Courtesy of Mish.
I am a gold bull, but I am also concerned about seriously misleading hype regarding alleged shortages.
For example, a friend recently emailed an article that contained this claim: Gold Selling for at least 50% over Spot in Asia-Rob Kirby.
According to Rob Kirby "In the Asian market, if you could find physical bullion as cheap as spot plus 50%, you’d be doing really, really, really well and you’d be hard pressed to find serious tonnage at that price in Asia.”
Kirby, who specializes in acquiring large amounts of physical gold for clients, sees physical gold bullion selling for at least “50%” over spot, which would put the price of gold in Asia at least $1,800 per ounce. Kirby also says, “Prices being paid right now in Asia make a mockery of the prices being shown in COMEX and the LBMA (London Bullion Market Association). These paper markets have divorced themselves from the laws of economics.
Misleading Gold Hype
Kirby's statement is purposeful hype. The phrase that Kirby relies on to make his statement semi-factual is "serious tonnage of bullion". However, people don't generally buy serious tonnage of bullion. Instead, they buy bars.
Even with that phrase, I would expect arbitrage to whittle away at the alleged 50% markup.
Markups normally decline the more one buys. Anyone can ascertain that by checking refinery, mint and bullion dealer prices for direct sales online.
Of course, if someone demands "tonnage" of bullion or coins and "tonnage" is not available, then one cannot readily get it at any price.
Regardless, the average person can buy physical gold and silver in small or large quantities with very tiny markups. I will mention numerous ways in just a moment but first let's consider silver.
Silver Bars and Coins
Reader Mark emailed me a few weeks ago when silver was trading at $15.72. Mark complained that his dealer wanted $24.50 for an American Silver Eagle (ASE).
That's a markup of $8.78, nearly 56% over spot! On silver bars, the dealer markup was spot plus $3.50. That's a markup of about 22%. …
