Gold trades lower as banks siphon dollars

In the Lead: “The Eagle Has Not Landed (In Certain Nests)”

Something else that is rising anew is palladium. The metal continued its seemingly non-stop rally and advanced $5 to the $675 per ounce figure, which is within striking distance of what is thought to be more significant upside resistance near $685 per ounce. As good as the rally in the noble metal has been there is a school of thought that – for the time being, and based on real-world automotive demand – sees the metal’s near-term value as possibly being capped around the $750 area.

However, the upcoming exhaustion of Russian state-owned palladium stockpiles (perhaps by 2013) is still at the core of speculative preoccupation at the moment and at the core of medium-term price projections as well. Market analysts are actively engaged in head-scratching about just who, if anyone, might fill the eventual 750,000 ounce shortfall that will arise in the market when Russian sales come to a screeching halt.

Something else that appears to be slowing down considerably, at least in the gold coin space, is the level of American Eagle sales. Yes, the item somehow ‘escaped’ the news radar this week, but fear not; we are here to bring you the unvarnished truth. The report indicates that total sales of the American Gold Eagle bullion coins literally “plunged” last month. This, according to production figures obtained from the U.S. Mint and sales figures from its website. Gold Eagle sales fell by 63.4% in November versus the same month last year.

When you consider the level of intensity of the European crisis and the malaise in the equity markets this quarter, the tally is somewhat of a shocker. It appears that the incessant pleas of newsletter-based doomsayers for the public to “get physical as Armageddon is nigh” are falling on deaf ears. It cannot be that every safe-haven seeker has suddenly had an epiphany about ETFs, since those vehicles are the favorite plaything of hedge funds and similar specs.

However and perhaps even more telling of a potentially developing trend is the fact that sales of the U.S. Mint’s gold bullion coins have fallen by nearly 20% on a year-to-date basis through the end of last month. A total of 41,000 gold coin ounces were sold in November 2011 compared to sales of 112,000 ounces in November 2010. YTD sales through November amounted to 934,500 ounces as compared to the 2011’s eleven-month tally of 1,160,500 ounces.

Moreover, consider the present sales figure in comparison to the 1,435,000 ounces that the Mint sold in 2009 – its record-breaking year. One metals-oriented blog asks the question: “Have Americans given up on gold?” Perhaps they have not, but perhaps when they have considered the fact that, after all of the time that has elapsed since the first promises of the death of the dollar were issued, the greenback is in fact not pushing up the daisies, and the American economy is equally far from its grave, they have decided that either the price tags are too high or that they had bought enough for the time being.

Until tomorrow (and until the weekend) it’s all about Europe, once again…

Jon Nadler is a Senior Metals Analyst at Kitco Metals Inc.

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About the Author
Jon Nadler Jon Nadler is a Senior Analyst at Kitco Metals Inc. North America
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