Thursday, June 3, 2010

Krugerrand Production At 25 Year High

According to a Bloomberg report, webbed by Business Week, the output of South African Krugerrands is at its highest level since 1985.
Output last week jumped 50 percent to 30,000 ounces of blank coins for minting by SA Mint, Debra Thomson, Rand Refinery’s treasurer, said by telephone from Johannesburg today....

“We’re seeing higher demand for gold because of the sovereign-debt crisis in Europe and the depreciation of the euro,” said Thomson. “People are looking for gold as a safe haven.”
One interesting fact from the article: new demand for the Krugerrands is coming mostly from Germany. The Weimar experience may make them quick on the trigger, but many Germans evidently see the Eurobailout as heralding inflation.

On the related subject of Euroinflation, Juliet Samuel of City A.M. highlights the role that ETFs are now playing. She points out that the prime customer base for the gold ETFs are institutional investors, many of which are barred from holding gold directly. She ends by noting that the current gold rise, unlike the late '09 spike, is seeing physical demand as a large component. '09's was largely in the futures market.

That physical demand is obviously exerting an influence in Germany, where the ETF story is evidently less compelling than in the U.K. or North America.

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