Gold Coin Demand Up, Silver Relatively Better

As gold and silver prices are going down, demand for coins are going up. Shouldn’t things be the other way around?

Perth Mint announced that gold coin demand has hit the highest point in the last 11 months. Bloomberg reports Gold Sales at Perth Mint Reach 11-Month High as Prices Retreat:

Gold sales from Australia’s Perth Mint, which refines all the bullion output in the world’s second-biggest producer, climbed 89 percent in September to the highest level in almost a year as prices declined.

Sales of gold coins and minted bars rose to 68,781 ounces from 36,369 ounces in August and the most since October 2013, according to data from the mint compiled by Bloomberg News. Sales were about 68,487 ounces in September 2013, data show.

The same article points out that the U.S. Mint, the largest Mint in the world, sold 58,000 ounces of American Eagle gold coins in September from 25,000 ounces in August and 13,000 ounces a year earlier.

When look at silver coins it becomes even more interesting. This chart comes from Goldchartsrus (the most extended resource for data related to the precious metals market). It shows how silver coin sales, expressed in dollar value (not in number of coins sold), is as high as gold coin sales. Why is this an interesting evolution? Because the price of silver has decreased faster than the one of gold, evidenced by the gold to silver ratio standing at 61 early this year and 71 today.

US_Mint_Eagle_Sales_2009_September_2014

The red line is clear: as of 2013, when the futures market has been pushing precious metals prices significantly down, the physical market has been reviving every time again. Although safe haven demand for gold coins has gone up, silver has done even better in relative terms given an increasing gold to silver price ratio.

 

 

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