Exceptional demand for gold coins in 2009
The demand for gold coins has risen sharply in 2009. This was a result of investors hedging against financial failure or diversifying portfolios into gold as there is a continuing lack of confidence as economies struggle to pull out of the worst recession in most peoples living memory.
The Royal Mint more than quadrupled production of gold coins in the third quarter after demand increased as investors sought to hedge against a weakening dollar.
Output rose to 32,735.8 ounces from 7,500.2 ounces a year before, according to data obtained by Bloomberg News under a Freedom of Information Act request. Production in the first nine months more than trebled to 100,391.3 ounces.
Sales of American Eagle gold coins by the U.S. Mint more than doubled in the first nine months to 954,000 ounces, its Web site showed. Harrods Ltd., the London department store, began selling gold bars and coins for the first time in October.
The strong demand for American Gold Eagles has lead to a shortage of blanks forcing the U.S. mint to sell on a weekly allocation basis thus dealers are charging a higher premium.
According to Muenze Oesterreich AG, the Austrian mint and the world’s largest marketer of pure gold coins, by the end of Q3 production was up 23 percent more last year’s total sales.
It is not just panicky individuals but professional investment advisors and sophisticated traders who are purchasing 50 or more coins at a time The surge in investors is creating shortages in mints across the world as they struggle to meet demand driving premiums above normal levels.
Gold coins are a tangible asset that can quickly and easily be realized and many such as Gold Sovereigns have liquidity that is recognized world wide. However, the sophisticated investor should view gold coins as an insurance policy within a diversified portfolio.
Maurice Hall
Tags: crisis, Gold, Gold coins, sovereign