The appetite for U.S. American Eagle gold and silver bullion coins is still at unprecedentedly high levels almost two months after a historic sell-off in gold unleashed years of pent-up demand from retail investors, the head of the U.S. Mint said on Wednesday.
His comments are likely to allay concerns among some traders that frenzied buying by mom-and-pop investors since mid-April – after prices plunged to two-year lows – had started to fade.
Interest in bullion coins, which target investors, has helped gold prices recover to a key support level around $1,400 an ounce, after a better economic outlook and lack of inflation prompted institutional investors to flee the futures market and exchange-traded funds.
"Demand right now is unprecedented. We are buying all the coin (blanks) they can make," Richard Peterson, U.S. Mint's acting director, said in an interview inside the Mint's production facility in West Point, New York, referring to the Mint's suppliers.
Sales of gold and silver bullion coins, including the popular 22-karat American Eagle and the 24-karat American Buffalo, are on pace to hit a record 45 million coins this year, said Peterson, head of the Treasury Department agency since 2011.
The Mint sold about 35 million bullion coins in 2012.
The Mint, one of the world's top producers of gold and silver coins, may resume making American Eagle platinum bullion coins in 2014 after receiving requests from dealers, who have seen renewed investor interest in platinum, he said. It has not made the coins since 2008 due to low demand.
Platinum's prices have sharply outperformed gold and silver on much improved U.S. and Asian auto markets and supply fears caused by mine violence in top producer South Africa. More than half of the world's annual platinum output is used in auto catalytic converters to clean harmful tailpipe emissions.
Year to date, the price of platinum is down around 2 percent, while gold is down 16 percent and silver is 26 percent lower.
The West Point Mint, the U.S. Mint's main producer of American Eagle gold and silver coins, has been working overtime to cope with a sudden surge in demand since gold's $225 drop on April 12 and 15, Peterson said.
The U.S. Mint has been limiting sales of the American Eagle silver coins to dealers on an "allocation" basis since January, and it had briefly halted sales of its one-tenth ounce gold Eagle in May.
Peterson said its supply of coin blanks for the small gold coins was depleted even though the Mint had stocked twice prior to mid April.
"We don't want to have inventory laying around that we are not going to be using, so we walk a fine line between having too much and having enough," he said.
"When the prices fell so dramatically, demand for that one particular denomination more than doubled and sold out," said Peterson.
Peterson said he expects the current premium to authorized dealers - set at 3 percent on each one-ounce American Eagle bullion gold coin and $2 on one-ounce silver bullion coins - to stay the same, reflecting the cost of minting and operation.
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