ThomWatch: Coin of realm WANTED!

ThomWatch
Public bids for coins of realm


By Thom Calandra
thomcalandra.com

TIBURON, Calif. -- Ordinary folks' demand for sovereign gold coins is creating a chain-supply demand for mintable gold strip and large ingots, making it possible that gold exploration companies' fortunes are on the verge of turning positive.

Gold coin dealers in Canada and the USA say they are seeing an uptick in demand for the coins, which many governments mint and sell to the public as legal currency. So are folks such as James Turk, an economist who owns and operates GoldMoney, an Internet service that uses gold and silver grams as spending currencies. "Our business has been growing since inception, but we have noticed an uptick recently," Turk told me Monday morning. "July and August are normally slow months, but they were near records this year." Turk says.

The quantity of the company's gold grams on deposit and stored as LBMA bars in London and Zurich increased 34 percent at the end of August vs. a year ago. Silver ounces rose 101 percent in the same time span.

The USA Mint suspended sales of its America Buffalo one-ouncer, whose sales are up 53 percent from a year ago, because of demand that put the screws to its supply of gold strip. Some nations' mints, such as Canada's, are faring better because they manaufacture their own gold strip and do not rely on outside suppliers.

More first-hand reports Monday from ThomWatch, all first hand:

• "Demand for gold coins has risen hugely," Kilu Capital Management's Nathan Lewis in Connecticut tells me. Lewis's latest book, GOLD: THE ONCE AND FUTURE MONEY, makes a case for gold as a replacement for soverign currencies. "I note that Dennis Gartman (a popular mainstream market commentator) said he recently bought gold coins for his own possession. Probably not one or two either. I think that Jeremy Grantham -- certainly not a gold guy -- recently said he started buying, too."
  
• Van Simmons, a friend who runs David Hall Rare Coins in Newport Beach, Calif., tells me Monday: "I haven't seen an uptick per-say due to the shortage, I have seen an uptick due to the price of gold being so volatile, If gold goes down everyone decides to wait, If it has a big day I get tons of calls." Simmons also says, "The main shortage has been in the supplies of silver and platinum."
  
• Bart Kitner, who is president of Canada's gold processor and sales company Kitco Inc., tells me, "The demand for coins is unprecedented. Its hard to say by how much, but I've never seen this situation before. One-ounce gold coins are not hard to come by, but all the one-ounce silvers that are being made are all being shipped to fill back orders from weeks ago."

Lewis, the author and money manager, says large buyers of bullion are boosting prices for precious metals and the premiums that gold and silver coins can command in a rising market. "The London market is the world's most important market for institution-size gold bullion ingots. There is an AM fix and a PM fix. Basically, all the buyers and sellers get together twice a day. The PM fix is the more important one. Recently, there have been big spikes on the PM fix, suggesting major demand for 400-ounce ingots."

My ingot basket just got in. Rising demand for coins and manufactured bars of gold (and silver) will boost prospects for actual suppliers of the product as well as verifiable miners. The cream of the crop almost surely will benefit first. Virginia Mines (VGQ in Toronto and VGMNF in USA) is one of them. I find the Quebec company's leadership and operations impressive. I have interviewed André Gaumond several times. Whilst I do not own shares of Virginia Mines, I know several investors who have sizeable stakes. The company, whose shares like most speculative gold miners are suffering of late, probably deserves a look.

The growing audience for coin of the realm is set against a landscape of broken lenders, rising jobless rates and the media-labeled "credit crisis" among banks, insurers and Wall Street/London derivatives developers. My friend Chris Kitze, one of the mid-1990s Internet pioneers who actually made and saved a buck, tells me Monday: "The Chinese are pissed because they sold us all the cool consumer gear and we paid for it with wampum. Now they hold almost $2 trillion worth of U.S. Treasuries and other equities and they will get crushed along with everyone else. They are too big to move into gold. The smaller guys definitely have an advantage here. Hey, I just found a slug of unused traveler's checks. I'm heading for the bank to cash them all."

THOM CALANDRA REPORT: For many investors who profited from a meteoric rise of commodities, mining, and life sciences companies, Thom Calandra acted as a beacon. Thom helped his followers find value in a quagmire of investment choices. Yet he is not a titled investment adviser. He is, more than anything, a scribe who goes where the action is. Thom co-founded CBS MarketWatch and MarketWatch.com. As the voice of Thom Calandra's StockWatch and The Calandra Report, Thom beat bushes for prospects. He fancied $300-ounce gold before that metal became an investment rage. Thom visited numerous biomedical companies, metals mines, and even a haberdashery or two, not to mention thin-crust pizza joints across the planet in his search for profit, fashion and food. Thom's latest project, the novel PABLO BY NUMBERS, was completed in summer 2008. He and Stockhouse.com this autumn will offer a subscription report with all the bells and whistles. The service is tentatively titled Thom Calandra Report. Please stay tuned AND PRUNED to Stockhouse.com and to ThomCalandra.com for more.