February Demand For U.S. Gold Coins Up 236% From 2015

(Kitco News) - Demand for U.S. gold and silver bullion coin sales took a bit of a dip last month, compared to January; however, sales are still dramatically higher compared to 2015.

The latest sales data shows that sales of various denominations of American Eagle gold coins and Buffalo gold coins totaled 102,500 ounces last month, down 35% from January’s sales of 124,000 ounces. However, year-over-year data shows that gold bullion sales are up 236%. Last February, the U.S. mint only sold a total of 30,500 ounces.

Erica Rannestad, senior analyst at Thomson Reuters GFMS, dismissed the monthly drop as a seasonal factor as retailers tend to overstock at the start of the new year. She added that the year-over-year growth shows just how strong the demand is.

George Gero, vice president of RBC Capital Markets, said that it is not surprising to see the considerable demand for gold this year.

“If you look at the markets last year, stocks were higher, the U.S. dollar was strong and there was no reason for retail investors to get into the gold market,” he said. “Now retail investor are buying coins so they have some security,” he said.

Phillip Streible, market strategist at RJOFutures, agreed that gold’s safe-haven appeal should continue to support physical gold demand in the near-term. However, he added that February’s sales drop could be an indication that investors don’t see the economic outlook as so dire.

“In January investors ran into gold because it felt like the world was coming apart at the seams,” he said. “Now maybe things don’t look so bad so investors might pare back their coin purchase.”

Streible added that higher gold prices could also dissuade some investors from buying coins; but both Rannestad and Gero see the opposite scenario.

“Buying begets buying,” said Gero. “Now that gold has attracted the attention of retail investors, I think demand is going to remain strong.”

Silver bullion coin sales also saw the same demand pattern as gold with the U.S. mint seeing sales of 4.782 million ounces last month, down 20% from January, multi-year record of 5.95 million ounces but up more than 58% from 2014.

Gold prices are seeing some modest selling pressure Tuesday with prices hovering around $1,231 an ounce, relatively unchanged on the session.

Courtesy: Kitco News