Tags: gold | coin | sales | Mint

US Gold Coin Sales Fall to 6-Year Low

Sunday, 01 Sep 2013 08:10 PM

Demand for U.S. gold coins plunged 77 percent in August to the lowest level in six years as retail buying that helped bullion recover from a historic sell-off in April continued to slow, U.S. Mint data showed.

Total sales in American Eagle gold bullion coins for investors were just 11,500 ounces this month, down from 39,000 in August 2012 and 50,500 ounces in July, according to the U.S. Mint's website on Friday.

Sales of American Eagle silver bullion coins at 3,625,000 ounces in August were down 17.75 percent from 4,406,500 ounces in July, but higher than 2,870,000 ounces in August 2012.

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The gold sales are sharply below the monthly average of almost 100,000 ounces for the first seven months of this year and the lowest monthly sales since June 2007, data showed.

Coin sales are typically slowest in summer months, but the size of the drop will likely stir fears about waning appetite for physical bullion, including jewelry and coins, which has driven gold's recovery from the historic sell-off in April when institutional investors exited en masse.

Sales have fallen every month since April when gold's price drop triggered pent-up demand from retail investors looking for a bargain.

Still, there is one sign of strength in the data.

The vast majority of sales took place in the last two weeks as tensions in the Middle East reignited investors' appetite for physical bullion as a safe haven against geopolitical turmoil. On Aug. 19, sales were just 3,000 ounces.

"Investors are concerned about what's going to happen to the stock market if a war does break out over in Syria. Gold is one of the few assets that provides safety during times like this," said David Beahm, vice president of New Orleans-based retail coin dealer Blanchard & Co.

His gold coin sales in the second half of August were about 40 percent higher than in the first two weeks, he said.

The pick-up in recent weeks and the return of institutional investors this week, which have propelled prices to three-month highs, might help gold's prospects heading into September, a key month for Federal Reserve monetary policy.

Safe-haven buying might only be fleeting if tensions in Syria subside.

"Geopolitical rallies tend not to buoy the market unless there's further deterioration. In this case, it would be military action," said James Steel, chief precious metals analyst at HSBC.

On Wednesday, spot prices rallied to $1,433 an ounce, their highest since May, as the United States and its allies threatened to launch military strikes on Syria.

On Friday, gold dipped back below $1,400 an ounce as the market viewed a U.S. military strike on Syria as less likely and a strong U.S. inflation reading reinforced expectations the Fed will taper its monetary stimulus soon.

Many economists expect the Federal Reserve to curb its massive stimulus program next month. Assets such as gold have been boosted by central bank liquidity over the past four years.

Silver bullion coin sales were more resilient than gold because they are lower priced and therefore more appealing to retail investors.

The U.S. Mint has been limiting some silver coin sales since January due to a lack of coin blanks used to strike the coins.

Editor’s Note: 5 Reasons Stocks Will Collapse . . .

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