Tuesday, May 28, 2013

US Mint Resumes Selling One-Tenth Ounce Gold Coins... At A 40% Premium To Spot

I suspect some of you were skeptical when I was ranting about the bifurcation between artificially suppressed paper prices and the prices for physical gold and silver.

Some of you may have cynically passed it off as opportunistic coin dealers charging a high premium and talking their books, especially on silver when premiums soared to 30% above spot after the waterfall decline of paper silver in mid-April.

Guess what?  Don't blame the dealers--it's the US Treasury Mint itself who is now charging a 40% premium on 1/10 oz. gold coins.  The mints charge a premium to the wholesalers, who charge a premium to the retailers.  The retail dealers' profit margin is minuscule, because after all, it's just money changing hands, not investments.

But when there is a physical shortage, market forces dictate that the suppliers can charge whatever they want.  The US Treasury Mint is no different.

If you listen to today's financial media, Bloomberg News is once again profiling commodities "experts" demonizing gold.  Meanwhile, their pals are loading up on the physical bullion--even while the ETF's are unloading paper gold--the virtual kind.

Well: we have good news - as of moments ago the US mint has once again restocked on the popular denomination (with a 20,000 production limit), and without a limit per household. The even better news: the coin will set you back just $195. This means a "tiny" 40% premium to spot.

No comments:

Post a Comment