Morning Market Update April 19: Physical To The Fore

April 19th, 2013 by

Gold and silver are slightly higher today, as phenomenal physical demand worldwide continues to support prices. This global gold rush, along with some short selling and bargain hunting, is stabilizing prices for a third day, even as gold ETFs continue to see large daily outflows as short-term traders rotate their funds into equities.

Markets in general are in the positive today, after an unhappy day at the stock exchange for nearly everyone yesterday.  In Asia, the Nikkei was up as the yen depreciated, and Hong Kong stocks broke a five-day losing streak. HK and Chinese stocks rose on the news that the Chinese government had begun accepting applications for foreign investment again, signifying increased liquidity for the market.

European stocks were up, as was the euro, on news that the EU finance minister said that EU austerity measures should be eased, in order to boost the flagging economy.

The dollar was weaker today, and oil continued to recover from hitting a 9.5-month low early this week. Both events are good for precious metals.

Alex Thorndike of MKS Capital remarked on the “exponential increases in premiums globally” in physical gold. “High premiums mean supply is drying up, and it will show up next in the paper gold market.” This may be a sign of the “decoupling” of physical gold prices from paper gold that some analysts have been expecting.

by David Peterson