Disillusionment with Europe's single currency continues to grow with the cracks beginning to show in it's heartland, Germany, where the third largest political party is now selling gold coins and bars to raise funds.
In a poll in September Alternative for Germany (AfD) were found to be Germany's third most popular party. The rise of the Alternative for Germany (AfD) party saw it receive 10.6% of the vote in Thuringia and 12.2% in Brandenburg on 14 September. Two weeks earlier it secured its first regional government seats in Saxony.
AfD are not anti-EU per se and have distanced themselves from other eurosceptic parties. They see a future for Germany in the EU and embrace common markets but wish to see the European Monetary Union (EMU) and the euro itself wound up and a return to the Deutschmark.
In the past two weeks, in a bid to gain as much state funding as possible they have entered the gold bullion market with quite a degree of success. In Germany, the federal government will match, up to a value of €5 million, any funds raised privately by a political party. In a bid to get the full allocation of state funding, AfD have started to sell gold bullion online.
In the two weeks since the scheme was announced they have sold gold coins and bars worth a sizable €1.6 million.
There has been strong, broad based demand for precious metals in Germany in recent weeks and months due to concerns about the Eurozone, the Euro, the conflict with Russia and global uncertainties.
AfD have managed to sell a large volume of bullion bars and coins despite being unable to undercut the well established bullion dealers with whom they have been competing. This indicates that their customers are motivated to buy gold from them specifically because they support the party and it's policies.
"I have always warned that we can not compete with the prices of the competition," federal executive of the party Konrad Adam told Spiegel newspaper. "People should not feel deceived by our offer."
The smash on silver and gold on Thursday and Friday of last week played into the AFD’s hands as it saw German people, both investors and savers, entering the market in droves to take advantage of the low prices.
Gold brokers across Germany described the manner in which demand for precious metals exploded last week as "a run." Many have seen a sharp increase in demand and found their inventories insufficient to meet demand according to Goldreporter.
Germans have become more knowledgeable vis-a-vis precious metals in the last few years and indeed have a cultural affinity for gold due to the hyperinflation and to Hitler’s banning of gold ownership.
The benefits of owning a tangible, divisible asset that cannot be printed at will by a government is strong in the folk memory. The lack of a response of the Merkel government following the scandal which arose when the Federal Reserve refused Germany's request to have it's sovereign gold repatriated has also motivated many Germans to take matters of wealth protection into their own hands.
They, like many people in the world today, are electing to become their own central bank.
The prudence and patience for which Germans are admired are worthy of emulation in these times. It is wise to do ones own research into owning precious metals and if one does take a position in gold - be sure to own coins and bars in segregated, allocated vaults in safe jurisdictions such as Switzerland
Trust in one’s decision and your judgement and view the volatility of the market with equanimity.
The fragile global financial and monetary system is teetering on the edge of collapse and serious inflation and stagflation is very possibly on the cards.
In the event of a crisis it will be there to help protect you which may not necessarily be the case for paper money and digits on a computer screen.
Gold was gold at the dawn of time and will continue to be.
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MARKET UPDATE
Today’s AM fix was USD 1169.25, EUR 933.91 and GBP 730.55 per ounce.
Yesterday’s AM fix was USD 1,170.75, EUR 936.90 and GBP 731.90 per ounce.
Gold fell $5.50 or 0.47% to $1,166.90 per ounce yesterday and silver remained unchanged at $16.16 per ounce.
Importantly, for European buyers, gold has remained quite robust in euro terms and seen only slight falls in recent days. Gold in euros remains up 8% for the year so far. Given the problems in the eurozone - it looks very well supported above the €900 level.
Gold in Euros - Year to Date 2014 (Thomson Reuters)
Gold inched up higher today in London, as the U.S. dollar retreated from multi year highs and alleviated recent pressure on the yellow metal.
Bullion traded below a key support level of around $1,180 an ounce on Friday as investors weighed the Fed’s announcement of the end of QE and the news that the Bank of Japan vastly increased increased its money printing and debt monetisation experiment in a surprise move, lending strength to the dollar.
This downward pressure on gold triggered stop loss selling and sent gold down to $1,161.25, its lowest since July 2010. Traders are now awaiting the U.S. non-farm payrolls report on Friday for its impact on the dollar and ramifications for monetary policy.
Technical analysts show support for gold at $1,155 an ounce, the 61.8% retracement of gold's rally from its 2008 lows to its 2011 record high at $1,920.30, and $1,180.
Unusually, Chinese buyers who normally buy on the dips did not appear to do so yesterday as measured by local premiums - an indicator of demand - which have failed to pick up in any big way.
Shanghai Gold Exchange premiums had fallen to a discount to the global price on Monday but recovered to a premium of $1-$2 an ounce today showing a pickup in demand. They are still far short of the $50 plus premiums seen last year but demand remains very robust with 60 tonnes taken delivery of on the SGE last week. Chinese gold demand alone is heading for some 2,000 metric tonnes again this year.
See Essential Guide to Storing Gold and Silver In Switzerland here
