U.S. Mint Runs Out of Smallest American Eagle Gold Coin

This story comes to us from Dabarati Roy at Bloomberg

The U.S. Mint ran out of its smallest American Eagle gold coin after demand surged following the biggest drop in futures in three decades.
Sales of the coins weighing a 10th of an ounce were suspended after demand more than doubled in 2013 from a year earlier, the Mint said yesterday in a statement. Total sales of American Eagles in April have almost tripled from a month earlier, according to its website.

Zack Seckler/Bloomberg

American Eagle Gold Bullion Coins, shown here in 1 oz., 1/2 oz., 1/4 oz., and 1/10 oz. sizes, are some of the world's leading gold bullion investment coins.

American Eagle Gold Bullion Coins, shown here in 1 oz., 1/2 oz., 1/4 oz., and 1/10 oz. sizes, are some of the world's leading gold bullion investment coins. Photographer: Zack Seckler/Bloomberg

 

 

Shoppers from India to China and Japan joined consumers in the U.S. and Australia in the rush to buy jewelry and coins after futures slumped 13 percent in two days through April 15. Indian buyers flocked to stores and banks for ornaments, coins and bars as purchases from the Perth Mint in Australia doubled and retail sales across China tripled.

“This week has been very busy for us,” Michael Kramer, the president of New York-based MTB Inc., a dealer authorized to purchase coins directly from the Mint. “We do not yet anticipate suspension” of heavier coins, he said. The Mint also sells 22-karat American Eagles of 1 ounce, half an ounce and a quarter of an ounce.
“The 1-ounce gold bullion coins are the most popular,”Michael White, a Mint spokesman, said in the e-mail.
A rush by Indian consumers for bracelets and coins is prompting jewelers to offer premiums on imports as traders and banks run out of stockpiles, a trade group said yesterday. Jewelers in big cities are paying as much as 800 rupees ($14.73) per 10 grams (0.02 pounds) while retailers in some remote areas are paying about 1,200 rupees per 10 grams as a premium, according to Haresh Soni, chairman of the All India Gems & Jewellery Trade Federation.

Hong Kong, Japan

Overseas purchases may jump 36 percent to 305 metric tons in the three months ending June from 225 tons a year earlier, Mohit Kamboj, president of the Bombay Bullion Association Ltd., said last week. Imports may climb as much as 20 percent this month from year earlier, he said.
Volumes of gold products sold jumped 150 percent in Hong Kong and Macau during the April 13 weekend compared with the weekend before, according to Dennis Lau, director of sales operations at Chow Sang Sang Holdings International Ltd. (116), last week. Retail sales tripled across China on April 15-16, the China Gold Association reported.
Japanese consumers are poised to become net buyers of gold for the first time in eight years as the yen’s decline and looming inflation drive them to seek refuge in bullion, according to Standard Bank Plc.
Futures on the Comex in New York climbed 1.1 percent to $1,424.90 an ounce by 5 p.m. in Singapore, about $100 above the $1,321.50 reached on April 16, which was the lowest level in more than two years. Prices have plunged 26 percent from the record $1,923.70 in September 2011.

Gold Buying Surges on Price Correction

This Article comes to us from Economics Fanatic on SeekingAlpha.com

As reported, investors and ornament lovers in India mopped up 10-15 tonnes of gold within three days of decline in the precious metal. Readers might argue that buying gold in India is more an ornament consideration than an investment consideration. However, the buying would not be rampant if a further decline in gold prices was perceived. Further, there has been buying of gold coins and bars, which underscores the point that Indians are increasingly looking at gold as an investment or currency.

In the United States, Zero Hedge reported that the U.S. mint sold 63,500 ounces of gold in a day, which happens to be a record. According to the website -

According to today's data from the US Mint, a record 63,500 ounces, or a whopping 2 tons, of gold were reported sold on April 17th alone, bringing the total sales for the month to a whopping 147,000 ounces or more than the previous two months combined with just half of the month gone.

Therefore, even investors in the U.S. are looking at the current correction as a buying opportunity than considering it to be an end to the bull market for gold. Commodity guru, Jim Rogers also considers the correction healthy and is looking to buy gold on further correction.

The important point I am trying to make through these examples is that the global appetite for gold has not declined after the crash. Instead, investors are taking the correction positively and looking to buy further instead of panic selling. Considering this buying momentum, I don't expect another major downside from these levels. I had written an article, which discussed the probability of a 10-15% correction in gold. For me, that target is achieved and I would consider buying some physical gold at these levels.

I would also like to offer the views of the World Gold Council on the recent decline in gold prices. The comments by the WGC underscore my points stated above. According to the WGC -

It has become increasingly clear over the course of the past week that the fall in the gold price was triggered by speculative traders operating in the futures markets. Their short-term view of generating a trading profit is in stark contrast to the views of long term investors in gold, as evidenced by the massive wave of physical gold buying that began over the weekend and accelerated following Monday's further decline. The surge in gold purchases is spanning markets from India and China to the US, Japan and Europe. Buyers are viewing this as an opportunity to purchase gold at prices not seen in the past couple of years.

Surely, for long-term investors, it is the time to accumulate gold. Of course, gold should be just a part of the portfolio and diversification is needed in order to avoid sharp erosion of capital due to the volatility witnessed. Talking about volatility, the movement in all asset classes subsequent to the crisis has been associated with a large degree of volatility. Therefore, diversification in asset classes and regions globally is essential.

For gold, investors can consider this as one of the best opportunities to buy and hold for long-term. I am not sure about the short-term trend. For the long-term, I can say with a lot of conviction that gold will trend much higher than its previous high.

The Charts

Recently there has been a rash of news about how Gold has broken through its lower support line and a further price drop could be coming but here is a chart that I just laid out as of February 20 and it looks like the actual support line is around $1525-$1530. Gold is still within its consolidation pattern and unless it closes through that support line I see no reason for the panic.

 

Here is the silver chart over the same time period and as you can see it is also still well within its consolidation pattern.

 

This chart is interesting because it shows the duration periods of the last 2 major consolidations in the Gold price and the timing of the end of our current consolidation does seem to correlate closely with a bounce off the support line above and also the maximum consolidation of the silver pattern.