Woes on Wall Street coincide with gold coin rush

Wednesday December 24, 12:50 pm ET By Sandy Shore, AP Business Writer US Mint labors to meet demand as investors buy up assets they can hold in their hands

DENVER (AP) — Investors who have forsaken shaky financial markets for the safety of gold must feel a little bit like prospectors.

As the worst recession in at least a generation spreads, so too does the clamor for gold bars and coins, assets less likely to go up on smoke like so many derivatives and asset-backed securities.

“I’ve never seen a case where demand was so high and supply was so short,” said Chicago coin dealer Harlan Berk, who has been in the business 44 years.

Spikes in demand for gold coins this year appear to run parallel with the mounting woes on Wall Street.

In August, as the Federal Reserve pumped $62 billion into the U.S. banking

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GoldDrivers 2009 – Extraordinary Bullish Outlook for Gold

By: Eric Hommelberg ldSeek.com

Dollar topping out Physical demand skyrocketing Supply chain shutting down COMEX Gold Manipulation exposed Gold shares on the move again

It sure has been a brutal year for gold and its shares and many may wonder if the $1030 top clocked in March 2008 marked the top for the gold bull market that started in April 2001. Despite the fact that many analysts want you to believe that gold has failed to act as a

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Gold bulls are going to attempt to raid Comex’s vaults by forcing delivery on their December futures contracts TODAY. Who can tell how that will go? I can’t. But it’ll be interesting to watch.

Facts: The open interest in futures contracts on the Comex has fallen to its lowest level since summer 2005, breaking a general uptrend in place since 2001. From a contrarian standpoint, the short-term bottoms in these data tend to favor the buyers over the sellers. However, the statistic went into orbit during the last half of 2007 — it broke away from the upper channel on the charts, creating a bubble in appearance. The current extremity could simply be a symmetrical reaction to that extreme.

Nevertheless, this is a bearish fact, technically speaking, if it represents a lasting new trend.

It is tempting to suggest that the threat of a raid in futures contracts is causing a short squeeze.

It

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Last week’s gold rally has fizzled out. But Ed Bugos says we could be in line for very bullish move. Outside of Japan, countries are inflating rapidly, which is extremely bearish for paper currency. And the supply and demand fundamentals of physical gold remain bullish.

More from The Daily Reckoning:

The late November rally in gold prices wasn’t quite as spectacular as mid-September’s gain, but it was still impressive. There was good follow-through too, though the momentum softened as bulls knocked on resistance near $850.

The rally was a no-brainer. There is a strong line of support at $700, which was resistance during 2006 and the first half of 2007. Moreover, the market was, and is, oversold.

The catalyst was news that the U.S. government had to bail out Citigroup (NYSE:C), the world’s largest bank by revenues. The event has given way to new concerns about the economy, which weighed on

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The spot price of gold has fallen more than 20% from its all-time high, reached in March of 2008. But if you think that means demand has declined, think again.

Gold demand has in fact exploded, and not just here and there. Everywhere. Around the world, customers have been queuing up to strip coin shops’ shelves bare. Mints have been running 24/7 and still have been forced to ration coin shipments to their dealers. ETF vaults are bulging.

Now, the World Gold Council has confirmed the trend with hard numbers for the third quarter of this year. In a page-and-a-half press release summarizing 3Q2008 activity, the WGC had to use the word “record” ten times. Some highlights:

Dollar demand for gold in Q3 was a record US$32 billion, 45% higher than the previous record, set in 2Q2008. Identifiable investment demand, which incorporates demand for gold through exchange-traded funds (ETFs), bars and coins, rose to ...

Gold bugs have suffered one of their worst years in history, says Keith Fitz-Gerald. But the US dollar looks increasingly fragile beyond this period of short-term panic buying. And that means the outlook for gold remains strong. Keith says every investor should ensure gold forms part of their investment strategy for 2009.

This from Money Morning:

If you were counting on gold to boost your returns this year, chances are you’ve been cruelly disappointed. In fact, when it comes to gold-related investments, virtually every category is down, making this one of the worst years in history for gold investors.

So, why is it that the largest of the large futures traders have some of the lowest net short positions in years? And what does this tell us about gold prices in the near future?

I’ll get to that in a minute. But first …

What Went Wrong?

In my analysis, I’ve identified the

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Pack a lunch and blow the froth off a cool one…as I’ve got three days of gold and silver market activities to talk about…and lots of fascinating reading as well.

Wednesday, November 26th

This was the last day for all parties to get their gold and silver contracts switched to the 2009 year…or they would have to stand for delivery on Friday. With the U.S. in holiday mode almost from the beginning of trading, the tiny rally at the Comex open was stepped on and never recovered. But it hardly mattered…as volume was virtually non-existent. Silver was the same. Call the day a big zero. However, the shares reacted otherwise. Even though gold was down ten bucks at the close of the equity markets, the HUI still managed a surprising 6% increase…the second day in a row that gold has been flat or down…and the HUI up. Hmmm!

Open interest on Tuesday showed

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nbsp;Here is my latest Money and Markets piece ...brbra href=http://www.moneyandmarkets.com/financial-mayhem-to-fuel-gold%e2%80%99s-next-surge-3-28362 style=font-weight: bold;Financial Mayhem to Fuel Gold’s Next Surge?/a by Sean Brodrick Wednesday, November 26, 2008 | 7:30 AM pLast week, I wrote about how our oil-rich friends in the Middle East are buying gold hand over fist. It turns out they’re not the only ones. The latest figures from the World Gold Council show a frenzy of activity … a href=http://www.moneyandmarkets.com/financial-mayhem-to-fuel-gold%e2%80%99s-next-surge-3-28362[More...]/a/p

Gold sold off gently in thin Far East trading on Monday morning…and the bottom was in a couple of hours before Hong Kong closed. From there, gold rose until about 10:00 a.m. in London, and although it tacked on about another ten bucks during Comex trading in New York, it had given all that back by the Comex close.

As for the silver price, it bottomed at the same time as gold and was off to the races shortly after London opened. The top was was in shortly after 10:30 Eastern time when it appeared that the about-to-become-parabolic rally drew the attention of the boyz. From that point on, the silver price didn’t do too much.

As would be expected, volume in gold on the Comex Friday was pretty heavy; but somewhat lighter yesterday. In silver, volume was heavier yesterday than it was on Friday…which stands to reason when you consider the

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Gold demand increased by 45% from the second quarter to the third. So why are gold prices falling? Mike Caggeso says frantic de-leveraging by hedge funds outweighed record retail demand for the precious metal. But he says the inflationary impact of the government’s bailout bonanza will be the catalyst for soaring gold prices in 2009.

This from Money Morning:

“Gold’s universal role as a store of value has shone through during this quarter helping attract investors and consumers to all forms of gold ownership,” James E. Burton, chief executive officer of the World Gold Council.

However, if you’d just looked at gold’s performance alone, you’d never be able to tell demand was so strong. Indeed, in the third quarter alone, gold prices tumbled almost 6% – and were actually down as much as 20%, until a mid-September rebound narrowed that loss.

Then came “Black October.”

The worldwide financial crisis continued to

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