Reduced physical supply of gold, buyers dare to pay 3 times more expensive

NEW YORK, KOMPAS.com – Retail investors did not get enough gold during the health crisis due to the Covid 19 virus pandemic. Even retail investors are willing to pay surprising value to get it.

Quoting Kontan.co.id, on Tuesday (04/28/2020), consumers who want to buy gold coins generally have to pay more than the price per ounce listed on the London and New York stock exchanges.

“The value is $ 135 higher, three times more than two months ago,” said Robert Higgins, CEO of Argent Asset Group LLC in Wilmington, Delaware. Bloomberg.

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“There is never time for American Gold Eagles at this premium level,” Higgins continued in an interview with Bloomberg.

The price increase was also driven by movement restrictions to prevent the spread of the corona virus. This causes a reduction in the supply of gold coins and gold bars available for shipping worldwide.

At the same time, the status of the gold bars is now increasingly attracting investors who are confused by the economic crisis.

“The world is in an imbalance of supply and demand, so as long as these conditions exist, the gold price premium will remain,” Higgins said.

Gold coins increased due to supply pressures and growing demand. The value of Certified Coin Exchange gold coins is at its highest level in six years.

Last year, demand for bullion and gold coins fell 20 percent. This is the lowest demand since 2009. The World Gold Council said this condition is detrimental to retail gold buyers.

Also read: 5 benefits of having a gold savings bar

But in 2020, these conditions are reversed. Investors returned to buy gold coins sold by the United States Mint. Gold purchases in March are at the fastest pace in three years.

Higgins also operates a gold wholesale business and generally handles an average of 1 million to 1.5 million ounces of gold each month. But now demand increased to more than 6.5 million ounces in March. This occurs because some metal refineries have started to resume partial operations.

Mish International Monetary Inc., a precious metal and gold coin dealer in Menlo Park, California, that sells gold coins also said that customers are willing to pay one-ounce gold coins at a price greater than 7 percent of the spot price or almost $ 1,851 per troy ounce. Meanwhile, at that time Friday’s spot price closed at $ 1,729.60 per troy ounce.

“This is crazy,” said President Mish Robert Mish. According to him, this is because many buyers no longer trust the system and want to have the precious metal in their hands for sure.

This news has been broadcast on Kontan.co.id with the title: The physical supply of gold is reduced, buyers dare to pay three times more expensive