Earlier this week the United States Mint began sales of the 2011 American Gold Buffalo coins to their network of authorized purchasers. So far, sales are off to somewhat of a tepid start compared to the high initial demand experienced in recent years.
The American Gold Buffalo is a one ounce 24 karat gold coin that has been issued since 2006. Featuring the classic Buffalo Nickel design created by James Earle Fraser, it has enjoyed popularity with both bullion investors and collectors. The US Mint has offered a bullion version of the coin, which is sold to authorized purchasers based on the market price of gold plus a premium, and various collector versions, which are sold to directly by the Mint at higher premiums.
The bullion versions of the coin have not been available since late September, when inventories of the 2010-dated coins became depleted. Prior to the start of sales for the 2011-dated coins on March 14, 2011, the US Mint indicated that they would have a sufficient quantity of the coins to meet public demand. As such, their allocation program, which serves to ration available supplies, would not be necessary. The authorized purchasers were allowed to order unrestricted quantities of the coins, under the typical procedures.
Through March 16, 2011, the US Mint has recorded sales of 21,500 of the one ounce gold bullion coins.
This represents a slower start than the prior two years. In 2009, figures available for the first three days of sales indicated 71,500 coins sold. Last year, opening day sales figures had reached 48,500 coins.
Sales of the United States Mint’s American Silver Eagle bullion coins were slower in the latest week. However, the slow down seems to be the result of the allocation program currently in place, as opposed to a reduction in demand. Sales for Gold Eagle bullion coins dropped to the lowest weekly total for the year to date.
The pace of United States Mint gold and silver bullion coin sales picked up in the prior week. The US Mint currently has available one ounce American Silver Eagles in allocated quantities and unrestricted quantities of American Gold Eagles.
The US Mint utilizes a network of authorized purchasers (AP’s) to distribute bullion products to the public. This small group of private sector businesses are allowed to purchase bullion coins from the Mint in bulk quantities, and in turn resell them to the public. The price charged to the APs is based on the market price of the metal plus a mark up.
In the past week, the United States Mint sold 833,500 ounces of silver bullion and 31,500 ounces of gold bullion. Available products included the American Silver Eagle in one ounce size and the American Gold Eagle in one ounce or three fractional sizes.
After the furious pace of sales experienced during January for the United States Mint’s American Silver Eagle and American Gold Eagle bullion coins, the current month is progressing at a more measured pace. For the week ending February 9, 2011, the US Mint recorded sales of 847,000 ounces worth of silver and 18,000 ounces worth of gold.
The pace of sales for the United States Mint’s American Gold Eagle and American Silver Eagle bullion coins jumped in the past week. This propelled silver bullion sales far into record territory for the month of January.
Amidst increased demand for physical gold and silver investment products, the United States Mint achieved record revenue from the sale of bullion coins during their 2010 fiscal year. Annual sales totaled $2.86 billion, which yielded net income of $55.2 million for the segment.
For much of the past three years, the United States Mint has struggled to keep up with the boom in demand for physical precious metals. Although they have been required to mint and issue American Gold and Silver Eagle bullion coins in quantities sufficient to meet public demand, they have often fallen short of this mandate, resorting to sales suspensions and rationing programs.