Weird Dichotomy in Gold and Silver Prices in Europe

Wednesday, September 03, 2008

Having read a growing number of reports on a physical silver - and now gold too - shortage with dealers unable to guarantee delivery time, here come some additional observations from the German language area in Europe. The dichotomy between the so called global spot price for the two precious metals and prices paid on ebay Germany has never been wider than these days. 
A lot of 100 one oz. silver Maple Leafs was sold for €1,267 or $18.25/oz Tuesday evening. This is a markup of 40% to the then current spot price of $13.10. It appears as there is a seller's strike as there are hardly any sizable silver lots on offer.
The gold market shows the same: Offers have dropped to mere 100 gram (3.21 oz) bars which are sporting minimum bids of €2,100 or $ 3,045 which translates into $948/oz. This is a markup of 17% to the so called global spot price.
A desirable 50 gram (1.6 oz) Rothschild gold bar - which are not produced anymore - is listed for another 6 days and has already drawn a bid of €895 or $1,298; this is 10% above spot.
Having read reports that South Africa's biggest refinery has been unable to fill a 5,000 oz. order I can only arrive at the conclusion that these so called global spot prices which are derived from COMEX paper prices have nothing to do with the world of truly physical deals. Come on, that's a $4 million purchase - and now they are finished.Has ebay already established itself as a competitor to precious metals exchanges? 
The loud uproar in the gold and silver investing community about falling futures prices - while demand is still up - seems to be a correct alert to market authorities that appear to sit on their hands with closed eyes.
The fundamentals for the metals could not be better. Western central banks remain with the tactic to shower more fiat money while betraying the public with false statements about their vigilance on inflation. Inflation is here and it will not go away for geopolitical reasons. Russia is the strong man that controls the biggest part of energy supplies to Europe. Rumours have it that Putin will raise natural gas prices by 20% later this year. Prices at European gas pumps have not come down with crude oil prices, suggesting the market is still tight, despite what is said officially.
Both gold and silver will see another formidable fall season where "official" prices will soon catch up with actual prices paid by investors. Especially silver is poised for a meltup, considering the COMEX shorts. And don't give too much about short term charts these days. As the market is manipulated, charts lose any power of predictability.

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