Demand for American Eagle Gold Coins Soaring Since US Election

on Dec 11, 2012

While gold prices have been struggling in recent weeks, including a drop below $1,700 an ounce on account of US fiscal cliff concerns, demand for gold coins in the US has soared since the presidential election, the Financial Times reported on December 10. Although gold coins represent a relatively small part of the overall gold market, the rise in sales is seen as highlighting gold’s safe haven image especially in view of the prospects for further monetary easing by the US Federal Reserve.

**Gold Coins Sales Soaring Since US Election**
The FT quotes data from the United States Mint showing that sales of American Eagles, one of the most popular gold coins, jumped as much as 131 percent in November, reaching their highest level in more than two years. The FT quotes Terry Hanlon, president of metals at Dillon Gage, one of the largest bullion dealers in the US as noting that sales rose sharply “within a day or two” of the US election. President Obama’s second term at the White House is generally seen as supportive for gold given the President’s support for the Fed’s quantitative easing measures intended to stimulate the US economy.

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“You’ve got a lot of people who are very worried about the economy,” pointed out Mr Hanlon, as quoted by the FT. “With the election they saw nothing was going to change.” The mining news website Mineweb in turn quotes Gold Coin analysts as seeing gold sales increasing further, with more investors turning to gold “as their ultimate safe-haven profit and wealth preservation tool.”

In addition to buying American Gold Eagles, investors also favoured American Eagle Silver Bullion Coins, albeit to a lesser extent, with Mineweb reporting that sales increased slightly from 3,153,000 ounces in October 2012 to 3,159,500 silver ounces in November 2012. The FT quotes Chris Carkner, head of bullion sales at the Royal Canadian Mint, as saying that November was a strong month for gold Maple Leaf sales, with Maple Leaf Coins being also among the most popular coins by circulation along with American Eagles.

**Gold Market Struggling**
!m[The Gold Market However Struggling For Momentum In Recent Weeks](/uploads/story/1013/thumbs/pic1_inline.png)Despite the observed rise in coin sales, the gold market has been underperforming of late, with prices dropping below $1,700 an ounce on December 4. “The institutional investors cut back and are more on the sidelines now,” points out James Steel, head of precious metals strategy at HSBC (LON:HSBA, NYSE:HBC, HKG:0005), as quoted by the FT. “But the coin market is dominated by retail investors and the man on the street is still pretty committed to gold.”

On December 11, Reuters reported that gold, which has risen more than nine percent so far in 2012, inched down, with spot gold losing 0.2 percent to $1,709.10 an ounce and US gold dropping 0.4 percent at $1,707.80.
**Fed Stimulus Prospects**
And while gold has recently been declining mostly on fiscal cliff-related concerns, analysts see the precious metal gaining if the Fed announces further stimulus measures following its last policy meeting for 2012. “Much will hinge on the FOMC and its decision on what to do once Operation Twist comes to an end,” notes Nick Trevethan, a senior commodities strategist at Australia & New Zealand Banking Group Ltd (ASX:ANZ, NZE:ANZ, PINK:ANZBY) as quoted by Bloomberg. “Momentum is on the side of the market. The next test for gold will be whether it can break $1,721 resistance.”


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