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Physical Gold and Silver Sales Rise: Will Long-Term Bear Remain?

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Physical gold and silver sales have picked up

With the much-discussed Greek crisis and Chinese markets plunging to low levels, global financial uncertainty has emerged. Demand for silver and gold coins remained low during the first five months of 2015. However, silver sales usually pick up as prices fall. For gold sales to increase, global instability is a key factor. Gold coin sales in July accounted for close to 40% of the total yearly sales.

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Key indicators

Gold historically performed contrary to the economy. Since there’s more confidence in the central bank, investors prefer other assets over bullions. Inflation concerns have affected financial markets. The Eurozone inflation rate was 0.2%, the same as the previous month. This figure was significantly lower than the target of 2%. Prolonged periods of low and negative inflation rates can discourage spending and investment in an economy. Due to concerns of global instability, bullions rallied on July 31, 2015. Gold futures on COMEX for August delivery surged by 0.6%. Silver for September expiry rose 0.33%

Miners suffered the most in the rout. Miner ETFs (exchange-traded funds) and mining companies saw a confused day on Friday, with most of them underperforming and a few marginally exceeding their peers. The SPDR S&P Metals and Mining ETF (XME) and the Global X Silver Miners ETF (SIL) declined by 0.94% and 1.79%, respectively. Companies involved in gold and silver mining also saw a mixed day. Goldcorp (GG), Agnico Eagle Mines (AEM), Newmont Mining (NEM), and Barrick Gold (ABX) declined by 0.23%, 1.40%, 0.29%, and 1.91%, respectively.

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