With physical gold (regional) shortages, increasing physical demand, a run on "paper gold", and soaring retail interest, the gold market remains in chaos, and now members of the U.S. Congress have expressed concerns to regulators.
The good news is that the large premium between Comex gold futures and spot gold has narrowed over the past few weeks. According to foreign media reports, Australia's largest gold smelter has increased the production of one kilogram of gold bars to ease supply constraints in the United States.
The sharp drop in demand for air travel has led to the grounding of passenger planes frequently used to transport gold products. Some smelting activities have also been affected by the epidemic, making the supply of gold bars generally used to settle Comex gold futures tight. Richard Hayes, CEO of the Australian Perth Mint, said:
"We are doing our best to produce one kilogram of gold bars. The current weekly production may be 7.5 tons, which has been pre-sold until May. A large part of these gold bars are ultimately used for settlement. Comex Gold Futures.”
Hayes believes that the arbitrage issues surrounding Comex will be short-lived and will not last for several months.
"This is an unusual situation where you have a large amount of physical gold, but it's just not in the right form or in the right place."
The chaos and the change in Comex delivery rules prompted U.S. Congressman Alex Mooney to comment on Commodities The Futures Trading Commission (CFTC) has raised concerns about gold and silver delivery defaults. Mooney said that the gold market regulated by the CFTC is facing tremendous pressure and delivery difficulties.
"I am increasingly concerned about the rising risk of defaults in the U.S. gold and silver markets, and the resulting loss of confidence in the markets. A major gold and/or silver default would also have far-reaching consequences for monetary policy."
because Affected by the epidemic, despite the surge in demand for gold coins, the U.S. Mint has recently suspended all production. This does nothing to help with physical needs.
As Everett Millman, a precious metals expert at Gainesville Coins in Florida, warned, the timing is bad and will exacerbate supply shortages in the gold coin market at a time when demand is surging.
Robert Higgins, chief executive of Argent Asset Group LLC in Wilmington, Delaware, said retail premiums are rising sharply and have jumped to $135, according to foreign media reports, three times what they were two months ago. "The American Eagle gold coin has never reached this level of premium."
The premium of the American Eagle gold coin has reached the highest level since the Crimean conflict in April 2014 triggered large-scale safe-haven buying.
Higgins said the premium will continue until the world resolves this imbalance and returns to a normal balance of supply and demand. He expects this strong demand to continue for some time because people are already frightened by this terrible virus disaster.
Meanwhile, Peter Schiff of SchiffGold.com said that while corporate performance reports have been coming in, but they have generally been disappointing, there is one group that is definitely doing well - gold mining companies that are truly "gold mines".
Schiff emphasized that government and central bank policies are the root of the problem. He pointed out that in order to support the market, the Fed had to destroy the purchasing power of the dollar, so what investors should do is buy gold stocks. Because gold and gold stocks will be the biggest beneficiaries of monetary policy. Schiff said:
"They are alternatives to fiat currencies, and fiat currencies are losing value globally, especially in the United States. So, I think, in terms of earnings, gold stocks will be among the few companies that will see significant earnings increases. In fact, They are benefiting from lower energy prices, because energy is a key cost of operating a gold mine. So, the gold mine is literally a gold mine, and I think investors are overlooking its potential."
Menlo Park, California Robert Mish, president of precious metals trader Mish International Monetary Inc, said:
"It's crazy... One factor in the market is that many buyers no longer believe in the system and they definitely want to keep gold in their own hands."
Gold demand A fundamental driver behind this – as Kyle Bass pointed out 10 years ago: “Buying gold is buying a put option against the political cycle, it’s that simple.”
This article comes from Jinshi Data
