterday. “There’s been people running through the gate.”

“There’s been significant sales made as people see this as great value,” he added. “Gold owners are very reactive to significant market movements.”

Japanese and Chinese gold retailers are also seeing a “frenzied” surge in demand, according to Zero Hedge.

“Japanese individual investors doubled gold purchases yesterday at Tokuriki Honten, the country’s second-largest retailer of the precious metal,” the report notes.

Here’s a collection of reports from around the world showing the recent surge in gold purchases [h/t ZH]:

1. Australia

From The Age:

Gold sales from Perth Mint, which refines nearly all of the nation’s bullion, have surged after prices plunged, adding to signs that the metal’s slump to a two-year low is spurring increased demand.

“The volume of business that we’re putting through is way in excess of double what we did last week,” Treasurer Nigel Moffatt said, without giving precise figures. “There’s been people running through the gate.”

[...]

“There’s been significant sales made as people see this as great value,” Mr Moffatt said. “Gold owners are very reactive to significant market movements.”

[...]

The Perth Mint’s sales of gold coins climbed 49 per cent to 97,541 ounces in the three monthsended March 31 from a year earlier

2. China

From China News:

Beijing gold store two hours to sell 20,000 grams of gold bullion trading volume of nearly 200 million.

From YCWB:

People have to rush to buy gold ... gold bullion out of stock yesterday, investors yesterday to spend as much as 600 million yuan to buy 20 kilograms of gold bars

The mad pursuit gold insufficiency is not just a game for the rich. Yesterday, the Yangcheng Evening News reporter learned from the East flowers to Bay store, many growers, pork traffickers, fishmonger recently put down his job went straight to the mall to buy gold.

3. Japan

From Reuters

Some Japanese also harbor fears that the expansionary monetary and fiscal policies dubbed "Abenomics", coupled with a national debt more than twice as large as annual economic output, could trigger a crisis down the line.

Skeptics about the radical attempt to reflate the economy -- or those simply worried that a slide in the yen that began in anticipation of Abe's election victory last December will continue unabated -- are still buying gold, dealers say.

"Investors in gold are convinced that Japan's fiscal position will get worse," said Wakako Harada, general manager of Japan's top bullion house, Tanaka Kikinzoku Kogyo.

"What I see at our counter is that more people are getting worried about Japan. That's why we are seeing a lot of buying."

[...]

"In contrast this time, we are seeing interest to buy on dips to take exposures to gold,"

[...]

"Investors are using this opportunity to buy gold to diversify beyond bonds, stocks and the yen currency as Japan's fiscal situation could deteriorate."

From The Age:

Japanese individual investors doubled gold purchases yesterday at Tokuriki Honten, the country’s second-largest retailer of the precious metal.

4. India

From Bloomberg:

Gold buyers in India, the world’s biggest consumer, are flocking to stores to buy jewelry and coins, betting a selloff that plunged bullion to a two-year low may be overdone.

[...]

While the drop in gold prompted investors worldwide to pare holdings in exchange-traded products, surging physical demand in India may help stem the 17 percent slide in prices this year. The plunge after rallying for 12 straight years may make bullion more affordable to Indians, according to Mehul Choksi, chief executive officer of Gitanjali Gems Ltd. (GITG), the nation’s biggest retailer of jewelry and diamonds by sales.

“This is a perfect time to buy as prices will only go up from here,” said Vishal Mehta, a 33-year-old garment dealer, while ordering coins from Choksi V. Naginchand & Co. in Zaveri Bazaar. “I usually buy one gold coin a month, but this time I am buying two.”

Lastly, as mentioned on TheBlaze long before the decline in the paper price of gold, Russia and China have been working overtime to expand their gold reserves. So they're way ahead of the curve.

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Featured image Getty Images.