Metals Minute 17: Precious Metals Lower Acquisition Cost
We have heavy paper selling by the bullion banks this morning in Gold, which we will talk about shortly. We see the continued variance between spot and physical prices, so if you are a holder of physical metal, these spot prices have become far less relevant than they were a year ago. Nevertheless, let's take a look at the numbers.
Gold is down 5% from last week, to $1725. Silver is down 5% to $26.50. Platinum is down 6% to $1202, and Palladium was down 1% to $2382. For the 1-yr time frame, Gold is up 5%, Silver is up 54%, Platinum is up 36%, and Palladium is down 5% from one year ago.
I believe the latest paper smash of Gold is due to large players trying to lower acquisition costs as we get closer to implementing Basel III NSFR (net stable funding ratio) rules. These new rules double the credit banks holding physical bullion in their reserves and make them more financially sound. Paper gold contracts will no longer be given equal credit.
Even so, there is still a hefty premium for physical metal, with Silver bullion prices barely budging from last week. Gold and Platinum look like the biggest bargains for physical this morning.