How Gold Prices Work in the Post-Crash Shortage – 1 May 2013

Summary: Following gold’s sharp drop over 2-days in mid-April, physical demand for gold and silver has skyrocketed. Lower prices have attracted a slew of new buyers, many of which are in Asia. In response this increased demand, premiums for coins and bars are at multi-year highs – dealers in Asia report the highest premiums since the crash in 2008. This has led some to claim there’s a strong disconnect between the spot price and the real value of a gold coin or bar. This piece from Bullion Vault explains the supply chain of retail gold and silver, and how it’s reasonable to expect premiums will increase when physical demand spikes. Read more…