Silver Coin Sales Are "The Silver Lining" of Past 5 Years
San Francisco (Oct 17) Gold coin purchases hit record highs in 2013, but investor appetite appears to have been sated so far this year with sales down compared to five years ago. Demand for silver, on the other hand, remains strong five years later.
“Given the lower metal prices, gold coins sales continue to suffer because gold has not performed as people expected to,” said George Gero, vice president and precious-metals strategist at RBC Capital Markets Global Futures.
When looking back over the last five years it is impossible to ignore the massive demand seen last year for both gold and silver coins.
In 2013, the Canadian mint sold 1.1 million ounces of its gold Maple Leaf coin, an increase of 47.7% from the previous year. South of the border, the American Eagle gold coin sales reached 856,500 ounces while the American Buffalo sold 239,000 ounces, an increase of 13.7% and 81% from 2012, respectively.
However, compared to five years ago, gold coin sales are significantly weaker today.
“It seems that people who buy coins are ‘buy and hold’ clients who are hedging against future inflation,” Gero said. “The main contributing factor in [declining] gold coin sales is the lack of inflation on the horizon.”
In 2009, American Eagle gold coin sales reached about 1.4 million ounces, 680,500 ounces of which were sold in the first two quarters of that year. During the first half of 2014, American Eagle gold coin sales peaked at 266,000 ounces, a drop of about 61% compared to 2009.
Turning to the American Buffalo gold coin, sales only reached 200,000 ounces in the last quarter of 2009; it is important to note that the coin was only introduced into the market in October of that year. However, since January of this year, the Mint only sold 111,500 ounces, not even meeting sales seen in the last three months of 2009.
Canadian Maple Leaf gold coins share the same story, as the Canadian Mint reported sales of 1.2 million ounces in 2009, which averages out to about 97,000 ounces per month. In 2014, the Canadian Mint’s gold coin has reached sales of 337,000 ounces from January to June, roughly about 48,000 per month.
In other words, there has been on average a 51% decline in monthly sales of gold Maple Leaf coins in 2014 compared to five years ago.
But, there is a silver lining; silver coin sales have outperformed the yellow metal, with higher sales reported by both the Canadian and U.S. Mints.
“Silver buyers are buying at low prices and low unit costs compared to gold,” Gero said. “With silver also having an industrial component, [investors are] hoping for a recovery eventually.”
Silver sales, like gold, are also coming off a record performance in 2013. Last year, the Canadian Mint posted its highest silver coin sales record in history, selling about 28.2 million ounces, an increase of 55.8% from the previous year.
Also that year, the U.S. Mint reported sales of about 42.7 million ounces of its American Eagle silver coin, a 26% increase from 2012.
According to data from the Canadian Mint website, Canadian Maple Leaf silver coins reached sales of roughly 10.3 million ounces in 2009. This year, the Canadian Mint has sold 15.4 million ounces just in the first two quarters, surpassing yearly sales of five years ago.
The U.S. Mint reported sales of about 28.8 million ounces in 2009 from its American Eagle silver coins, 13.8 million ounces of which sold from January to June alone. During that same period in 2014, silver coin sales reached 24.1 million ounces, an increase of approximately 75%.