September 30, 2023

US Mint Gold and Silver Bullion Sales Highest in More Than a Decade

During May 2010, the United States Mint’s gold and silver bullion sales levels reached their highest level in a decade or more for the two most popular offerings. This heavy demand for physical gold was experienced by several world mints last month, driven by concerns and uncertainty about Greece and the Euro.

The United States Mint sold 190,000 of their 1 oz. American Gold Eagle coins. This ranked as the highest monthly sales total for the bullion option since January 1999 when 208,500 coins were sold. The all time record high for sales in a single month took place in October 1986 when 609,500 of the one ounce coins were sold.

There were 3,636,500 of the 1 oz. American Silver Eagle coins sold during May 2010. This was just shy of the all time monthly sales record of 3,696,000 coins sold in December 1986. The month of May ended with a three day weekend, if one more day of sales had taken place, the record may have been broken. It’s worth noting that Silver Eagle bullion coins are also subject to the US Mint’s allocation (rationing) program, meaning these impressive sales still do not reflect full public demand.

Recent articles report similar surges in bullion coin demand. Production of Gold Krugerrands by the Rand Refinery reached their highest weekly production levels in 25 years. The treasurer of the refinery cited Germany as a large source of demand. The Perth Mint of Australia which did not provide production levels, has doubled their capacity over the past 18 months. As soon as the European Commission announced that they would bail out Greece their stock of gold “all went.”

2010 First Quarter Gold Demand

The World Gold Council has released Gold Demand Trends for the First Quarter of 2010. The report indicates a drop in gold demand for the covered period, but suggests that demand will be strong for the rest of the year.

Identifiable gold demand during the first quarter of 2010 was 760.2 tonnes, representing a drop of 25% compared to levels seen for the first quarter of 2009. The change was driven by a 69% decline in investment demand, offset by a 43% increase in jewelry demand and 31% increase in demand from industrial sectors.

The drop in investment demand was driven by a sharp decline in demand from ETFs and similar products. Total demand was only 3.8 tonnes for the quarter compared to 465.1 tonnes for the year ago period. Comparisons are also influenced by an unusually strong year ago period.

Investment demand did pick up right after the close of the first quarter, when concerns about Greece and debt contagion fears led to a significant pick up in demand for physical gold. In a previous post, I explored how physical gold demand had surged compared to the muted levels of the first quarter. More significantly, there has also been a resurgence in demand from the GLD ETF in the past month.

In their forecast for strong demand for the remainder of 2010, the WGC cites jewelry demand in India and China, as well as investment demand for the United States and Europe as the drivers.

Gold Philharmonic Sales Drop 80%

Recent reports indicate that sales of gold bullion coins from the Austrian Mint have dropped a shocking 80% from year ago levels. The Austrian Mint produces the Gold Philharmonic, which has for some quarters been the world’s best selling gold bullion coin.

According to the article, the Marketing Director of the Austrian Mint indicating that they had returned to “business as usual” rather than “hectic, panic demand” experienced over the past few years.

Gold Philharmonic sales fell to 53,930 ounces for January and February 2010 compared to 267,091 ounces for the same period in the prior year.

For comparison, I checked the sales figures for the American Gold Eagle bullion coins, which I follow more closely. According to the US Mint provided figures, there were sales of 169,000 ounces of gold in January and February 2010, compared to 205,500. While this does represent a drop of about 18%, its not of the magnitude shown at the Austrian Mint.

While demand for physical gold does seem to have pulled back from the extreme levels of recent years, the magnitude is not as huge as suggested by the Gold Philharmonic numbers.

Gold and Silver Eagle Shortage Becomes Surplus

For countless months, authorized purchasers of US Mint gold and bullion coins have been subject to a rationing process, which limited the number of coins they could purchase. The rationing program had been put into place after the demand for gold and silver coins exceeded the US Mint’s ability to supply them. In a few recent posts I have provided some indications that the shortage of American Silver Eagles and American Gold Eagles might be ending. There’s yet another indication that the end of the shortage and rationing is close at hand.

Throughout the rationing period, the entire supply of coins available from the US Mint had been divvied up and sold to the authorized purchasers. For the first time since rationing began, the US Mint failed to sell their total production of Gold and Silver Eagles.

Dave Harper, the editor of Numismatic News, writes:

In the prior two weeks, the 14 purchasers authorized to buy the American Eagle coins from the U.S. Mint have not taken the maximum number of coins that are available, leaving the Mint with an extra 39,000 one-ounce gold American Eagles and 185,000 extra silver American Eagles.

To my knowledge, the rationing program for Gold and Silver Eagles still remains in place despite the surplus of recent weeks. The US Mint is likely waiting to build an inventory of bullion before attempting to remove purchasing restrictions completely.

When the rationing program was instated by the US Mint, it generated a lot of attention from blogs and news sites. The rationing was cited as evidence of the overwhelming demand for physical precious metals that would eventually carry market prices higher. With the opposite situation developing, opposite predictions have emerged.

In befuddlement to both arguments, the the disconnect between physical demand and market price continues. Amidst the unraveling of the physical scarcity situation, the prices for gold and silver have risen to multi-month highs with many predicting impending breakouts, which will carry prices even higher.

Growing Demand for Gold, When Will Prices Soar?

Sorry for the lack of posts lately. Let’s get back into the swing of things with a round up of some gold and silver related stories for the past few days to bring things back up to speed.

Federal Reserve Will Fail with Quantitative Easing

Reaction following the Federal Reserve announcement that they will purchase $300B of long term Treasuries.

Bugs triumpant about gold, terrified about US

More reactions from gold bugs who are “triumphant — and terrified.”

Bloomberg TV archive carries Murphy interview

Catch the Bernard Lo interview with GATA Chairman Bill Murphy. It also might set the stage for another segment to debate the matter of gold price suppression.

Bank crisis spawns a new kind of gold rush

An article out of Canada describing what it calls “a bandwagon effect for investment in precious metals.” Many people are demanding physical possession and purchasing 400 ounce blocks of gold.

Japanese Young Boost Gold Buying Amid Recession

An article from Bloomberg about the growing and broadening demand for gold. It describes one firm’s gold accumulation program, which allows customers to have a certain amount automatically debited from their bank account each month and invested in gold.

Why the price of gold is not yet soaring?

A question that is on many people’s minds, especially in light of numerous articles like the ones above. Temporarily putting aside government and central bank manipulation, here’s an excellent evaluation of some of the other forces at work.

Put simply, in order for the gold price to go substantially higher, investment demand must offset declining jewelry demand and, in addition, absorb all the scrap supplies that are now hitting the market as individuals all over the world scramble for cash in a very, very bad economy.

Wealthy individuals are certainly buying the stuff but ordinary investors are still in shock.

To get a really good “gold bubble” going (not to be confused with conditions today that some journalists confuse with the real thing), you need broad participation – lots of embraces from lots of average Joes.