CAN'T HANDLE GLOBAL RUN ON GOLD COINS By
John Crudele - NY Post - November 18, 2008
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."
And the price that the government charges coin dealers has
recently been increased by as much as 10 percent for a 10-ounce
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.
Finally, someone in Washington is complaining about the coziness
between the government and Goldman Sachs - which, incidentally,
has been going on unfettered for the greater part of two decades.
If you've been reading this column for any length of time,
you already know I have been griping loudly about the obvious
inappropriateness of this Washington/Wall Street liaison and
have spent considerable energy outlining my suspicions.
Now, Iowa Sen. Charles Grassley, the senior Republican on
the Senate Finance Committee, is asking the inspector general
of the US Treasury to investigate whether some government
officials who formerly worked at Goldman let their "relationships"
cloud their judgment during the merger of Wells Fargo and
In case you aren't up on the Goldman-to-govern ment express
train, cur rent Treasury Secretary Hank Paulson is a for mer
Goldman chairman, as was Robert Rubin who headed the department
during Bill Clinton's presidency.
And more Goldman execs are being mentioned for the Treasury
job in President-elect Barack Obama's administration.
Specifically, Grassley is concerned about a tax code change
that paved the way for the acquisition of Wachovia by Wells
Fargo. An ex-Goldman executive was leading Wachovia at the
time of that deal.
Here's the answer he'll get from Treasury and Paulson: these
are dangerous times and anything that was done was for the
good of the country. In other words, they'll drag out the
old national security argument.
Grassley will become a minnow in the next Democrat-controlled
Congress. But the Democrats need to take up the baton, turn
it into a club and see just what Paulson has been up to.
As I've written before, Paulson has admitted that part of
his job was to keep in touch with "market participants."
Calling his friends on Wall Street - and especially at Goldman
- would be an odd extension of the role of Treasury secretary
and I certainly would like to know what he felt compelled
to tell these folks.
Like - did Paulson leak to Wall Street last August the fact
that the Federal Reserve was about to begin interest-rate
All Grassley or the Democrats need to do is subpoena Paulson's
phone records and meeting minutes of his secretive President's
Working Group on Financial Markets. But I don't think anyone
in Washington has the nerve.