U.S. Mint sales of American Eagle gold and silver coins are both on track for their weakest year since 2007, as investors shrug off geopolitical concerns and sell some silver in favor of investing in the stock markets' record rally.
The weak sales come as investors sell their coins to dealers, spurring the strongest second-hand market for American Eagle silver coins in the United States since 2009, according to two U.S. dealers.
This has caused dealers to cut premiums for the traditional safe-haven market. Coin premiums shift according to market supply and demand.
"Bullion gold coins are going for about $50-$70 over the spot price," said Ryan Denby, manager of Austin Rare Coins and Bullion in Austin, Texas.
"We're selling silver bullion coins at a premium of $2.50-$4.50 per ounce." U.S. Mint sales of American Eagle gold coins are on track for the weakest full year since 2007, after volumes in the first nine months of this year slid to 232,000 ounces, down 66 percent from the same period in 2016.
Sales of American Eagle silver coins totaled 15.9 million ounces during the first three quarters of 2017, down 48 percent from the same period a year ago and - like gold - on track for the weakest year since 2007, data showed.
"When people are selling their metal in the marketplace, there really isn't a need to go to the mint when there's enough inventory to meet the needs of the investor at lower rates," said Walter Pehowich, executive vice president of Dillon Gage, a major precious metals dealer in Addison, Texas.
Investors who typically buy physical precious metals to hedge against financial risk as well as in times of geopolitical turmoil are taking note of improving U.S. economic growth. As a result, they are opting for riskier investments that offer higher returns, he added.
Demand for American Eagle silver coins on the second-hand market has increased throughout the year, while demand for gold is only just picking up now, said Denby. World stocks are setting fresh record highs, with the Dow Jones Industrial Average and the S&P 500 indexes on track for a sixth straight week of gains.
"The perception is that there's nothing wrong with the economy,” Denby added. Spot gold hit a 13-month high at $1,357.54 an ounce in September.
Spot silver has been lackluster, trading largely between $14.86 and $18.65 an ounce, well within last year's range.
To be sure, geopolitical tensions abound, from North Korea's testing of weapons to friction over the nuclear deal with Iran and North American Free Trade Agreement to the ongoing situation in Syria and Iraq.
But investors' actions now show they are confident in U.S. President Trump's economic policy and the direction of the economy, said Miguel Perez-Santalla, vice president of Heraeus Precious Metals in New York.
"A lot of that conservatism is just more comfortable under the Trump presidency, so they don't feel the need to buy the precious metal," he said.
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