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Coin dealers report a huge increase in people buying bullion during the coronavirus pandemic 

Gold and silver have become the new toilet paper in Australia as investors pile into coins and bullion as a safe haven during the coronavirus panic.

‘Everyone is going bananas for gold and silver and we’ve seen a lot of excitement around rare coins, too,’ said Numismatist Matthew Thompson of Downies Coins and Collectables in Melbourne.

Demand has surged so much that stocks of both gold and silver coins and bullion are running low.

Numismatist Matthew Thompson (pictured) of Downies Coins and Collectables in Melbourne with a display case that is normally full of gold coins. Demand is surging from investors who want to put their wealth into tangible assets to protect against a falling Australian dollar

Numismatist Matthew Thompson (pictured) of Downies Coins and Collectables in Melbourne with a display case that is normally full of gold coins. Demand is surging from investors who want to put their wealth into tangible assets to protect against a falling Australian dollar

‘I have literally no bulk silver and only a handful of gold coins in the shop right now,’ Mr Thompson said.

‘Normally these display cases are full,’ he said, holding up a large black display case with just three coins. 

‘It’s crazy at the moment, many dealers are completely cleaned out of physical stock.   

Retail investors are turning to precious metals seeking a store of value as the Australian dollar drops below US60c. 

Because bullion is in short supply- with silver almost unobtainable by some dealers – retail customers are turning to collectibles instead.

Gold bullion is in great demand right now and so is silver bullion, and silver is harder to get

Gold bullion is in great demand right now and so is silver bullion, and silver is harder to get 

A disconnect has opened between retail demand and paper gold trading in the futures and ETF markets where hedge funds have sold down positions to pay those who are cashing out

Mr Thompson said there was a lot of excitement around high-end rarities like the 1930 penny, with the shop having one specimen for sale at $27,500.

‘A lot of our clients are also diving into the rare coins, as many people like the idea of having a diversified portfolio,’ Mr Thompson said. 

The surge in demand for physical gold and silver around the world has taken off with safe haven buying resulting in precious metals being sold out and world gold markets stressed. 

Goldman Sachs told investors on Tuesday it was now time to buy gold as the currency of last resort, Marketwatch.com reported.

‘We have long argued that gold is the currency of last resort, acting as a hedge against currency debasement when policy makers act to accommodate shocks such as the one being experienced now,’ said Goldman Sachs analysts led by Jeffrey Currie. 

Retail investors across Europe and the US have rushed to buy up bars and coins to protect their money from fiat currency devaluation and stock market plunges caused by the economic impacts of the coronavirus.

The Financial Times reported a growing global shortage of gold bars as Europe’s largest gold refineries in the Swiss region of Ticino near the Italian border have been caught up in the pandemic shutdown.

The gold price hit a seven-year high on March 9 of more than US$1700 a troy ounce.

Sanitizers at the Swiss-Italian border checkpoint in Chiasso, Switzerland. Coronavirus has disrupted production at Europe's largest refineries in Ticino, near the Italian border

Sanitizers at the Swiss-Italian border checkpoint in Chiasso, Switzerland. Coronavirus has disrupted production at Europe’s largest refineries in Ticino, near the Italian border

At the same time that retail demand has surged, hedge funds have been selling down the metal in order to pay off redemptions as investors cash out.

Much of the selling has been seen in the paper gold markets  – the futures and exchanged traded funds – instead of the physical metal.  

This has led to a disconnect between gold futures and the spot price of the physical metal with the gap between futures on the Comex exchange in New York and the London spot price widening to almost $80 an ounce – or four percent – on Tuesday.

This rare 1930 penny is selling for $27,500. Downies Coins and Collectables numismatist Matthew Thompson said high-end coins such as this are now in high demand as customers want to protect their wealth during uncertain times

This rare 1930 penny is selling for $27,500. Downies Coins and Collectables numismatist Matthew Thompson said high-end coins such as this are now in high demand as customers want to protect their wealth during uncertain times

Retail dealers round the world have reported delays of up to 15 days on shipments. 

Rob Halliday-Stein, founder of UK online bullion dealer BullionbyPost, told the Financial Times the demand was like the toilet paper craze.

‘Basically we’re selling as soon as we get stock on location in secure vaults — but we’re restricted to what we can get hold of. It’s a bit like toilet roll,’ 

In Australian dollars, the gold price was at $2708.95 early on Thursday morning, Kitco.com reported.

The Australian dollar was sitting at US59.6c on xe.com as of 9am Australian Eastern Daylight Time on Thursday.

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Written by Angle News

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