(Kitco News) – A new trend could be emerging in the physical bullion marketplace as coin sales from the U.S. Mint were weaker than its counterpart in Australia.
In its monthly sales report, the Perth Mint said that it sold 84,976 ounces of minted gold products in August, an increase of 7% from July. At the same time, sales are up 57% compared to August 2021.
Meanwhile, data from the U.S. Mint shows that it sold 51,500 ounces in various denominations of American Eagle Gold bullion coins. Sales are down 20% from July and 62% from last year.
Meanwhile, the U.S. mint sold 850,000 one-ounce America Eagle silver bullion, unchanged from July. However, sales are down 78% from the more than 3 million coins sold last year.
In Australia, the Perth Mint said it sold 1.656 million ounces in silver minted products last month, down 33% from July but up 13% from August 2021.
Some market analysts have said that the Perth Mint’s strong sales could be due to more aggressive marketing, especially in Europe.
Everett Millman, precious metals expert at Gainesville Coins, said the Perth Mint could also be benefiting from growing Asian demand as lockdowns in China have started to ease.
“From a logistics perspective, it is probably easy and cheaper to ship gold and silver coins from Australia to India and Asia,” he said.
Millman said another factor that could be disrupting U.S. mint sales is that premiums for those coins are higher than other bullion like Kangaroos from the Perth Mint or Austria’s Vienna Philharmonic gold coins.
“Consumers are becoming a little more cost-conscious, and they are turning to other coins with lower premiums,” he said.
Premiums for U.S. Mint products, especially America Eagle Silver coins, have even attracted the ire of Congress. Last month, Rep. Alex Mooney (R-WV) sent a letter to U.S. Treasury Secretary Janet Yellen, calling her and U.S. Mint Director Ventris Gibson out for production issues for America Eagle Silver coins.
Mooney noted that the U.S. Mint has only made 11.6 million ounces of the silver bullion coin available to the public through July 2022 – barely half of what has been supplied through the first seven months of prior years when demand has been similarly strong.
“This shortage in U.S. Mint production has apparently led to extremely high market-based premiums on Silver Eagles (as high as 70% over the silver melt value) – even as comparable items produced by other sovereign mints and private mints were not beset by such shortages or historically high premiums,” Mooney wrote in the letter.
“The high costs resulting from the U.S. Mint production shortage directly harm U.S. citizens wishing to avail themselves of a U.S. legal tender means of protecting their financial security from the effects of inflation.”
Millman also noted that market factors are prompting investors to avoid gold and silver bullion. He added that gold prices have struggled as the Federal Reserve aggressively tightens its monetary policy. Rising interest rates have pushed the U.S. dollar to its highest level in 20 years and bond yields above 3%, two significant headwinds for precious metals.
However, Millman said he doesn’t expect the current environment to be sustainable. He said that although the Fed continues to hold its hawkish stance regarding interest rates, that position could quickly change as economic conditions deteriorate.
Millman noted that markets continue to see the Federal Reserve pivoting on interest rates, even if expectations have been pushed back until the second half of 2023.
Analysts have noted that gold and silver bullion should pick up as recession fears continue to grow.
“If you are looking for a safe-haven asset, there are not a lot of choices out there. Every other currency has been battered by the U.S. dollar, so gold remains an attractive monetary metal,” said Millman.
Phillip Streible, chief market strategist at Blue Line Futures, said that he expects bullion demand to pick up as investors start to realize the value in the marketplace.
He noted that the gold/silver ratio is trading near its highest level in roughly two years, holding around 95 points.
“You have never gone wrong buying silver when the ratio is above 95 points,” he said. “That trend goes all the way back to the 1980s.”
Shared by Golden State Mint on GoldenStateMint.com
