It seems that there has been a strong surge in demand from consumers for gold coins and small gold bars due to fear and uncertainly about the future caused by the COVID-19 pandemic.
On Thursday (April 2), Bloomberg reported that those consumers lucky enough to be able to find these “cheaper” forms of physical gold have to pay quite a premium over the spot price quoted in London and New York. At the time of writing (11:40 UTC on 2 April 2020), spot gold is trading at $1,594.96, up +$11.56 (i.e. up 0.73% over yesterday’s close).
The report says that gold bullion dealers are so desperate to get their hands on gold bars and coins that they are urrently willing to offer “a rare premium over spot prices.”
Mark O’Byrne, the founder of GoldCore, a dealer based in Dublin, told Bloomberg:
“People want to buy, not to sell gold. We have a buyers’ waiting list and we emailed our clients seeing who wished to sell their gold. At this time there is roughly only one or two sellers for every 99 buyers.”
Although it is not hard to buy large 400-ounce gold bars, retail investors are mostly interested in coins and much smaller bars because they are more affordable.
Another factor besides exploding demand that makes these smaller forms of physical gold hard to come by at the moment is the fact that “some refineries and mints have stopped operating or capped production because of local lockdowns.”
Markus Krall, chief executive of German precious-metals retailer Degussa, says that currently gold bullion dealers are selling such items at a 10-15% premium over spot pries.
Ronan Manly, an analyst at Singapore dealer BullionStar, had this to say:
“We are seeing an unprecedented situation where huge customer demand and the disconnect between physical prices and spot prices is driving buy premiums high.”