Premium on physical Gold highest in India at $40/10 gms

Reports that George Soros has cut his holdings in the past quarter are also putting pressure on the prices. And there is another report from Goldman Sachs predicting more declines in the near term. The regional presidents at the US Federal Reserves, who are asking for reduction in stimulus, are also keeping investors jittery.

Gold prices have declined 19% in the current calendar year.

While paper gold is getting liquidated and the ETFs are seeing redemption, interest in physical gold has picked up. The demand is so strong that now investors have to pay a premium to buy physical gold. The delivery comes with a waiting period.

Its now paper players v/s the physical gold buyers!

In paper futures, you can short sell even if you don’t have the actual commodity to sell. As per various reports, the leveraged shorts are 10-12 times higher on comex. Even as these paper shorts are leading to prices decline, physical buying has picked up.

The major buyers are in China and India who have been investing heavily in gold as the prices have become cheaper in dollar terms. Large buy orders from these markets are pushing the physical premiums to the levels not seen for longest time.

Hong Kong and Singapore buyers are paying premium of $5 per oz for a gold bar. Dubai buyers are paying a premium of $7-10 per Kg. Turkey was reportedly paying a premium of $25 an oz over London price. India is paying a premium of nearly $40 per 10 gms. The coins demand from mints in the US, UK to Australia are reportedly soaring. And not just the bars and coins. Scrap gold sales have also picked up in most of these Asian physical markets.

There also are theories that high volume of physical gold may slowly give Asian countries the power to influence gold prices. And while that could be few years away, at present you still have the global banks dishing out bearish reports on gold.