This article was originally printed in Numismatic News.
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Why did precious metals drop in the face of the Japanese disaster? Let’s take a look and bear in mind that as we do, the people of Japan are among the largest per capita individual holders of precious metals.
When there is turmoil of any sort, liquidity is a necessity so the global markets went to liquidity (they park the big money in U.S. Treasury bills). This created margin calls where investors with profits in metals sold to cover margin requirements on their stock positions.
A longtime associate in Japan also noted that where necessities were scarce and people were desperate they bartered with gold, silver and platinum to get what they needed. In other words, they cashed in some of their physical insurance.
How does all of the above affect the coin market? Well, even though there was downward pressure on bullion related coins, supplies have dried up and as a result buy/sell spreads have narrowed. This is a common indicator of upward market momentum.
Proof gold and silver Eagles have increased in premium over spot prices and so has the number of active buyers. This could also be related to the April 15 deadline for IRA contributions. Yes, physical gold and silver can be put into IRAs in the form of Eagles, but must be stored in a certified warehouse.