May 23, 2024

Gold Bullion Coin Sales Soar By 94% In January As Confidence In The Dollar Crumbles

According to the latest production figures from the U.S. Mint, January sales of American Gold Eagle bullion coins soared by 93.8% over the previous month.

A total of 127,000 ounces were sold in January compared to 65,500 ounces in December 2011.  The surge in demand for gold bullion coins is now at the highest level since January 2011 when 133,500 ounces were sold.

Investors are taking opportunity of the bargain price of gold which remains below last year’s high.  After hitting a London PM Fix price of $1,895 on September 6, 2011, gold sold off by 19.2% to a closing low of $1,531.00 on December 29, 2011.

Since the beginning of the year, the price of gold has steadily advanced.  The closing London PM Fix price of $1,744.00 on January 31st represents a gain of $213 per ounce for the month, up 13.9% from the 2011 year end price.  The price of silver has also advanced strongly in 2012 with a gain of 26.8% from last year’s low amid record breaking demand for the American Silver Eagle bullion coins.

Sales of the American Gold Eagle bullion coins hit an all time record in 2009 when 1,435,000 ounces were sold.  A summary of annual gold bullion sales since 2000 is shown below.

Total yearly gold bullion coin sales from January 1, 2000 to January 31, 2012 are shown below.

Gold Bullion U.S. Mint Sales By Year
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 127,000
Note: 2012 total through January 31, 2012

The huge demand during 2009 for gold bullion coins came in the wake of the 2008 financial system meltdown as investors sought a safe haven from paper assets.  Here we are four years later and the financial system is more fragile than ever with insolvent banks  and governments being propped up by central banks that are printing money on a scale previously unimaginable.

Although I have been a precious metals investor for many years (more sometimes than I care to think about), many of the people I deal with on a personal  and professional level seemed to be totally confident holding only paper assets, even after the financial system came very close to a total collapse in 2008.

That confidence now seems  to be slowly but persistently eroding and I am seeing many people enter the precious metals market for the first time.  It is not an “all in” seismic shift but rather a thoughtful and fundamental portfolio reallocation based on the growing realization that paper dollars are being constantly debased.

A one time bout of money printing by the Federal Reserve to “save the system” can perhaps be quickly forgotten, but a persistent and deliberate effort to debase the currency is another matter.  The growing realization that the Federal Reserve is deliberately destroying the integrity of the dollar will be the basis for continual future demand for the only real money left – gold.

The growing movement to reallocate wealth into gold is still in its infancy which implies a future gold value many thousands of dollars higher than today’s price.

US Mint Gold Bullion Sales Collapse in August

The US Mint’s published sales figures for the month of August show a stunning decline in the level of gold bullion sales. The monthly sales for their popular American Gold Eagle bullion coins measured just 41,500 ounces. This represents the lowest monthly total since June 2008, before the financial crisis took hold and led to a surge in bullion sales.

American Gold Eagle sales during August included 39,000 one ounce coins, 1,000 one-half ounce coins, 2,000 one-quarter ounce coins, and 15,000 one-tenth ounce coins to make up the total sales of 41,500 ounces. This represents a decline of more than 70% compared to the previous month and about 50% compared to the year ago period.

The US Mint’s other gold bullion offering, the 24 karat American Gold Buffalo also put in a lackluster month with sales of 15,500 of the one ounce coins. This is down from a monthly high of 70,500 ounces in May and the prior month total of 23,000 ounces. In the year ago period, the coins were not available.

Since the American Gold Eagle coins have been available continuously (amidst a few periodic suspensions), the monthly sales totals illustrate the pattern demand for the US Mint’s gold bullion coin. There have been a few other monthly drops over the course of the past few years and demand has always managed to recover.

Here are the monthly sales totals for American Gold Eagle bullion coins (in ounces) since June 2008.

Jun-08 15,500
Jul-08 50,000
Aug-08 86,000
Sep-08 113,000
Oct-08 121,500
Nov-08 116,500
Dec-08 176,000
Jan-09 92,000
Feb-09 113,500
Mar-09 136,500
Apr-09 147,500
May-09 65,000
Jun-09 116,000
Jul-09 86,000
Aug-09 82,000
Sep-09 115,500
Oct-09 115,500
Nov-09 124,000
Dec-09 231,500
Jan-10 85,000
Feb-10 84,000
Mar-10 102,000
Apr-10 60,500
May-10 190,000
Jun-10 151,500
Jul-10 152,000
Aug-10 41,500

US Mint Silver Bullion Sales on Record Pace, Gold Sales on Pace for Fourth Highest

Through June 30, 2010, the United States Mint has sold 18,168,500 ounces of silver bullion and 833,500 ounces of gold bullion. If the current pace is maintained for the rest of the year, US Mint silver bullion sales will break another record and gold will be within the top four annual sales totals.

The United States Mint currently offers the one ounce American Silver Eagle. This has been the US Mint’s only silver bullion coin option since its debut in 1986. Annual sales totals have ranged from a low of 3,466,000 ounces sold in 1996 to a high of 28,766,500 ounces sold in 2009.

This year’s mid-year total sales of 18,168,500 suggests that a new record high for annual sales will be extremely likely. Monthly sales figures have been relatively steady with four months above the 3 million level. It should be noted that this is not necessarily indicative of steady demand, as sales of the coins are currently subject to an allocation program, which rations the available supply amongst the US Mint’s authorized purchasers.

Later this year, the US Mint will be releasing a new series of America the Beautiful Silver Bullion Coins. These coins will contain 5 ounces of silver and feature designs which are duplicates of the current quarter program. It’s still uncertain just how many of these new silver bullion coins the US Mint will produce and whether this will have a meaningful impact on overall silver bullion sales.

On the gold bullion side, the US Mint current offers the American Gold Eagle and the American Gold Buffalo. The first is a 22 karat gold coin available in one ounce, one-half ounce, one-quarter ounce, and one-tenth ounce sizes. The latter is a 24 karat gold coin available in one ounce size only.

The mid-year gold bullion sales total of 833,500 ounces is made up of the following:

  • 618,500 American Gold Eagle 1 oz
  • 31,000 American Gold Eagle 1/2 oz
  • 44,000 American Gold Eagle 1/4 oz.
  • 280,000 American Gold Eagle 1/10 oz.
  • 160,500 American Gold Buffalo 1 oz.

According to the latest information I have read, the one ounce bullion coins are not subject to allocation, however the fractional weight gold bullion coins are subject to allocation. These coins available to authorized purchasers starting on June 10, 2010.

The highest annual US Mint gold bullion sales was achieved in 1999 when 2,055,500 ounces were sold. This is followed by 1998 at 1,839,500 ounces, 1986 at 1,787,750 ounces, and 2009 with 1,625,500 ounces. The lowest annual gold bullion sales total occurred in 2002 when only 164,500 ounces of gold were sold for the entire year. The US Mint actually sold more gold bullion than this last month when 185,000 ounces were sold.

2010 Proof Gold Buffalo and 2010 Fractional Gold Eagles

Closely behind the release of the 2010 Gold Buffalo bullion coins, the United States Mint has two more gold products on the way. This includes the collectible proof version of the Gold Buffalo and fractional weight American Gold Eagles.

The 2010 Proof Gold Buffalo is now scheduled for release on June 3, 2010. Since this is a collector coin, it will be available for sale directly from the US Mint via their website. Each coin will contain one ounce of 24 karat gold and feature the design from James Earle Fraser’s Buffalo Nickel. Pricing for the coins won’t be known until the week of release, since it will be based on the average weekly price of gold. At the current gold price, the coins would be $1,510.

Last year, the 2009 Proof Gold Buffalo wasn’t available for sale until October 29, 2009, amidst delays and cancellations across many of the US Mint’s precious metals products. The coins remained available for sale until March 29, 2010 and sold 49,388 coins.

The US Mint has reportedly begun production of the fractional weight versions of the 2010 American Gold Eagle bullion coins. I’ve always felt that these smaller weight coins were an important part of the bullion program, as they allow for different investment levels. The US Mint has historically offered one-half ounce, one-quarter ounce, and one-tenth ounce size coins.

A release date for these coins has not been established. Once available, they will be sold via the US Mint’s network of authorized purchasers, like other bullion offerings.

US Mint Begins 2010 Gold Buffalo Coin Sales

Today on April 29, 2010, the United States Mint began accepting orders for 2010 American Gold Buffalo coins from their network of authorized purchasers. The earlier offering of these 24 karat gold bullion coins is a signal that the US Mint is catching up with their bullion offerings after years riddled with suspensions and delay.

During 2009, the US Mint’s 22 karat Gold Eagle bullion coin was subject to rationing from the beginning of the year until June 15. The rationing was resumed on December 15, 2009 after a resurgence in demand caused a two week sales suspension. Going into the following year, the offering of 2010-dated coins was delayed by several weeks.

Last year the release of the 24 karat Gold Buffalo coins experienced even more significant delay. The coins were not available for sale to the authorized purchaser network until October 15, 2009. Throughout the preceding ten months, there were significant doubts raised as to whether the coins would be offered at all. The bullion coins only ended up being available from October 15 to December 4.

After a slow start in 2010, the situation has improved significantly. In March, the US Mint lifted the allocation program which had rationed supplies of the 22 karat Gold Eagle bullion coins. This month, they will begin selling the 24 karat Gold Buffalo bullion coins. This comes more than five months before last year’s offering began.

The next steps will be for the US Mint to begin sales of fractional weight American Gold Eagle bullion coins and the collectible 2010 Proof Gold Buffalo. This will finally clear the way for the US Mint to offer collectible proof and uncirculated versions of the 2010 Gold Eagle. These offerings were canceled last year, since the US Mint was not meeting full demand for the bullion versions of the coin.

While it would be nice to say that the progress in catching up with bullion demand is the result of increased production, it seems likely that a reduction in demand for gold bullion is responsible. So far this year, the US Mint has recorded sales of 324,500 ounces worth of gold bullion. This compares to sales of 489,500 ounces of gold in the comparable year ago period. The 34% reduction in sales has no doubt freed up some the Mint’s precious metals blank supply and production capacity.