The precipitous drop in the spot price of gold and silver over the
past several weeks has driven physical demand for those precious
metals to new levels.
Sales by the U.S. Mint of silver American Eagle bullion coins are
on a record-setting course as the nation’s coin producer works to
satiate market investors’ appetites for the metal.
A total of 25,943,500 ounces of silver American Eagles have been
reported sold through June 26, compared with the 22,303,500 coins sold
during the first six months during the record-setting year in 2011.
The recent dip in the price of silver forced the U.S. Mint June 26
to reconsider repricing several of its numismatic products containing
the metal and delayed the planned June 27 release of the 5-ounce
silver Uncirculated 2013-P Great Basin National Park quarter dollar.
“Due to the recent decrease in the price of silver, the United
States Mint is considering lowering prices on several silver coin
products,” according to Mint officials in a June 26 announcement. “The
new prices will go into effect after being published in the Federal
Register and after a new on-sale date has been determined.”
Since the start of the calendar year, Gold has dropped 27 percent,
or $457.50 per troy ounce, while silver has plummeted 39.5 percent, or
$12.20 an ounce.
On Jan. 2, 2013, the closing London PM fix price for one troy
ounce of gold was $1,693.75; $30.87 for silver; $1,566 for platinum;
and $711 for palladium.
On June 26, 2013, the closing spot prices for each of the metals,
respectively, was $1,236.25; $18.67; $1,329; and $652.
The Mint has pulled off sale a number of its numismatic products
containing precious metals over the past six months for downward
repricing before putting them back on sale.
When the numismatic versions of the 5-ounce silver America the
Beautiful quarter dollars with the P Mint mark of the Philadelphia
Mint were introduced April 28, 2011, the coins were offered at $279.95
and the spot price of silver was $48.70.
The first issue offered was the 2010-P coin honoring Hot Springs
National Park in Arkansas.
On June 25, 2013, silver closed at $19.77 per ounce and the last
price the U.S. Mint was charging for the 5-ounce silver numismatic ATB
coins was $179.95.
The Uncirculated 5-ounce silver coins have been repriced downward
at least two other times from 2011 to the present.
Prices down, demand up
Ross Hansen, founder of Northwest Territorial Mint in Auburn,
Wash., said the drop in the spot price of gold and silver has been a
boon to business.
NWT is a wholesale and retail supplier and buyer of silver, gold,
palladium and platinum precious metal bullion, including American
Eagles and Canadian Maple Leaf coins, as well as the exclusive
producer of Pan American Silver Corp. silver bullion and its own NWT
“We like the lower prices. It helps us all the way around,” Hansen said.
“Customers who have a finite amount of money to spend are finding
they can buy more ounces of the same product for the same amount of
money they have available to spend, especially for silver,” Hansen said.
“People are looking at this as a great buying opportunity,” he added.
During 2012, of the 33,742,500 silver American Eagle bullion coins
the U.S. Mint sold to its authorized purchasers, Hansen said NWT
resold 11 percent of that total.
NWT also produces awards and medals in a variety of metals.
While gold bullion sales are also up for NWT, silver takes the
lead with more silver being sold as a percentage of overall bullion
sales, Hansen said.
“Americans have a love affair with silver,” Hansen said.
Hansen said NWT has sold hundreds of thousands of ounces of silver
in the form of its Silver Bullet products. The .999 fine silver
products resemble different calibers of ammunition and come in
different weight sizes.
Mike Fuljenz, owner of Universal Coin and Bullion in Beaumont,
Texas, said the demand for physical gold — holding the actual metal —
is at record levels. He said more investors are seeking delivery of
the actual metal versus owning the metal on paper and having it held elsewhere.
Gold demand is up in India and China in both coin and bar form,
and premiums on bullion coins in all markets are continuing to rise
because of limited supply, Fuljenz said.
Investors are turning to better-date U.S. gold coins, which have
seen increased premiums, Fuljenz said, while common-date gold double
eagles have fallen in price with the sliding spot price.
Fuljenz says most stock-oriented investors hold their gold through
paper certificates traded on the New York Stock Exchange via
exchange-traded funds (ETFs).
An ETF is an investment fund traded on stock exchanges, much like
stocks. An ETF holds assets such as stocks, commodities, or bonds, and
trades close to its net asset value over the course of the trading day.
Reuters reported in mid-June that total global assets in gold ETFs
shrank to $96.2 billion in May, down 32 percent from $141.2 billion at
the end of 2012, citing data from BlackRock. BlackRock is an
American-based multi-national investment management corporation based
in New York City.
“Investors can buy, sell and trade those ETFs rapidly, so they
represent the opposite of the buy-and-hold mentality of the physical
gold investors around the world,” according to Fuljenz. “The volume of
gold held by ETFs has declined 20 percent in six months, from 84.6
million ounces in December to 67.9 million ounces last week. This adds
new supplies to the market, depressing gold’s price further.”
Further fanning the flames, Fuljenz told Coin World on June 25, is
the recent opening of ETFs in China involving gold as well as central
banks buying gold to add to their foreign exchange reserves.
Silver demand is also increasing as the spot price falls, Fuljenz said.
The U.S. Mint’s authorized purchasers approved to buy American
Eagle and American Buffalo bullion coins are still on weekly
allocation for silver American Eagle bullion coins which are
experiencing unprecedented sales.
Brice Northrup, director of marketing for Provident Precious
Metals in Lavon, Texas, said many investors are finding the drop in
metal prices to be the perfect opportunity to add to their holdings in
Northrup said he’s also seen an upswing in purchasing by precious
metals investors seeking to take physical possession of the metals.
Northrup added, “We haven’t noticed any production issues from our
suppliers just yet, although with sustained demand, it wouldn’t be
considered out of the ordinary.”