Gold price rises sharply as retail investors move to physical precious metals

Gold price rises sharply as retail investors move to physical precious metals by Michael J Kosares for USA Gold

Gold rose sharply overnight in a move that began during Asian trading hours and gathered pace in Europe. It is up $35 at $1663*.  Silver is up 18¢ at $14.61. Investors are moving to the refuge of physical precious metals largely in response to the deflation scare coursing through financial markets. The burgeoning retail demand, in turn, is putting additional pressure on already limited supplies of bullion and reinforcing stubbornly high premiums on coins and bars.

“Normally it would be troubling from a contrarian’s perspective for retail participants to be the leading buyers of gold bullion,” says analyst Clif Droke in his regular Seeking Alpha column.  “But as was the case in the wake of the 2008 financial crisis, the public’s unmitigated level of fear over a very uncertain economic future will be intense and unrelenting. Further, when the public is ‘all-in’ on a given asset, that asset’s price can move higher in an explosive fashion over a period of several months or even years. This was the case not only for gold in 2009-2011, but also for equities in 1997-1999. With that said, look for increasing demand for physical gold among individual investors in the coming months as the coronavirus crisis continues to boil.”

Note:  In keeping with the physical gold market’s use of the  April COMEX contract for pricing coin and bullion products and settlement purposes, we will use it from today as the spot price quote in our Daily Market Report.  This is the same spot price posted at our Online Order Desk and is roughly $20 higher than the price you see quoted in the menu bar above.

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