As gold prices are down and out, the demand is surging. This is contrary to what we are told by the mainstream.
Gold Price Decline Creating Problems for Mints
During an interview with Bloomberg news, the Treasurer of Perth Mint, Australia’s official bullion mint, Nigel Moffatt said, “Our biggest restriction is the amount of unrefined gold we’re getting in from producers.” He added further, “everything we get in is going straight out the door as soon as we refine it.” (Source: Bloomberg, July 28, 2015.)
He was also asked about where the demand is coming from; Nigel Moffat mentioned it’s from India, China, and Thailand.
Here’s something he also noted: “If you look at the coin market for example. Our only restriction on coin sales right now is the amount we can produce. If we can actually find more skilled press operators, and make more coins, we’d be selling more as well.”
The Australian mint isn’t the only place where the demand for the precious metal is soaring.
In July, the U.S. Mint sold 32,000 ounces of gold in American Buffalo Bullion coins. This was the highest amount since January, and 52% more than what was sold in June – 21,000 ounces. (Source: U.S. Mint, last accessed August 4, 2015.)
It also sold 170,000 ounces of gold in American Eagle coins in July—the highest amount since April of 2013, and $123.00 more than the previous month when it sold just 76,000 ounces of gold in American Eagle coins. (Source: U.S. Mint, last accessed August 4, 2015.)
This is something to keep an eye out for. Just recently, the government of India slashed its import tariff on gold for the second time in two weeks. (Source: Financial Express, July 24, 2015.) This can have solid implications; more buyers. Understand this; the precious metal is the second-largest imported good in the country after petroleum.
As Demand Soars, Gold Production is Plummeting
Dear readers, when examining the gold market, we actually have a basic economic problem. The demand is surging, and the supply is declining. This is a perfect recipe for higher prices ahead.
Consider this; in the first four months of 2015, mines in the U.S. produced 62,700 kilograms of gold. (Source: U.S. Geological Survey, last accessed August 4, 2015.) In the same period a year ago, this figure was 69,100 kilograms. (Source: U.S. Geological Survey, last accessed August 4, 2015.) This represents a decline of over nine percent!
Other gold producing regions are reporting dismal production figures as well.
Where is Gold Really Headed?
If you listen to the mainstream, there’s a significant amount of noise suggesting gold prices are headed down further. I have seen some estimates that outright don’t make any sense.
As I see it, in the short-term, there’s definitely a possibility of further downside, but it will not be as big as some are expecting. $1,000 is possible just due to momentum and negativity towards the metal. Know this; if the gold bullion price declines to $900.00 an ounce, a massive number of mining companies will simply not be able to produce. In other words, production will decline further.
Here’s what I suggest: look at gold from a long-term perspective, and don’t be too fixated on the short-term fluctuations. They are the result of nothing but noise, emotions, and speculation. In the long-term, the yellow metal remains a solid opportunity. It will pay off big-time.
Shocking: Could This Lead to an Economic Collapse in 2015?
How safe is your portfolio from a stock market crash? While government officials try to soothe investors’ fears with a lot of “happy talk,” new indicators suggest the U.S. economy may be on the verge of collapse. In fact, it’s starting to happen already.
In a special investor presentation, Profit Confidential founder Michael Lombardi outlines exactly what the next financial crisis will look like as well as how to protect your savings. To get the full story, check out his report, “The Great Crash of 2015.”