Strong demand for physical gold from private households continues to cause bottlenecks and price premiums. Gold traders in Dubai report premiums over the spot gold price of up to $10 an ounce for physical bullion.
Shortages of gold and particular silver coins and bars is not confined to the small coin and bar market and there are also supply issues in the larger bar market with kilo bars being increasingly difficult to secure.
There an oddity about gold at the moment with phenomenal physical demand in Asia, U.S. and Europe, while the actual spot prices languishes. We have written before about the strange disconnect between paper and physical demand but rarely has there been such a clear divergence.
You have to distinguish between "the gold price," which reflects the paper gold futures prices and has collapsed, and "the price of gold," which represents the physical price of gold and has remained well-supported.
Wholesale gold prices rose back above $1,430 per ounce Monday morning for the first time since last Monday's price drop, amid reports of strong buying in Asia, while stocks gained and US Treasuries fell.
Last week, Arizona lawmakers passed a bill that makes precious metals legal tender. Arizona is the second state after Utah to allow gold coins created by the U.S. Mint and private mints to be used as currency.