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Coin Sales Surge Despite Price Dip

Written By Brian Hicks

Posted April 18, 2013

Despite the steep fall of both gold and silver in recent days, sales for coins made of those metals are booming. As a result, mints worldwide are kept busy, and the cost of these collector items is skyrocketing above the value of the very metal that goes into making them.

What’s going on?

Right now, coins make up roughly a fifth of all gold purchases. They’re cheaper than the gold bars favored by investors and so are more accessible.

gold and silver coinsEarlier in the week, gold futures fell on expectations that the ongoing inflation around the world could be easing out a bit. Coin prices, meanwhile, remained high thanks to continued demand from champions of gold, who appear to insist that the coins can retain their value in the longer run.

What that means is that the premium on these coins is now more than 5 percent over the spot price of gold. Silver’s story is even more dramatic. The premium is now at 18 percent over the price of silver itself.

The Wall Street Journal reports:

“The premium for coins is getting higher and higher,” said Gregor Gregersen, director at Singapore-based Silver Bullion Pte. Ltd. “They’re harder to get hold of and, as people see that, some of them are going into a panic.”

Gold for April delivery dropped 0.3 percent to $1,382.20 on the NY Comex yesterday, while Australia’s Perth Mint has gone on record stating that demand for gold coins and bars has shot up—Q1 gold coin sales are up 50 percent year-over-year.

And here in the U.S., sales for gold American Eagles have risen threefold from last Friday to this Wednesday, inversely paralleling the drop in gold prices over the same period. Thus far in April, American Eagle sales have amounted to 147,000 ounces, while April 2012 saw a mere 20,000 ounces in sales. That’s quite the difference.

Precious Metals Still a Good Bet?

The story echoes in Canada, India, and, it seems, most of the world. Of course, gold and silver have long held their places in investors’ minds as safe haven bets.

Gold has had an incredible run, but it is now certainly on the decline. This is mostly due to a current period of uncertainty in global markets. The major questions revolve around the financial mess in Cyprus, the willingness of central banks worldwide to continue their stimulus actions, and whether unemployment, housing markets, and other key indicators will improve.

In the recent past, the news was unfailing bad—and investors flocked to gold as a result. Now, the news is sometimes good and sometimes not so good, meaning investors aren’t quite sure what’s going on. Central banks have mostly held to their strategy, and one consequence of that is steadily increasing inflation.

This means spot shortages of gold and silver. Silver has recently picked up its luster—along with platinum and palladium—likely because each of these metals has widespread industrial applications.

Short-term speculation may, in fact, be what is depressing the precious metals market for the moment, but it’s clear that there are investors hoping to ride the storm out on the backs of gold and silver coins.

I mentioned sales for American Eagle gold coins earlier, and they’re breaking records. Silver is also doing spectacularly. Ever since 2008, silver has picked up greatly. Through April 16th of this year, sales totaled 2.2 million ounces. Assuming sales don’t dip abruptly, Silver Eagle sales should see an uptick of about 31 percent over March, the Gold and Silver Blog estimates.

Clearly, investors continue to see silver and gold as good bets in the long term. Right now, with prices of the actual metals dropping, more and more investors are getting in on it in the form of bullion.

Could it be compared to savvy home buyers snapping up houses right when the market was at its worse? In fact, home buying has seen a significant rise in recent months—and it’s also a fact that prices have gotten about as low as they’re likely to be.

In the context of precious metals, then—as risky as it might be right now—certain bullion investors are jumping onto gold and silver as best as they can in anticipation of prices going back up in the near future.


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