Gold Investors Add 43% to Holdings of Bullion

Gold investors increased their holdings of bullion at a major dealer by more than 40% in the first six months of the year. BullionVault, which says it looks after more gold than many of the world's central banks, reported 43% growth in its clients' physical holdings of the metal in the first half to more than 18 tonnes or $553m worth. The addition of almost 5.5 tonnes, or $166m worth, was almost twice the growth in BullionVault's clients' holdings in the same period last year and was equivalent to 70% of the growth seen over the whole of 2008. Adrian Ash of BullionVault said: "While politicians argue over 'green shoots' in the economy, the number of private individuals buying physical gold continues to grow. – Telegraph

Dominant Social Theme: An uptick but not a trend?

Free-Market Analysis: This is why gold bugs are so suspicious of the larger marts. Gold has been moving up and down in a mostly constrained trading range for 2009, and even before. At the same time, there have been plenty of scattered reports of significant scarcity of gold and silver -- even at government mints. And there have been plenty of reports of concentrated gold and silver buying, not just in the West but in India and in the East as well.

And now comes this report by a major bullion dealer saying that physical holdings of gold have grown by half in the past six months. Now it could be that BullionVault is experiencing unprecedented growth, but why should BullionVault's customers be so much more aggressive than the rest of the gold-buying public? In fact, BullionVault's experience sees to jibe with other apocryphal statements about gold and silver buying. We checked in with a familiar bullion expert to Daily Bell readers, Pat Gorman, based in Arizona, and he confirmed the same sort of statistics. The public is buying lots of precious metals – and has no intention, seemingly, of dumping them.

Contrast this to the mainstream media statements about gold and silver. Central banks are constantly threatening to sell gold for a variety of reasons – sometimes almost any reason will seemingly do. The International Monetary Fund recently expressed its determination to sell tons of gold so that it would be better able to hand out more paper money. (We bet the countries in question would happily take the hard stuff.)

It does seem from time to time that the prices of money metals are being suppressed by a financial establishment that is determined to maintain a money-printing franchise. No different in many ways, at least in our humble opinion, from the determination of others in the business who wish to keep their games alive. Madoff comes to mind. There is in fact a good deal of direct evidence that this is so, thanks to such organizations as GATA -- which has painstakingly put together a fairly expansive documentation of the flim-flammery and how it occurs.

Our position, however, has more to do with practicality (though we know where the fingers point.) Our idea is that markets cannot be contravened. Over time, the market will get to where it is going because, contrary to efforts that assume the opposite, the human race is not THAT malleable. The invisible hand is not something with which you want to arm wrestle. It always wins, though the timeline is unpredictable.

Conclusion: We have read in the past few months literally thousands of articles about the global stock market renaissance, one we think is vastly overstated. At the same time, we have read relatively few articles about the continued demand for money metals as the "correction" and the "recovery" grind their way forward. It is almost enough to put one off reading the mainstream media. One might, in fact, wish to found a publication that will help act as a corrective. Call it The Daily Bell – live from Galt's Gulch.

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