May 28, 2022

American Eagle Silver Bullion Coin Sales Soar 100%

silver eagleSales of the US Mint American Eagle silver bullion coins has been extremely robust ever since the financial system can close to collapse in 2008.  Prior to the financial crisis sales of the silver bullion coins averaged about 9 million coins per year.

Over the past five years, despite the large correction in the price of silver, yearly sales of silver bullion coins have run well over 30 million coins per year with sales reaching an all time record high of almost 43 million coins in 2013.

Purchasers of physical silver bullion coins buy for the long term to diversify their wealth and hedge against ruinous monetary and fiscal policies fostered by both the government and the Federal Reserve.  While the financial system has been held together over the past five years by the Fed’s zero interest rate policy and money printing, the long term financial health of not only the United States but the world is beginning to look increasingly fragile as debt levels continue to explode world wide resulting in a financial system leveraged beyond comprehension.

Silver has dipped below $17 per ounce this year, off 13% on the year after plunging by 36% in 2013.  While this decline has obviously been painful for silver investors, it has put silver in the bargain bin and silver bullion coin investors are responding accordingly.  If silver bullion coin sales continue at the current pace, sales for all of 2014 could hit an all time high.

Courtesy: Kitco.com

Courtesy: Kitco.com

The US Mint reports that September sales of the silver bullion coins for September 2014 totaled 4,140,000 ounces, double August sales of 2,007,500 and up 37.4% from September sales of the prior year.

Due to a slump in sales during the summer months, year to date sales of silver bullion coins through September are running behind comparable prior year sales.  Year to date sales of the American Eagle silver bullion coins through September 30, 2014 totaled 32,251,000 down from 36,088,000 from the prior year.

Since 2000 investors have purchased over 300 million of the one ounce US Mint silver bullion coins as shown below.

Silver American Eagle Bullion Coin Sales in Summer Slump

silver eagleLet’s face it – no one likes to invest when prices are falling, whether it be stocks, bonds, gold, or silver.  Nonetheless, history has shown time and time again, across all asset classes, that investing after prices have collapsed and when there seems to be little reason to buy is usually the exact right time to buy.

This is something that investors in gold and silver may chose to ponder as demand for precious metals continues to decline.  The demand for both gold and silver has fallen as precious metal prices decline and investors turn to other rising asset classes such as real estate and stocks.  According to BullionVault which buys and sells physical gold and silver for its clients, precious metal demand  retreated to a four year low during August.

The weak demand for precious metals was reflected in the latest report from the US Mint which showed lower sales for both gold and silver American Eagle bullion coins (see Gold Bullion Coin Buyers Go On Strike).

Sales of the US Mint one ounce American Eagle silver bullion coins during August continued the sales slump that has lasted throughout the summer.  Although August sales of 2,007,500 coins increased slightly from sales of 1,975,000 in July, sales during August were off almost 45% from August 2013.

Sales of silver bullion coins during 2014 have declined substantially during the June to August time period compared to the prior year.  Total sales of silver bullion coins during the summer months of June through August 2014 totaled 6,674,500 ounces compared to 11,306,500 ounces during the previous year for a decline of almost 41%.

Earlier this year it appeared that the ever popular silver bullion coins would rack up another  record breaking year, above the record sales of 42,675,000 ounces during 2013.  Although sales of the American Eagle silver bullion coins have been robust during 2014, breaking last year’s record may remain an elusive goal.

Gold Bullion Coin Buyers Go On Strike – Sales Drop Again in August

1986-gold-eagleSales of the US Mint American Eagle gold bullion coins slumped again in August following the fall off in demand seen in July.   August sales of 25,000 ounces dropped by 16.6% or 5,000 ounces from July’s total of 30,000 ounces.

Although August 2014 sales of the gold bullion coins was more than double the 11,500 ounces sold in August 2013 the overall sales trend of American Eagle gold bullion coins has been in a steep slump during 2014 compared to the previous year.  Year to date sales of the gold American Eagle bullion coins as of August 31, 2014 totaled 321,000 ounces, a decline of almost 54% from comparable year sales of 691,000 ounces.

The price weakness in gold prices seen during 2013 continued this year as Gold Demand Falls 16% as Jewelry Purchases Decline 30%.

Gold demand fell 16 percent in the second quarter, led by declines in India and China, the World Gold Council said.

Global demand slipped to 963.8 metric tons from 1,148.3 tons a year earlier as jewelry purchases fell to the lowest since the fourth quarter of 2012, the London-based council said today in a report. China fell behind India as the largest consumer, with global jewelry buying dropping 30 percent and bar and coin demand down 56 percent. Mining companies hedged 50 tons as they continued selling future output.

Gold slid 28 percent in 2013, the most in three decades, as investors lost faith in the metal amid expectations U.S. policy makers would cut stimulus as the economy strengthens. Last year’s price drop spurred jewelry, coin and bar demand, particularly in China. Indian bullion buying has slowed as the government restricted imports to curb a current account deficit.

Global jewelry demand declined to 509.6 tons in the latest quarter, the least since the final three months of 2012. China’s purchases slipped 45 percent and those in India fell 18 percent, with the countries together accounting for almost 60 percent of world jewelry consumption. Buying rose 15 percent in the U.S. and 21 percent in the U.K. as consumer confidence rose, it said.

Global bar buying slumped 57 percent to 212.1 tons in the three months through June and coin demand slid 50 percent to 46.3 tons. Global consumer demand was down 42 percent to 784.9 tons, according to the report.

Total consumption in China, which overtook India as the biggest user last year, dropped 52 percent to 192.5 tons, the council said. Indian demand fell 39 percent to 204.1 tons, returning as the largest purchaser on a quarterly basis for the first time since the end of 2012.

The decline in demand for gold seems to be feeding upon itself as lower prices beget lower demand.  As gold prices climbed towards $2,000 an ounce during 2011 buyers tripped over each other to get into gold.  Ironically, buyers have now gone on strike as gold has become available at bargain prices.

The sale of gold bullion coins has been in a downward slump since 2009 when sales soared to record levels during the height of the financial meltdown.  There are many things happening in the world today that cause serious people to think that 2009 was just a warm up for what’s to come next – if this is correct, the demand for gold could turn sharply higher in a very short period of time.

Total gold bullion coin sales through August 2014 are shown below.

Based on the year to date figures, gold bullion coin sales could well end the year at about half of 2013 totals.

Gold American Eagle Bullion Coin Sales Soar 37% in June – Will Gold Outperform Stocks in 2014?

2014-proof-gold-eagleSales of the US Mint American Eagle gold bullion coins soared in June to 48,500 ounces from the previous month of May during which sales totaled 35,500.  Demand for gold bullion coins, however, has been relatively soft compared to previous years.

June sales of the gold bullion coins were down from the year ago period when 57,000 ounces were sold during June 2013.  At the current sales pace 2014 annual sales of the gold bullion coins would come in at roughly 500,000 ounces down significantly from total sales of 856,500 ounces during 2013.  Sales of the American Eagle gold bullion coins hit a record high of 1,435,000 ounces during 2009 when the financial system was still in intensive care and the Federal Reserve initiated a massive money printing campaign to “save” the world.

Gold should always have a presence in an investment portfolio but since mid 2011 stocks have become a powerful competing investment alternative to precious metals. The easy money policies of the Federal Reserve have served to inflate asset values of stocks and bonds to dangerously overvalued levels according to many analysts.

Will stocks and bonds continue to enjoy easy gains of 20 to 30 percent a year or will the entire house of cards built on easy printed money come tumbling down when the world least expects it?  Just this week the Bank for International Settlements (a consortium of the world’s biggest central banks) issued an alarming warning about growing levels of debt and the dangerous unintended consequences of zero interest rate policies.

The report issued by the Bank for International Settlements (BIS) noted that “Overall, it is hard to avoid the sense of a puzzling disconnect between the markets’ buoyancy and underlying economic developments globally.”  The head of the BIS’s economic department further noted that  “Financial markets are euphoric, in the grip of an aggressive search for yield…and yet investment in the real economy remains weak while the macroeconomic and geopolitical outlook is still highly uncertain.”  The BIS noted the obvious when it cautioned that the ultra low levels of interest rate due to financial repression by central banks is encouraging further borrowing but an eventual rise in interest rates will amplify the problem of excessively high levels of debt, a consequence that no one seems prepared for.

So who needs gold when stocks are heading straight up and the consensus is that this wealth machine of easy money and asset inflation is unstoppable?

Gold, silver and stocks

At some unknowable point in time and for some unpredictable reason the euphoria of the credit bubble created by the central banks will burst just as all bubbles in history have burst.  The resulting financial chaos that ensues from the bursting of a central bank induced credit bubble will be calamitous since the situation could well become uncontainable by world monetary authorities.  As the BIS notes, “keeping interest rates unusually low for an unusually long period can lull governments into a false sense of security” whereby they continue to borrow vast amounts of low cost funds to such excess that further expansion of government borrowings become impossible.  Governments that are unable to finance additional borrowings when the next economic downturn comes will turn to their only savior – the central banks.  Unable to stimulate the economy through rate cuts since rates are already at zero, central banks will be forced to monetize government debts on a monumental scale and when this day arrives we should all want to have a heavy percentage of our portfolios in gold.

The current mania for paper assets seems to have even infected China and India who have historically turned to gold as a safeguard against profligate governments and paper money backed only by the promises of lying politicians.   According to the Wall Street Journal demand for gold is expected to decline in both China and India during 2014.

The crowd seems to be leaning heavily towards paper assets and away from gold, suggesting that a turnaround is probably forthcoming.  Gold has already had its correction and is now on track for what will probably be a historic rally.  Consider that despite widespread bearishness on gold, the price during 2014 has held its own and is actually up on the year.  From a price of $1,225 per ounce at the start of the year gold has moved up to $1,326, not exactly a sign of weak demand.

Silver American Eagle Bullion Coin Sales Plunge in June

silver eagleSales of the one ounce American Eagle silver bullion coins plunged in June from both the previous month and previous year.  After hitting sales of almost 4 million ounces during May the US Mint reports that sales of the silver bullion coins for June totaled only 2,682,000.

June sales plunged by over 32% from the prior month and by almost 18% compared to June 2013  when sales were 3,275,000 ounces.  Monthly sales of the silver bullion coins can show dramatic month to month changes based on supply and demand so it is difficult to read much into the current month’s sales figures.

Reflecting the drop in current demand the US Mint recently suspended its allocation program which had been implemented a year ago in the face of soaring demand for silver bullion coins during 2013.  Sales of the American Eagle silver bullion coins reached a record during 2013 with sales of 42,675,000 ounces, up 26 % from 33,742,500 ounces during 2012.

The American Eagle silver bullion coins remain extremely popular with small investors and sales have remained extremely robust ever since the near implosion of the financial system during 2008.  Sales of the silver bullion coins prior to 2008 ran from eight to ten million ounces per year compared to yearly sales of 30 to 40 million ounces per year after 2008.

Sales of the American Eagle silver bullion coins could easily hit another all time record high during 2014 if sales continue at their current pace.  If sales for the next six months match the first six months, sales of the silver bullion coins for 2014 could come in at close to 50 million ounces, shattering last year’s record high sales of 42,675,000.

The American Eagle silver bullion coins cannot be purchased by individuals directly from the U.S Mint.  The coins are sold only to the Mint’s network of authorized purchasers who buy the coins in bulk based on the market value of silver and a markup by the U.S. Mint.  The authorized purchasers sell the silver coins to coin dealers, other bullion dealers and the public.  The Mint’s rationale for using authorized purchasers is that this method makes the coins widely available to the public with reasonable transaction costs.

Shown below is a graph of sales of the silver bullion coins by year since 2000.

Soaring Gold and Silver Prices Should Not Be a Surprise to Anyone

bars-of-goldThe precious metal markets caught on fire in a big way today.  Gold prices surged the most in nine months by over $40 per ounce and silver closed in on $21 per ounce.  After losing 28% last year as short term hot money investors sold out their holdings, gold and silver were ready for a huge rally from both a fundamental and technical standpoint (see Why Gold and Silver Could Outperform Every Other Asset Class in 2014).

Precious Metals June 19, 2014

METALS PRICE CHANGE PER CENT GAIN
GOLD $1319.00 +40.50 3.17%
SILVER $20.89 +0.88 4.45%
PLATINUM $1472.00 +24.00 1.66%
PALLADIUM $841.00 +12.00 1.46%

The reasons for today’s huge gains in precious metals varied in the mainstream press but soaring prices should have been no surprise to long term investors who understand why gold and silver should be a part of every portfolio.

Gold and silver constitute a fundamental defense for wealth preservation against the rapidly eroding value of paper currencies backed by broke governments which is Why All Governments Hate Gold.

The various governments of the world and their central banks produce and distribute a product – paper currencies. Those currencies are backed by confidence, faith, and credit, but not by gold, oil, or anything real. Those currencies are digitally printed to excess, since almost all governments spend more than their revenues. The UK, Japan, and the USA are prime examples.

Politicians want to spend more money, but they also need to maintain the illusion that the money is still valuable, that it will retain most of its purchasing power over time, and that inflation is under control. The illusion weakens when food, gasoline prices, and other consumer goods are wildly rising in price. At a more abstract level, gold indicates the same lack of confidence in the printed pieces of paper that our central banks distribute.

If last year’s price correction shattered your conviction in owning gold and silver please consider The Fundamental Reasons for Owning Gold and Silver Are Stronger Than Ever.

One of the best methods for protecting wealth against a constantly depreciating paper currency is to own precious metals.

The bull case for precious metals remains intact as central bankers worldwide have become the lenders of last resort for nations that have exhausted their borrowing capacities.  Very little has changed since 2008 when the world financial system stood at the abyss of collapse.  Unsustainable debt levels continue to increase even as the capacity to service the debt diminishes.

Virtually every government in the world has taken on debts and liabilities that are clearly unsustainable.  Governments “don’t go broke” is the sustaining mantra for those with faith in paper currencies but governments do and will continue to print money that accelerates the loss of purchasing power of fiat currencies.  Please consider the following charts courtesy of John Mauldin Economics.

Eventually, as people realize that the central bank emperors have no clothes it will become clear Why There is No Upside Limit for Gold and Silver Prices.

The increase in the value of gold and silver is due to the fiscal and monetary policies of nations struggling to deal with massive levels of debt – policies that virtually guarantee a continued rise in the price of gold and silver.  Central banks, having exhausted all conventional means of monetary easing, have moved on to the last resort option of quantitative easing and currency debasement.

Government officials argue that unprecedented deficit spending and quantitative easing are necessary to stimulate economic  growth, but this theory has not worked in the real world.  Despite trillions in stimulus spending,  job creation and economic growth have been extremely weak and are likely to remain so according to economists Kenneth Rogoff and Carmen Reinhart who wrote This Time Is Different: Eight Centuries of Financial Folly.  According to Rogoff and Reinhart, economic growth is subpar when public sector debt exceeds 90% of GPD which the U.S. and many other developed nations have already surpassed.  In addition, a recovery of the job and housing markets after a financial crisis take many years due to the burden of excessive levels of debt.  Ultimately, Rogoff and Reinhart predict that austerity measures will need to be imposed along with some type of debt restructuring.

Is the U.S. capable of reducing spending and  instituting austerity measures? Cutting deficits means cutting payments to a long list of incomeless recipients who really don’t care where the entitlement money comes from.  Those still actually paying taxes will object strongly to any proposed tax increase to fund government spending.  Unable to cut spending or raise taxes leaves the Government with one bad option – print more money.

Politicians, who value getting elected above all else, are likely to strong arm the reliably compliant Federal Reserve to “come to the rescue” again with additional printed dollars.   In the minds of politicians and Federal Reserve officials, there will always be very compelling reasons to continue borrowing and money printing.

A nation that has reached the limits on taxation and borrowing has few viable policy options other than a continuing series of quantitative easing programs.  Current government policies, if left unchanged, virtually guarantee a continued increase in the price of precious metals.

 

What’s the Difference Between Gold Cast Bars, Gold Minted Bars and Gold Bullion Coins?

2014-Australian-Kangaroo-1kg-Gold-Bullion-Coin-Obverse-SBesides offering an incredible selection of gold and silver precious metal products at fair prices, the Perth Mint excels at educating its customers.

The Perth Mint has specialized in the production of precious metal coins since 1899.  The Perth Mint operates and owns the only gold refinery in Australia and is owned by the Gold Corporation which operates under the statutory authority of the Government of Western Australia.

All gold and silver bullion coins and bars produced by the Perth Mint are available in 99.99% pure gold and are issued as legal tender in Australia.

In this week’s Bullion News, the Perth Mint explains to potential buyers the different factors to take into account when deciding whether to buy gold cast bars, gold minted bars, or gold bullion coins.

Cast Bars, Minted Bars and Bullion Coins

Gold Cast Bars

Investors seeking to pay the lowest premium over spot gold prices will typically consider purchasing gold cast bars since they have the lowest fabrication cost.  The Perth Mint warns buyers that when buying gold cast bars it is essential to make purchases from a totally trustworthy seller to ensure weight, purity and re-saleability.

The Perth Mint sells gold cast bars in 1 ounce, 2 1/2 ounce, 5 ounce, 10 ounce, 20 ounce, and 50 ounce weights.  The current markup over spot on a 1 ounce cast bar is only $35.  Investors planning to make larger purchases such as a 20 oz cast bar can pick it up for less than $100 over the current spot price of $25,633.

Gold Minted Bars

Gold minted bars are cut from rolled gold, have a better finish and appearance, and are stamped with various designs on a minting press.  I have observed while traveling that gold minted bars are extremely popular in gold and jewelry stores in China since they can be purchased in sizes as small as 0.3 grams and often come in a tamper proof security container.

The Perth Mint sells gold minted bars in 5 g, 10 g, 20 g, 1 oz, 50 g, 100 g, and 10 oz.  A one ounce gold minted bar currently sells for a premium over spot of around $44.

Gold Bullion Coins

Gold bullion coins are typically favored by many small investors since they are issued and guaranteed by governments, come in numerous sizes, are difficult to counterfeit due to their thin size, and are issued with distinctive and detailed designs which add another dimension to the desirability of owning gold.  The minting process to produce a gold bullion coin is far more complex than that for producing bars and therefore the premium over the gold spot price is significantly higher.

The Perth Mint sells gold bullion coins ranging in size from only 1/20 ounce to a massive 1 kilogram.  The one kilogram gold bullion coin currently sells for about $42,000.

A Must Buy Silver Miner That Is Adding New Reserves at Just $0.38 Per Ounce

PAAS silverSilver and gold mining stocks have been indiscriminately sold off during the correction in precious metal prices.  While the sell off has been painful for investors in precious metal mining stocks it also presents profitable opportunities.  The price of gold and silver will not remain at bargain levels forever and now is the time to establish positions in selected mining stocks that offer solid long term capital appreciation.

Investing in precious metal mining stocks has recently been a minefield for investors due to a variety of reasons including poor management decisions, overpriced acquisitions, increased production costs, increased government taxation, and falling gold and silver prices.

One silver mining stock that has rock solid finances, pays a dividend, owns substantial silver reserves, and has excellent price appreciation potential when silver prices go back up is Pan American Silver Corp (PAAS).

Although no one can predict when silver prices will head back up, both PAAS and silver appear to be forming bottoms.  Pan American Silver recently made a multi-year double bottom in the $10 per share range and silver stubbornly refuses to break below the $18 per ounce level despite wide ranging bearish commentary on the metal.

paas

Courtesy: Yahoo Finance

Courtesy: Kitco.com

Courtesy: Kitco.com

Moving beyond technical analysis there are also many fundamental factors in place that could easily send the price of PAAS to much higher levels.  Here’s my list of the top 7 reasons why now is a good time to buy the common stock of Pan American Silver.

  1. According to the company website, over the past ten years PAAS has added almost 270 million ounces of new silver reserves at a cost of just $0.38 per ounce.  The new silver reserves more than replaced the 225 million ounces of silver mined since 2004.
  2. During the first quarter of 2014 PAAS increased its silver production by 5% to 6.61 million ounces.
  3. In order to maintain a strong financial position in the face of declining silver prices PAAS implemented cost cutting measures while improving operational efficiency.  The all-in sustaining cost per silver ounce sold dropped by 20% in the first quarter of 2014 to $15.54 per ounce while cash costs dropped to $8.25 per ounce from $11.33 in the comparable prior period.
  4. Pan American Silver was just upgraded by Charles Schwab from “avoid” to “neutral” and added to the firm’s trigger stock list which identifies PAAS as a buy candidate if the price closes above $13.81.  The reasons listed by Schwab for upgrading the stock include a rising 50 and 200 day moving average which is bullish, an up/down pattern that indicates the stock is under accumulation, and a bullish trend as indicated by the moving average convergence/divergence (MACD).
  5. PAAS is in a strong financial position with ample liquidity.  As of March 31, 2014, the company held cash and short term investments of $394 million and working capital was over $680 million.
  6. The Company pays a current quarterly dividend $0.125 per share or $.50 annually which works out to an annual yield of almost 4% which is about 4% higher than what a saver can currently get from a bank due to the Federal Reserve’s zero interest rate policies.
  7. PAAS sells below its book value of $14.33, has only $40 million in long term debt, and generates operating cash flow of over $123 million.  The Company does not engage in price production hedging so any increases in the price of silver flow right to the bottom line.

A strong financial position, long life low cost silver reserves, a 4% annual dividend, and a currently depressed price of silver all form the perfect recipe that should make the purchase of PAAS common stock a rewarding experience.

Gold Advance Stymied by Investor Worries and High Gold Silver Ratio

feature-300x200The price of gold has held its own this year despite a long list of reasons from bearish analysts for not owning gold.  From a closing price of $1,225 at the start of the year gold has managed to eke out a small gain of 1.8% to a price of $1,247.50 at Friday’s close.  In mid March gold had reached a high of $1,385 but quickly surrendered those gains.

In a recent interview with Bloomberg several analysts listed various reasons for the unease in the gold market including:

  • selling by hedge funds
  • a lack of upward price momentum which is discouraging investors from making new purchases
  • anxiety over future gold and silver pricing as major banks drop out of the market for establishing the daily gold and silver fix price
  • the risk of a large drop in the price of gold if it breaks technical support at $1,230
  • an increase in the gold silver ratio to almost 70 from the more normal long term average of around 55 to 60.
Courtesy: stockcharts.com

Courtesy: stockcharts.com

One analyst interviewed by Bloomberg expects the gold silver ratio to converge via a drop in the price of gold, which is one possibility.  Another way in which the gold silver ratio could drop, of course, is if silver outperforms gold.  Since mid 2012 gold has outperformed silver by a relative percentage of about 17%.

gld vs slv

On an absolute basis silver has experienced a major price decline from almost $50 per ounce in March 2011 to $19.94, a price last seen in early September 2010.

slv

Is it time to buy or sell gold and silver?  Based on information from precious metal analysts, which is probably already fully discounted by the markets, the risks of buying gold and silver today are very high.  Kinda reminds me of what stock analysts were saying about buying stocks in early 2009.

American Eagle Silver Bullion Coin Demand Remains Strong – 2014 Should Shatter Previous Sales Record

proof-silver-eagleThe American Eagle silver bullion coins produced by the US Mint remain extremely popular with retail investors.  During 2013 silver bullion coin sales hit a record high of almost 43 million ounces and would have been even higher if the US Mint had been able to keep up with demand.  The US Mint actually ran out of silver bullion coins late in the year and suspended sales for most of December and part of January 2014.

Sales of silver bullion coins exploded in the wake of the financial crisis during 2008 when investors began to seriously question of value of paper money which could be manufacturing at will and in unlimited quantity by a profligate government.

Prior to the financial crisis yearly sales of the silver bullion coin ran between eight and ten million ounces.  Since 2010 yearly sales exploded to over 30 million ounces per year and during 2013 exceeded 40 million ounces.

According to the US Mint May sales of the silver bullion coin totaled 3,988,500 ounces up by almost 12% from the previous month and up by 15% from the comparable prior year month.

Sales of the silver bullion coins are shown below by year with 2014 sales through May 31st.

The American Eagle silver bullion coins cannot be purchased by individuals directly from the U.S Mint.  The coins are sold only to the Mint’s network of authorized purchasers who buy the coins in bulk based on the market value of silver and a markup by the U.S. Mint.  The authorized purchasers sell the silver coins to coin dealers, other bullion dealers and the public.  The Mint’s rationale for using authorized purchasers is that this method makes the coins widely available to the public with reasonable transaction costs.

If the US Mint is able to keep up with demand, 2014 should be another record breaking year for sales of the American Eagle silver bullion coins.  If the pace of silver coin sales continues at the current rate sales for 2014 could easily top 50 million ounces, an increase of about 16% from last year.