In case you havent heard the news, theres a move on among the global intelligentsia to abolish physical cash, but huge segments of people around the world still arent buying that notion. Hence, gold and silver both enjoyed a standout start to 2016, propelled in part by sales of physical bullion.
Havent heard about the cashless society yet? Were inching closer to that target now that the Bank of Japan has imposed negative interest rates and a new Bloomberg editorial announced, Bring on the cashless future. The goal is to hand absolute control of your money to the central bankers, who then digitize it and force you to spend it under their negative-rate regime, all the while tracking your every purchase.
Gold kicks off 2016 up 5%: But critics arent having it, and their numbers are growing. Thats one reason why gold and silver were among the best-performing assets this past January. The yellow metal finished the month up about 5%, while silver returned about 3%.
And investors who understand the importance of physical bullion ownership helped power a robust month of coin sales at the U.S. Mint.
The Mint saw its January sales of 2016 gold American Eagle coins rise 53% over those in January 2015, with 124,000 ounces purchased.
Silver Eagles beating 2015 sales: Meanwhile, silver American Eagle coins also remain in hot demand despite being effectively rationed under an allocation program in place since mid-2015. Almost 6 million ounces of silver Eagles (5.95 million) were gobbled up in January 2016; thats 7.7% higher than January 2015s total and more than 153% above Decembers tally.
Commenting on Januarys gold Eagle statistics, Adam Hamilton of Zeal Research speculated that these surging gold bullion-coin sales could prove a very bullish leading indicator for gold. The last time the U.S. Mints gold American Eagle sales soared dramatically year-over-year was in 2009, paving the way for golds awesome 29.7% gain in 2010.
Moreover, Hamilton correctly observed that despite the resurgent American Eagle demand last year, Americans remain radically underinvested in gold.
ETF buying signals sentiment shift: That underinvestment could be changing, however. Gold also has enjoyed a tailwind from increasing investment in gold exchange-traded funds. Although not as good as personal ownership of physical bullion, ETF sales are important because they are a sign of interest from Wall Street and retail investors.
According to financial blogger and technician Dan Norcini, rising purchases of gold ETFs are suggesting a bullish shift in sentiment for gold.
The reported gold holdings in GLD are steadily increasing, he wrote. In 2015, from the start of the year, gold holdings increased over 64 tons in GLD until they topped out in the middle of February. From that point, through the rest of the remaining year, reported holdings then steadily declined as did the price of gold.
In 2016, to date, gold holdings in the ETF have also increased by a bit less than 27 tons. That is certainly constructive as it indicates RISING FAVORABLE SENTIMENT towards gold. Bulls should welcome this development while Bears should understand it and RESPECT it.
And those who would debase away the value of cash and digitize currencies also should respect the meaning of golds resurgence so far in 2016.