by Jan Nieuwenhuijs, Voima Gold:
Gold coin demand makes up a small part of total demand, and thus doesn’t have much impact on the gold price.
Demand for gold coins must be seen as a retail sentiment indicator. In the gold space, it is often assumed that whenever demand for gold coins rises and the premiums these coins attract escalate, the price of gold should sky-rocket accordingly. This is a false assumption, because gold coin demand accounts for less than 8% of total demand, and thus can’t possibly have a large impact on the gold price. At the heart of this misconception is a lack of knowledge between the gold retail and wholesale market. The price of gold is predominantly set in the wholesale market by institutional supply and demand. (For more information, please read my previous article “The Essence of Gold Supply and Demand Dynamics.”)