Perth Mint Outperforms US Mint in Gold Sales Last Month
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(Kitco News) – A new trend may be emerging in the physical precious metals market as the US Mint’s coin sales were weaker than those of its Australian counterpart.
In its monthly sales report, the Perth Mint said it sold 84,976 ounces of minted gold products in August, a 7% increase from July. At the same time, sales have increased by 57% compared to August 2021.
Meanwhile, data from the US Mint shows it has sold 51,500 ounces of American Eagle gold bullion coins in various denominations. Sales are down 20% from July and 62% year-on-year.
Meanwhile, the US Mint sold 850,000 one-ounce America Eagle silver bars, 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 of minted silver 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, particularly in Europe.
Everett Millman, precious metals expert at Gainesville Coins, said the Perth Mint could also benefit from growing Asian demand as lockdowns in China begin to ease.
“From a logistical point of view, it’s probably easier and cheaper to ship gold and silver coins from Australia to India and Asia,” he said.
Millman said another factor that could disrupt sales of U.S. coins is that premiums on these coins are higher than other precious metals, such as the Perth Mint’s kangaroos or Austria’s Vienna Philharmonic gold coins.
“Consumers are becoming a bit more cost-conscious and are turning to other coins with lower premiums,” he said.
Premiums on US Mint products, particularly America Eagle silver coins, have even drawn the wrath of Congress. Last month Rep. Alex Mooney (R-WV) sent a letter to US Treasury Secretary Janet Yellen calling out her and US Mint Director Ventris Gibson over production issues for America Eagle silver coins.
Mooney noted that the US Mint had made only 11.6 million ounces of the silver bullion available to the public through July 2022 — barely half of what was shipped in the first seven months of previous years, when demand was similarly strong.
“This shortage in US coin production appears to have resulted in extremely high market-based premiums on Silver Eagles (up to 70% above silver melt value) – even when comparable items produced by other sovereign mints and private mints were unaffected by the shortages or historically high premiums,” Mooney wrote in the letter.
“The high costs resulting from the US Mint’s production shortage directly harm US citizens who seek to use a US legal tender to protect their financial security from the effects of inflation.”
Millman also noted that market factors are causing investors to avoid gold and silver bullion. He added that gold prices have struggled as the Federal Reserve aggressively tightens monetary policy. Rising interest rates have pushed the US dollar to a 20-year high and bond yields above 3%, two major headwinds for precious metals.
However, Millman said he doesn’t expect the current environment to be sustainable. He said that while the Fed continues to maintain its hawkish stance on interest rates, that position could change quickly if economic conditions deteriorate.
Millman noted that even as expectations have been pushed back to the second half of 2023, markets continue to see the Federal Reserve turning on interest rates.
Analysts have noted that gold and silver bars should rise as recession fears continue to mount.
“If you’re looking for a safe haven, there aren’t many options out there. Every other currency has been battered by the US dollar, so gold remains an attractive currency metal,” Millman said.
Phillip Streible, chief market strategist at Blue Line Futures, said he expects demand for bullion to pick up as investors begin to see the value in the market.
He noted that the gold/silver ratio is trading at about 95 points, near its highest level in about two years.
“You’ve never done anything wrong by buying silver when the ratio is above 95 points,” he said. “This trend goes back to the 1980s.”
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