Sales of Gold Coins Soar on Accelerating Demand, Fear

image: IMF head Christine Lagarde makes $467,940 annually, plus $83,760 to “maintain an appropriate scale of living.” Her tax bill? Zero

It’s the oldest story in business. They teach sophisticated versions in graduate economics courses, but you can impart the same lesson to kids using marbles and pennies. Your local supermarket knows all about it; it’s how they track prices and inventory.  It’s called supply and demand. If demand for an item exceeds supply, the price goes up.

We’re currently getting to see a dramatic example of supply and demand in action in the precious metals market.  All year prices have been edging up as stock markets coughed and hiccuped their way through the first quarter, unease crept into our election process and the dollar lost steam.

As of May 7, the price of precious metals year-to-date has skyrocketed. Gold’s up 21%, silver 25%, and platinum and palladium have also seen healthy jumps. Much of this surge can be attributed to the wavering dollar.  Investors routinely flock to precious metals – especially gold – when they’re uncertain about dollar-denominated investments like stocks and bonds.

According to Paradigm Capital analysts, “[A] new upcycle has begun in the gold sector.” What the firm characterizes as a “standard upcycle” will, they predict, most likely carry gold to eighteen hundred dollars an ounce in the next three to four years.

But another analyst sees even higher prices for the yellow metal. At a conference in Dubai, precious metals expert Diego Parilla contended gold is on its way to three thousand dollars per ounce in the next three years. His argument is that central banks are out of “bullets.” In other words, the world’s financial brain trust, not just central banks in Europe, Japan and the U.S., but also the IMF, have run out of creative ways to tamper with the global economy.

This shift in sentiment has resulted in skyrocketing sales of gold coins. April sales of gold American Eagle coins catapulted almost 180% over March figures, and more than 250% over the same time last year. Silver coins logged in an all-time sales record of almost forty-five million ounces last year. In its third-quarter report, the Royal Canadian Mint reported record bullion sales in 2015.

So let’s admit that a “shift in sentiment” represents an understatement of how professional investors are now coming to view gold. In the last few months, as the financial community has lost its faith in the competence of central banks and the IMF to shepherd our monetary system, gold has once again become the refuge of choice for those hoping to protect their financial lives and futures from banks that treat their security as nothing more than fodder for their financial experiments.

As it has always been, gold is where we run for protection when our dollar-denominated paper assets forsake us.  It’s where we find shelter and stability when central banks devalue our cash, and punish our savings with non-existent interest rates.  As we see what is clearly a group of entitled elites, who preach but don’t practice austerity, performing increasingly dangerous experiments with the world economy, it becomes more and more clear that safeguarding our wealth and our futures is vital. Physical gold and silver, no longer a luxury of the rich, have finally been acknowledged as a necessity for anyone hoping to maintain a middle class existence, especially into what may be decades of retirement.