Last year marked the third consecutive year that the U.S. Mint saw sales decline for gold American Eagle coins.
Listen to market chatter and you may be led to believe that gold is the hottest commodity on the planet and everyone is buying. Look at the data and you may find a different story.
The U.S. Mint reported that gold coin sales declined 25 percent to 753,000 ounces in 2012, the lowest level since 2007.
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The data do not support the view of analysts regarding a current gold rush or stories of retail buyers hoarding the metal, says International Business Times.
Numerous reasons have been put forth to explain the lackluster demand for gold coins.
Traditionally, gold was bought for protection. Many investors put cash into the metal in anticipation of events such as failing monetary systems or rampant inflation. However, sentiment about economic conditions appears to be improving, lessening the desire for safe havens.
Also, safe-haven seekers are commonly portrayed as having a distaste or distrust for currency, but in reality many people hoard cold hard cash when they foresee the potential for a crisis.
Then, there is the price. Gold is currently over $1660 an ounce. Owning a gold eagle requires the buyer to pay for the metal and a premium to cover miscellaneous costs such as minting and marketing.
Physical owners must also think about storing and securing their coins. For some who choose to use safe deposit boxes or depositories, this results in additional costs. Then, if they ever wish to sell their coins more labor and expense are generally involved.
This is not to suggest that investors are turning against gold altogether. Rather MarketWatch suggests major changes are occurring in the gold market to allow investors to have more choices. Among them are gold exchange-traded funds (ETFs), which are rapidly gaining popularity.
According to data from MarketWatch, as gold coin sales have been declining, holdings in global exchange traded products have seen a three year jump of 44 percent.
A single share in a gold ETF costs only a fraction of an ounce of gold. Furthermore, shares of ETFs trade on exchanges like stocks, so investors can easily buy and sell.
Investors' interest in gold ETFs and the growing number of exchange-traded gold products coming to the marketplace seem to indicate that many who continue to play in the gold space prefer more convenience than coins offer.
“The American Eagle — the gold version — has flown the coop,” MarketWatch says.
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