Perhaps the anomaly can be explained by a two level demand, one for coins and the other for bullion
that is what makes sense to me. at Kitco, they are sold out of all the 1oz type products, but no problem getting 400oz product at only a slight premium to spot. now, if there was a real bullion shortage it should be very hard to get 400oz bars, but apparently not a problem. only problem is, it costs $292,440!
so, what makes sense to me is, like you say, J6P demand is very strong. this ties back into what i said about minting capacity. i don't know if it's true, but to me it seems like a reasonable guess. perhaps minting capacity even globally is not that great because for a quarter-century, very few people wanted gold coins. now retail demand is growing.
since premia are very high on the coins, the minters should be making high margins on coins and thus should be increasing supply as much as possible. the fact that these coins continue to be in short supply, even though bars are plentiful, suggests to me that there is a bottleneck, and that the bottleneck is on the minting capacity end, not the bullion supply end.
are there publicly traded minters? i am curious if they are actually producing only a small amount of coins, or if they are producing the same as always, but the coins sell out too quickly for Kitco to list them in their store.
if this theory is remotely correct, i think the following extrapolation could be made: while bars are readily available now because not enough people with $292K want them, a change in the preferences of this group of investors could make bars hard to get as well. in that case, there should be no alternative but for POG to rise an extrahuge amount. |
