August 13, 2022

Gold ETF Holdings Surge in 2022

The SPDR Gold Shares Trust (GLD) continues to power higher in 2022 with a year-to-date gain of 7.5%.  The value of gold holdings of the GLD from the beginning of the year increased by over $11 billion to $68.13 billion.  Total gold held in trust by the GLD now amounts to over 1,106 tonnes.

The GLD hit an all time high during early March when it reached $191.50.  The demand for gold has increased due to of control inflation, a war in Europe that is spinning out of control, rampant money printing by the Federal Reserve and reckless spending by the Federal government.

Here are some basic facts about the GLD:

  • An investment in GLD allows investors to purchase an interest in gold without the costs of purchasing, transporting, insuring and storage of gold bullion or coins.
  • The fund expenses of the GLD are a modest 0.40% and allow an investor to purchase gold in whatever amount is desired, saving the cost of commissions and shipping on gold bullion.
  • The GLD does not give the buyer the right to receive gold bullion in lieu of shares purchased.
  • Purchases and sales can be done at any time during the trading day.  The GLD has excellent liquidity and the discount or premium from the value of gold bullion held is usually minimal.

Gold has been going steadily upwards since 2016 with minor pullbacks during 2018 and 2021.

The return on the GLD from date of inception on November 18, 2004 has been 8.36%.  In an uncertain world future returns look brighter every day.

 

 

What is the Best Way to Invest in Gold?

Major Gold Mining Stock Outperforms Bullion and Gold ETFs

Investors in gold often wonder about the best way to own the precious metal.  Gold is gold but depending on the vehicle used to purchase gold, investment returns can vary dramatically.

Simply put, the three basic ways to invest in gold are gold bullion, gold bullion ETFs, and gold mining stocks.

Gold Bullion

Purchasers of gold bullion may not trust “paper gold” or they may simply appreciate the beauty of gold bars and coins.  There is an innate satisfaction in being able to physically admire and touch gold, a metal that has had value to man since before the dawn of civilization.  Paper currencies always eventually wind up worthless while gold will maintain purchasing power.  The pleasure of owning physical gold does have drawbacks, the biggest of which is security and storage.

Although gold has moved up dramatically since 2019, the current price of around $1,950 is still slightly below the record high of $2,061 reached in August 2020.

gold Technical chart [Kitco Inc.]

Gold Bullion ETFs

An easy and low-cost method for purchasing gold bullion is by investing in gold bullion ETFs.  Funds put into gold ETFs are invested in physical gold and the fund is responsible for physical security.  The largest gold ETF is the SPDR Gold Shares (GLD) which currently holds about $68 billion in assets.  The ETF has a relatively low expense ratio of 0.40%.  The GLD will closely match the move in the price of gold bullion less the expenses of running the fund.

The GLD currently trades at $181.47 slightly below its high of $190.81 reached in August 2020.

Another ETF worthy of consideration is the iShares Gold Trust (IAU) which currently trades at $36.97, holds $32 billion in physical gold and has an expense ratio of only 0.25%.

Gold Mining Stocks

Gold mining stocks are where it all starts.  Someone must undertake the expensive process of locating and mining gold ore to produce refined gold.  The profit generated by the gold mining stocks depends not only on the price of gold but also on how efficiently gold mining companies are at exploration and deploying capital.  Many junior gold mining companies have not been able to participate in price gains despite the increase in gold prices.

There are two ways to invest in gold mining companies.  An investor can invest in a basket of gold mining stocks in a mutual fund or ETF such as VanEck Gold Miners ETF (GDX) or by purchasing individual gold mining companies.  Purchasing an ETF allows an investor to spread risk across the industry.  Purchasing a successful gold mining company can result in gains that far exceed the increase in gold bullion.

For example, the GDX currently trades at $39.67, below the price reached in August 2020.

Now, look at the performance of Newmont Corporation (NEM) a major gold mining company which has recently exploded to an all-time high and up 173% since late 2019.

There is no way to know which way of investing will work out best until after it happens.  Always diversify to reduce risk is probable the best advice.

American Gold Eagle Bullion Coin Sales Up Sharply in March

gold-eagle-100x100According to the latest report from the US Mint, sales of the American Gold Eagle bullion coins soared in March from both the previous month’s sales and the previous year.

Total sales of the Gold Eagle bullion coins during March came in at 46,500 ounces, up by 151% from the previous month’s sales of 18,500 ounces.  Sales of the gold bullion coins were also way ahead of the year ago month, with more than double the sales of 21,000 ounces in March 2014.

Although sales of the gold bullion coins have been declining since 2009, year to date sales for 2015 have slightly outpaced the previous comparable period.  For the three month period ending March 31, 2015, the US Mint sold a total of 146,000 ounces, up from 143,500 ounces in the previous year’s quarter.

Sales of the gold bullion coins during 2014 totaled 524,500 ounces.  If the sales pace for the first quarter continues, sales for 2015 should outpace last year by around 60,000 ounces.

The chart below shows sales by year since 2000 of the US Mint American Gold Eagle bullion coins.

The current price for a one ounce gold bullion coin is about $1,270, an expensive purchase for many people but the Mint also sells smaller weight coins.   The American Eagle gold bullion coins are also available in one-half ounce, one-quarter ounce and one-tenth ounce sizes.   A one-tenth ounce gold American Eagle coin currently costs only about $138.  During March the US Mint sold a total of 70,000 one-tenth ounce coins, 8,000 quarter ounce coins, and 5,000 one-half ounce coins indicating solid demand by small investors for physical gold.

American Eagle Silver Bullion Coin Sales Drop Sharply from Previous Month and Year

american-silver-eagleSales of the US Mint American Eagle silver bullion coins dropped sharply during February from both the previous month and comparable prior year period.

The US Mint reported total sales of 3,022,000 ounces during February which is down by 19.4 percent from the comparable prior year period and down by a considerable 45.4 percent from the previous month.  Due to strong January sales, however, total sales of the silver bullion coins is up slightly by 0.3 percent on the year.

There were four months during 2014 in which monthly sales of the silver bullion coins dropped below the 3 million level and yet sales hit an all time record high of 44,006,000 troy ounces.  Average monthly sales of the silver bullion coins during 2014 came in at about 3.6 million ounces per month while the average monthly sales year to date during 2015 is at 4.3 million ounces.  The silver bullion coins remain extremely popular with precious metal investors despite the decline in the price of silver since 2011.  Long term silver investors allocating a portion of their portfolio to physical precious metals view the current bargain price of silver as an opportunity to load up as evidenced by 2014 record breaking sales.

The chart below shows the trend of sales for the US Mint silver bullion coins since 2000.  Sales for 2015 are year to date through February 28, 2015.  Ever since the financial crisis when the banking system can close to completely imploding, sales of silver bullion coins have exploded by about 500 percent and remained strong despite the so called recovery in the economy and banking system.

While the sales of gold bullion coins has declined since the financial crisis, silver bullion coins remain as popular as ever with investors seeking a store of value in physical precious metals.

The price of silver has declined sharply since the highs of 2011 as investors have fled what seems like a losing proposition, especially in comparison to stocks and bonds which have been pumped up in value by the Fed’s easy money policies and zero interest rates.  Silver has seen volatile price action since the financial crisis but most investors who have made purchases since 2008 are now at about a break even price level or sitting with losses making this an interesting price juncture for silver investors.

10 year silver

Whether it be stocks, bonds, or precious metals, it is classic psychological behavior for investors to pile in at the top as prices are reaching bull market highs and then refuse to buy at the bottom when everyone is bearish.  No one can predict the timing of future price moves, but with silver prices in the bargain bin and little interest by investors, this is probably an area that deserves additional investment by long term buy and hold investors.  Silver has been considered money and a store of value throughout the ages and this is not likely to change, especially as desperate and over indebted governments rely upon printing press money from the central banks to keep the wildly over leveraged financial system from crashing again.

The sales of silver bullion coins by year since 2000 is shown below.  The figures for 2015 include year to date totals as of February month end.

American Silver Eagle Bullion Coins

               YEAR

OUNCES SOLD

2000

 9,133,000

2001

 8,827,500

2002

 10,475,500

2003

 9,153,500

2004

 9,617,000

2005

 8,405,000

2006

 10,021,000

2007

 9,887,000

2008

 19,583,500

2009

 28,766,500

2010

 34,662,500

2011

 39,868,500

2012

33,742,500

2013

42,675,000

2014

44,006,000

2015

8,552,000

             TOTAL

 327,376,000

 

American Eagle Gold Bullion Sales Plunge in February Following Weak 2014 Sales

gold-bullionThe US Mint’s February sales report for American Eagle gold bullion coins revealed slow sales in February continuing the weak sales trend set in 2014.

For the month of February 2015 total sales of the American Eagle gold bullion coins rang in at only 18,500 ounces, down 40.3 percent from the comparable prior year’s month and down a whopping 77.2 percent from the prior month’s sales of 81,000 ounces.  Who needs gold when you can buy government debt at negative interest rates?

The situation with gold and all other assets classes has been distorted beyond all traditional metrics by the ultra easy monetary policies of the world’s central banks.  Leverage in the world financial system now exceeds by many orders of magnitude that which existed prior to the financial crisis of 2008 which nearly brought the system to a grinding halt.  Where and when we go from here is anyone’s guess but I think it’s fair to conclude that at some future point gold will be acknowledged as the only store of value that cannot be devalued by desperate governments and central banks.

Until the investment masses reach that moment of clarity when they conclude that central banks cannot provide prosperity to the masses by printing money and monetizing government debt, gold may remain on the deep discount rack.  One has to wonder about the critical thinking skills of citizens such as Greece or Russia or Venezuela or many other countries in which the currency is plunging in value and life savings are being wiped out but yet the masses are not moving into a traditional universally accepted store of value such as gold.  Considering the fragile state of paper currencies and concerted efforts by central banks to destroy the purchasing value of the currency, it should be impossible to buy any amount of gold in many countries since no logical sellers would offer their gold at any bid.

Gold bullion sales in 2014 dropped to only 524,500 ounces after fairly robust sales of about 800,000 ounces during both 2012 and 2013.  The decline in the sale of US Mint gold bullion coins can be seen in the chart below.  Note that sales figures for 2015 include year to date totals through the end of February.

Although sales of gold bullion coins has been in a definite downtrend it is interesting to note that sales of the coins are still fairly robust compared to average sales in the years prior to the financial crisis.  After an increase in sales during 2013, sales of the gold bullion coins have declined every year since peaking during 2009 despite the fact that gold bullion did not reach its peak price of almost $1,900 per troy ounce during late 2011.

Listed below are the annual sales of the US Mint American Eagle gold bullion coins since 2000.

 

Gold Bullion U.S. Mint Sales Since 2000
Year Total Ounces Sold

2000

164,500

2001

325,000

2002

315,000

2003

484,500

2004

536,000

2005

449,000

2006

261,000

2007

198,500

2008

860,500

2009

1,435,000

2010

1,220,500

2011

1,000,000

2012

753,000

2013

856,500

2014

524,500

2015

                       99500

TOTAL

 9,483,000

2015 totals through February 28, 2015

Will 2015 turn out to be another year of low demand for American Eagle gold bullion coins?  Time will tell but based on annualzied year to date sales, total US Mint gold bullion coins would total 597,000 ounces, slightly above 2014 coin sales.

American Eagle Gold Bullion Coin Sales Up 25% In November

Liberty-EagleThe sale of the US Mint American Eagle gold bullion coins remained strong in November.

The US Mint reports that sales of the gold bullion coins were 60,000 ounces in November up by 24% from last year’s monthly sales of 48,000 ounces.  Sales for November slipped from October sales of 67,500 ounces which was the second biggest sales month of the year.  The year started off with a bang for the gold bullion coins when the US Mint sold 91,500 ounces in January.

Year to date sales of 506,500 ounces through November remain far below last year’s comparable sales of 800,500 ounces, a decline of 36.7%.  The sale of gold bullion coins has been in a general decline since 2009 as seen in the yearly sales chart below.

Gold has been in a nonstop bear market decline since early 2011 and gold sentiment weakened even further with today’s announcement that Swiss voters rejected a call for the Swiss National Bank to increase their gold reserves.

gold Technical chart [Kitco Inc.]

Shown below are the total ounces sold by year since 2000 of the American Eagle gold bullion coins.  Based on current sales trends sales of the gold bullion coins for 2014 will decline to the lowest levels since 2007.

American Eagle Silver Bullion Coin Sales Up From Previous Year and On Track For Record Breaking 2014 Sales

silver eagleThe US Mint American Eagle silver bullion coins remain more popular with investors than ever, despite the decline in the price of silver.  Apparently there are plenty of long term silver investors who prefer to hold the physical metal and are viewing the decline in the price of silver as an opportunity to load up at bargain prices.

The latest report from the US Mint shows that November sales of the silver bullion coins totaled 3,426,000 ounces, down from the previous month but up by 1,126,000 ounces or 49% from the previous year.  October 2014 was the highest selling month of the year with total sales of 5,790,000 coins.

Sales of the American Eagle silver bullion coins year to date through November 30 now total 41,547,000, just shy of the all time record sales year of 2013 when the Mint sold 42,675,000 coins.  If December sales of the silver bullion coins surpass 1.1 million coins, which is very likely, 2014 will be another record breaking sales year.

Gold and silver investors can only shake their heads and wonder at investor confidence in central banks as an orgy of money printing continues worldwide and leveraged debt piles up at a rate and amount never seen before in history. The attitude seems to be “who cares – my stocks and bonds and real estate are going straight up.”

At some future point that no one can predict you can count on another financial accident on par or greater than that of 2008-2009 that will destroy confidence in paper money and the ability of governments to repay debt with sound money.  At that point the exchange rate between dollars and precious metals will amply reward the investors now buying bargain gold and silver.

Silver has now given back the bulk of its gains from the highs reached in early 2011 and could well go lower given the bearish sentiment and declining price pattern.

Since 2000 investors have purchased over 300 million American Eagle silver bullion coins.  Below are the sales by year with the 2014 total through November 30.

 

Gold Plunges After Swiss Voters Reject Central Bank Gold Buying

SNBGold can’t catch a break lately as Swiss Voters Reject Measure Forcing SNB to Acquire More Gold.

Swiss voters rejected a measure in a referendum requiring their central bank to hold a portion of its assets in gold, a measure its President Thomas Jordan termed an “invitation to speculators” that could have hurt the economy. Bullion tumbled to a three-week low.

The “Save Our Swiss Gold” proposal stipulating the Swiss National Bank hold at least 20 percent of its 520-billion-franc ($540 billion) balance sheet in gold and never sell any bullion was voted down by 77 percent to 23 percent, the government said yesterday. Polls had forecast the initiative’s rejection. Two other initiatives on tax privileges for foreign millionaires and immigration limits also were rejected.

SNB policy makers estimated they would have needed to buy 70 billion francs worth of gold if the referendum had passed. Some economists estimated the SNB wouldn’t have had to sell euros to meet the requirement, given its dollar holdings. At the end of the third quarter, it held 45 percent of its 460 billion francs of foreign currencies in euros and 29 percent in dollars.

Even though the Swiss gold referendum was expected to be defeated gold prices plunged by over $38 per ounce in late Sunday trading and silver was pulverized with prices down almost 8%.

As stocks and bonds continue to soar on liquidity provided by central bank quantitative easing investors have been dumping gold by the tons from their portfolios.  The Swiss Gold Rejection simply gave investors another reason to stay away from gold which has been in a vicious bear market.

Gold has lost 19 percent since peaking in March and investor holdings of exchange-traded products are near a five-year low. While prices probably won’t be affected too much by the “no” vote of the initiative called “Save Our Swiss Gold,” approval would have improved sentiment and increased prices by as much as $50 an ounce, HSBC Holdings Plc estimated in November.

“Gold had received some support in the last couple of weeks” before the vote, Georgette Boele, an analyst at ABN Amro Bank NV in Amsterdam, said by phone. “We’ll get more pressure on gold. The overall outlook is not looking great.”

2014-proof-gold-eagle

Even the surprise news that India had ended curbs on gold imports did nothing to support prices.  In a bear market all news is bad and gold can’t seem to find a support level.  The irony of it all is that the massive euro holdings of the Swiss National Bank were purchased with Swiss francs manufactured out of thin air by the SNB to prevent its currency from appreciating against the euro.  Governments world wide have turned an experiment with quantitative easing into  national policy and are churning out trillions of dollars of printed fiat currencies.  Last I heard the value of anything depreciates as the quantity increases.  Although it’s a tough market right now, long term I’m betting that it’s a smart move to have some gold on hand.

Bargain Gold and Silver Prices Boost Worldwide Coin Demand

feature-300x200Bargain prices for gold and silver is fueling global demand for bullion coins.

During September sales by the U.S. Mint of American Eagle gold and silver bullion coins increased dramatically.  Sales of the American Eagle gold bullion coins during September rose to 58,000 ounces, up from 25,000 in August.  Sales of the American Eagle silver bullion coins rose to 4,140,000 ounces in September, more than double the 2,007,500 ounces sold in the previous month (see also Must Know Facts Before Buying American Eagle Silver Bullion Coins).

The increased demand for gold and silver coins seen in the U.S. was mirrored at other major world mints which have seen steadily increasing demand during the third quarter.

The Perth Mint of Australia, one of the largest mints in the world, has also experienced a sales spike in demand for gold and silver bullion.  During September The Perth Mint sold 756,839 ounces of silver bullion up from under less than 450,000 ounces earlier in the year.  The Perth Mint actually sold more gold bullion during September than the U.S. Mint with sales of 68,781 ounces.

The Perth Mint

The Perth Mint – ounces of gold and silver sold

The Perth Mint sells gold and silver bullion as both coin and minted bars and has a much wider product category than the U.S. Mint.

Further declines in the overextended and over-leveraged financial markets due to economic worries is likely to accelerate the recent trend into safe haven assets such as gold and silver.

Courtesy: yahoo finance

Courtesy: yahoo finance

American Eagle Gold Bullion Coin Sales Soar 132% In September

gold-bullionDespite the ongoing slump in the price of gold, buyers of physical gold seem to sense that gold has reached bargain levels.  The September sales report from the US Mint shows that sales of the American Eagle gold bullion coins soared by 132% over the previous month.

September sales of gold bullion coins totaled 58,000 ounces, up from 25,000 ounces in August and 13,000 ounces last year.  Sales of gold bullion coins reached the highest level of the year since January when the Mint sold 91,500 ounces.

Despite the monthly increase, sales of gold bullion coins remain weak compared to previous years.  Year to date 2014 sales total 379,000 ounces compared to 704,000 ounces in the comparable prior year.

Gold has reached what some think is a critical support level in the $1200 range, a point from which gold has rebounded three times in the last two years.

Courtesy: Kitco.com

Courtesy: Kitco.com

With the stock and bond markets delivering robust returns to investors due to the unprecedented easy money policies of the Federal Reserve interest in gold has diminished greatly.  History has shown time and again that the best time to invest in an asset class is when the crowd thinks there is no reason to buy.

Sales of gold bullion coins have been steadily declining since 2009 when sales soared to almost 1.5 million ounces.  Sales of gold bullion coins by year since 2000 are shown below.

Based on the present sales rate of the American Eagle gold bullion coins, total sales for 2014  could drop to the lowest level since 2007.