Gold and silver bullion are on the move

The price movement of gold and silver often attract much attention. When prices make a noticeable increase, it regularly leads to perma-bulls calling for the next great explosion in precious metals. On the other hand, any dips or corrections lead to critics calling for an end to the 12-year bull market. Both sides are debatable, but there is no denying that physical bullion made impressive moves this past week.

On Wednesday, the Bundesbank confirmed reports and announced it will repatriate a portion of its foreign gold reserves. By 2020, the central bank intends to store half of Germany’s gold reserves in its own vaults within the country, compared to only 31% now. The other half will remain in New York and London. The plan will remove 300 tonnes of gold from New York, reducing Germany’s percentage of reserves held at the New York Federal Reserve from 45% to 37%. Another 374 tonnes will be relocated from Paris to Frankfurt, which removes all of Germany’s gold held in France’s capital.

Central banks have shown a great deal of interest in gold over the past few years. For the first-time in decades, central banks across the globe became net buyers of the precious metal in 2009. Last year, central bank purchases increased 17% to 536 metric tons, according to Thomas Reuters GFMS. This represents the biggest addition to gold reserves in 48 years. The organization also expects central banks to add another 280 tons in the first half of 2013.

Silver making moves too…

Gold is not the only precious metal making moves this week. The iShares Silver Trust, which is the biggest exchange-traded fund for silver, added 572 tons of the metal. It is the biggest increase in assets for the BlackRock  managed fund since December 2007. The ETF has received inflows of more than $600 million this week, leading all ETFs in the marketplace. According to Bloomberg  and Barclays, global investment through all silver-backed exchange-traded products is at a record 19,114 tons.

Demand in silver coins is also showing strength. On Thursday, the U.S. Mint suspended sales of the new American Silver Eagle. In a statement to authorized purchasers, the Mint explains, “The United States Mint has temporarily sold out of 2013 American Eagle Silver Bullion coins. As a result, sales are suspended until we can build up an inventory of these coins. Sales will resume on or about the week of January 28, 2013, via the allocation process.”

The 2013 American Silver Eagle was initially released on Jan. 7, 2013. On the first day of availability, the Mint received more than 3.9 million orders, the highest one-day of sales in the history of the program. According to the latest information on the Mint’s website, sales have reached about 6 million coins for January and are on pace to surpass the all-time high of 6.1 million coins set in January 2012.

Here’s how some of the major gold and silver ETFs moved technically over the past week:

Click to enlarge.

About the Author
Eric McWhinnie

Eric McWhinnie is the chief commodities analyst at Wall St. Cheat Sheet. He has been an analyst at Wall St. Cheat Sheet since early 2010. He has worked at State Street and Waddell & Reed in financial advisory services and is also the editor of Wall St. Cheat Sheet's Gold & Silver Investment Newsletter and Commodities Investment Newsletters.

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