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Bullion Shortage and Spot Prices Tell Two Different Gold Stories

Having blogged earlier on a physical silver shortage and the drying up of gold bullion purchases, recent events in the precious metals markets justify an update that again arrives at the conclusion that last Friday's silver and gold price plunge on COMEX has pretty little to do with the actual physical investment demand for gold and silver. Tim Iacono had a good post with the headline "Gold prices getting fishier and fishier," that does away with the myth that the US mint faces unprecedented demand. I stumbled across several more reports that show the ongoing dichotomy between official spot or futures prices and premiums actually paid by investors, if they can get their coins or bars at all.

The British Evening Standard ran a story over the weekend that said demand in Germany had grown 10-fold and dealers were not taking any more orders:

German gold dealers say demand has skyrocketed this past week to 10 times normal so no more orders can be taken for the foreseeable future.

"The demand exceeds our capacities by a great deal," said Heiko Ganss, head of precious metal company Pro Aurum.

"The requests cannot be satisfied right now," a dealer from the Düsseldorf WGZ Bank confirmed.

"Demand for gold as a conservative investment has risen dramatically," said Stephan Henkel. "right now the demand is about 10 times as high as in normal times."

Gold deliveries now take between four and six weeks.

This was confirmed by the Berlin daily Tagesspiegel, which reported in a very insightful article that German gold dealer Pro Aurum has closed its mail-order business due to demand never seen before.

One reportedly has to wait four weeks to take delivery of one kilo gold bars.

Physically backed gold ETCs (Exchange Traded Commodities) see heydays as well, according to a story at

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The Prudent Investor is written by Toni Straka. Straka, who is 41, currently resides in Vienna, Austria. Straka is an independent certified financial analyst (OeVFA, EFFAS) who worked as a financial journalist for 15+ years and now evaluates global market trends. The Prudent Investor's subtitle is "Seeing Too Many Bubbles" - Straka believes we are in an era of global redistribution of wealth in which the US-European centric approach will not work much longer. "Five billion people in the developing countries will demand their fair share of the world's resources," he writes. When not blogging, the Prudent Investor enjoys taking long trips to "far off" destinations. Visit his site: http://prudentinvestor.blogspot.com/

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