There's a worldwide run on gold coins.

Even as the price of the precious metal itself comes under pressure along with commodities like oil and copper, people around the world are demanding so many of the valuable coins that government mints are having difficulty filling orders.

A spokesperson for the US Mint tells me that gold coins in this country, for the past month, "are being allocated because of an increased demand." [BMK note: Perth Mint is totally out of gold and silver coins]

And the price that the government charges coin dealers has recently been increased by as much as 10 percent for a 10-ounce coin.

Robert Mish, a coin dealer in Menlo Park, Calif., says customers who want to purchase 200 gold coins often have to wait up to two weeks. Six months ago, he said, a purchase that size could have been filled immediately.

Someone who recently tried to purchase 100 one-ounce American Eagle gold coins in the New York City area was turned away, even though he'd uneventfully made purchases before through the same dealer.

And even when gold coins are available, dealers report that customers are paying a bigger premium than they would have just a few months ago.

Previously, American Eagle coins were going for 5 percent over the market price of gold on the Commodity Exchange (Comex). Now the premium can be anywhere from 10 percent to 15 percent, even though the US Mint raised its price to dealers by just 3 percent for an ounce coin.

In one sense, the attraction for gold coins isn't surprising. Since ancient times, gold has been considered the safest investment to hold in times of uncertainty.

With fears of future inflation rising and concern about the value of paper currency and government debt increasing with each new recovery plan announced in Washington and in foreign capitals, the desire to hold gold grows.

That part makes perfect sense. But there's another more puzzling aspect to the recent gold rush.

Even as the demand for gold coins such as the Canadian Maple Leaf or the Krugerrand of South Africa has grown, the market price of the precious metal itself is off its highs.

In early October, the price of an ounce of gold on the spot market was about $930 an ounce. With the commodities bubble bursting in recent months, gold declined into the upper $600 range. Spot gold closed yesterday at $739.90, down $2.60.

Bill Murphy, chairman of the Gold Anti-Trust Action Committee, says the price of spot gold is even more perplexing given the demand for coins and the fact that central banks in Europe have stopped selling gold into the open market.

"Gold should be moving up," Murphy says. "How could there be such a dichotomy between the historic high premium for coins all over the world and the low Comex price?"

His answer? "Today the public is buying gold like crazy, but the US government and the banks that hold bullion are intentionally keeping the price down."

Ah, but that column will have to wait for another day.

From Lemetropole cafe

From what I've heard so far out of the G-20 meeting, nothing much of substance is forthcoming. The "plan" is to formulate a "plan" by April. Not gonna happen, the markets and economy are in an absolute nosedive and as with an airplane the central banks do not have the luxury of time to pullout [reflate] before crashing. The central banks had this meeting as an opportunity to fix the problem of "bad money", it looks like the opportunity will be squandered. Now it will be Mother Nature to the rescue but it will feel like anything but a rescue.

Make no mistake, big money around the world knows what must happen officially [central bank decree] or unofficially [Mother Nature]. Official money, ie the Saudis, the Chinese central bank, Russia and others have already started their moves toward Gold on a physical basis. They are not buyers of paper promises, they want the real thing because of the default risk. Up until this point the talk in the physical markets was about tight or non existent supplies at the retail level, this past week the lack of supply took a quantum leap when Europe began curtailing Gold shipments to the worlds' largest consumer, India. This has the possibility of starting a bidding war that breaks physical away from paper for good. Think of it this way, either Europe doesn't have the physical for delivery, they have physical but don't want to part with it, or they are afraid of default by India within the 3-5 day shipment period between the order and settlement. The truth is that probably all of the above are correct answers to some extent.

We really did receive news of epoch proportions this past week regarding Gold and either no one realized it or everyone is so demoralized that it didn't even register. The Saudis bought $3.5 Billion of bullion, the Chinese are talking about shifting or diversifying part of their $2+ Trillion of reserves into Gold, and the Russians are talking about a "Gold convertible Ruble". In my mind only the announcement that "Fort Knox is empty" could have been bigger news, in time I think we will find out the truth about U.S and IMF bullion reserves. So now we have governments that have been adversely affected by the fiat Dollar standard beginning to mobilize and act in their own best interests, they obviously see the writing on the walls.

Capitalism, as in any other game, the participants will act in their own self interest to "win". I have compared the current situation to "musical chairs" and a "game of chicken" many times in the past, it is fast becoming obvious that this is truly the case. For instance, while sovereign money has stopped and reversed in FNM/FRE bond purchases, they have only slowed or stopped their purchases of direct Treasuries. Who will be first to start the wholesale liquidation that's coming? Who chickens out first and sells U.S. Treasuries? While some governments have spoken about and others have begun "local currency settlement" of trade, who will be first to request settlement in bullion? This is absolutely where trade and currency is headed. While I'm sure the U.S. and it's allies put on the "stall" this weekend in Washington, I don't believe Mother Nature will have any of it. Without a coordinated "reflation deal", we can only see more deflation as the derivatives keep blowing out balance sheets like popcorn kernels in a microwave. It truly is REFLATE or DIE.

The sooner this process begins, the better! Governments can try to wait it out, stick their heads in the sand and peek out in the first quarter of next year only to find their butts were blown off while they weren't looking. Or, they can be proactive, close the markets and hammer out a currency deal that allows the world to execute commerce in a sound and stable currency. This is a currency crisis of biblical proportions that will not be solved with "Rubinesque" methods [just buy another 6 months time, and pray]. No, it is over and this past week saw the early posturing by sovereign nations preparing for a stoppage in the music. The sovereign floodgates into Gold has begun and will shortly become every nation [man/woman] for themselves. That's how Mother Nature works, she can be cruel but she is always fair as the rules are the same for everyone and they don't change in the middle of the game. Governments have tried for 5,000 years to cheat Mother Nature to no avail, today is no different.

This week, former chairman of the Fed Reserve Alan Greenspan in an interview aired on PBS' News Hour was asked by Jim Lehrer what should be the proper relationship between a chairman of the Fed and The President of the United States. In a shockingly honest tone Greenspan replies,

"Well, first of all, the Federal Reserve is an independent agency, and that means, basically, that there is no other agency of government which can overrule actions that we take. So long as that is in place and there is no evidence that the administration or the Congress or anybody else is requesting that we do things other than what we think is the appropriate thing, then what the relationships are don't, frankly, matter."

This issue with the Fed being above government is one of the key things We The People need to understand in order to wake up to the awful situation that we have found ourselves in. Our wealth, our labor, and anything we gain buy being productive has been stolen from us since the Federal Reserve took over our money system in the 1913.

Most people believe the Fed to be a government agency overlooked by the President of the United States. Others fully believe the statements of Mr. Greenspan but don't really understand what it means to have an "independent agency" (i.e. private banks) be above The Presidency, The Congress and Senate, and the Supreme court of the United States…

By Jim Sinclair
Let today be your answer to the many question concerning whether gold will ever rise again. The answer is it will to $1200 and then onward to $1650.

I suspect that we could soon have a financial/felony experience that could land on the dollar like a piece of lead. I suspect that the instant the USDX breaks its present up-trend line from .72 to about .89, it will look like the dollar stepped into an elevator door and found no elevator there.

I suspect that the next move in gold will witness the massive short covering in all variety of shares, both majors and juniors. Under no circumstances give away your insurance (gold and all things gold) and if you have then for your sake buy your insurance policy back ASAP (gold and all that is gold).

Gold is a currency that you will see perform as the currency of choice. There is no doubt we are headed into a planetary Weimar experience to some degree.

Dollars are being created faster now than in any other period in history. The Fed and treasury are guaranteeing everything from money market funds to large corporate entities in one way or another.

The first valuation of worthless OTC derivatives via a public sale of these at .0875 to .02 cents shocked anyone with a brain. Now the downturn in business is hitting financial entities and shortly litigation will smoke whatever is left.

The FDIC is already yelling for additional and significant funding from congress as their capital contracts on every Friday’s bailout and their responsibility to cover now goes to GE, a non-bank with no depositors.

People expect things to return to normal in 2010. That is a fairy tale. All these bailouts and Federal guarantees on credit items constitute a white wash on a falling economic structure going out of control and soon. The out of control point of major planetary dislocation is between today and 66 days from now.

Gold is the only viable insurance. The US dollar is not viable insurance because there is simply too much of it and that amount is growing every day. That makes the US dollar untrustworthy.

Gold is the only viable insurance. Clearly equities (with the exception of precious metals shares) are not. Gold is the only viable insurance. US Treasury bills are not because the yelling at all the rating agencies in Washington today just might get US credit downgraded.

General commodities have been viable, but by nature they are too wild and from now on will be selective until Pakistan implodes and Weimar appears Banks cannot offer insurance as they are in the main bankrupt.

Insurance companies cannot offer you sound insurance as they are now broke by OTC derivatives. Money market funds are not insurance, making gold the only viable insurance.

Retirement programs are no longer insurance and with Motor’s bankruptcy pending they can simply disappear into Chapter 11. Pensions are simply too large for the government agency to insure. Jobs are no longer insurance as companies are run by lawyers and accountants. Equity in your home is not insurance because it simply does not exist.

Your family is no longer insurance because they have the same problems you do. The assumption your kids will take care of you in your old age is not viable insurance no matter what you think.

Gold has no liability attached to it and is therefore the only viable insurance as honest money. Gold is universally exchangeable, making it the only viable insurance.

Gold has historically performed perfectly in maintaining buying power, making it the only viable insurance. Gold is the only viable insurance because it is Honest Money without liability or agenda.

Since gold is the only viable insurance and because everyone needs it, gold will trade at levels of at least $1200 and $1650. I could go on but gold is all there is that will protect you from the White Wash being applied to the Walking Dead entities by the Fed and Treasury on a structure that is in fact in a free fall.

I am not the least concerned about gold and believe you should not be either as long as you have no margin and understand what gold really is: the only honest currency and only historically functioning insurance policy. There is no other viable insurance in this most unusual situation.

This weeks technicals generally look more positive for gold and silver. This risk to the downside is fairly limited and we seem to be building a constructive base for a large move higher.

Gold weekly (in $AUD) click on chart for larger view
In Australian dollar terms the gold technicals are very bullish. Last week we tested resistance at $1076 and have bounced nicely to $1150. A break of $1168 could see $1225 very quickly.


Gold daily (in AUD) click on chart for larger view
The daily chart shows how gold has regained its uptrend from mid September. $1142 should hold some resistance next week.



Silver weekly (in USD)click on chart for larger view
We can see that silver is again holding its uptrend support from October 2001. $8.93 is a critical level to hold.



Silver daily (in USD)click on chart for larger view
The daily chart shows some short term strength and if next week we can break the $9.60 downtrend line we could see a rapid move to $10.50.

Ted Butler is interviewed on Financial sense and provides some explanation for the recent developments in the silver market. He builds a strong case as to why the price should explode soon.

BULLIONMARK PODCAST
Approximately 30 minute radio interview in 3 parts

The list of countries moving out of US dollar reserves and into gold is increasing. Governments are becoming increasingly unwilling to accept worthless infinite paper for valuable finite assets like oil. The end of the US dollar as the worlds currency of exchange is near.

"Argentum et aurum comparenda sunt"

TEHRAN -- Iran has converted financial reserves into gold to avoid future problems, an adviser to President Mahmoud Ahmadinejad said in comments published on Saturday, after the price of oil fell more than 60 percent from a peak in July.

Iran, the world's fourth-largest oil producer, is under U.N. and U.S. sanctions over its disputed nuclear programme and is now also facing declining revenue from its oil exports after crude prices tumbled.

"With the plans of the presidency ... the country's money reserves were changed into gold so that we wouldn't be faced with many problems in the future," presidential adviser Mojtaba Samareh-Hashemi was quoted as saying by business daily Poul.

He gave no figures or other details.

Before oil prices plunged by more than 60 percent from a peak of $147 per barrel in July, Iran made windfall gains from its crude exports and in April estimated its foreign exchange reserves at about $80 billion.

Iranian officials in July denied reports Iranian banks were moving funds from Europe, with one report suggesting as much as $75 billion had been withdrawn and converted into gold or placed in Asian banks, because of a threat of tightening sanctions.

The International Monetary Fund said in August that if the price of Iranian crude fell to $75 a barrel, Iran would face a current account deficit in the medium term that would be tough to sustain due to Tehran's financial isolation.

On Friday, U.S. crude fell $1.20 at $57.04.

Gold futures ended more than 5 percent higher on Friday and bullion ended the week about $10 higher compared with its last Friday's close of $735.95 as investors covered short positions.