American Eagle gold, silver coin demand reaches 11-year lows

CHICAGO (Reuters) – In a sign of precious metals demand, sales of U.S. Mint American Eagle gold and silver coins are closing out their weakest year since 2007, as investors favored higher-yielding assets, despite volatility in global stock and bond markets late in the year.

One ounce silver coins undergo washing at the cleaning facility at the United States West Point Mint facility in West Point, New York June 5, 2013. REUTERS/Shannon Stapleton

Annual sales of U.S. Mint American Eagle gold coins were at 244,500 ounces for 2018 as of Dec. 20, the lowest since 2007, when 198,500 ounces were sold. Silver American Eagle coins sold by the U.S. Mint for 2018 were at 15.56 million ounces, also the lowest in 11 years.

Lackluster sales of new U.S. Mint American Eagle gold and silver coins came as investors concentrated on buying more older coins at lower premiums, U.S. dealers said.

During summertime, premiums for backdated one-ounce American Eagle gold coins sank to as low as 1.2 percent over spot prices. That premium has since rebounded to about 2.5 percent above spot gold prices, still less than 2018-minted gold coins, which sell for up to about 3.25 percent above spot prices, said Katie Cooper, a trader at Upstate Gold Coins in Fayetteville, New York.

“That’s why this year when we saw such low secondary market premiums, no one was going to buy a current-date coin at [nearly] 1.5 percent higher” than the back-dated price, said Cooper.

Spot gold prices XAU= have lost 3 percent in 2018, and at one point in August were down 11 percent on the year. [GOL/]

Sales fell in consecutive months for the first five months of the year, U.S. Mint data showed. Sentiment changed in the summer, when a trade war between the United States and China sparked a temporary move towards safer assets.

However, that momentum waned later in the year, even as stock markets continued their slide, because the U.S. dollar increased in value. This made dollar-denominated gold more expensive for holders using other currencies and a less attractive investment.[nL2N1VS1LS]

As the trade war heated up, gold and silver coin sales increased, said Steve Rand, broker manager of Scottsdale Bullion & Coins in Scottsdale, Arizona.

Investors may turn back to bullion in the coming year, dealers and analysts said, as precious metals could look more attractive as a storehouse of value if stock markets remain volatile.

“I expect 2019 to be a better year for gold and silver,” said Matt Badiali, senior research analyst at Banyan Hill Research. “The Fed won’t raise rates as much as expected. The dollar could weaken on (an) economic slowdown.”

Reporting by Renita D. Young; editing by David Gaffen and Cynthia Osterman

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