As the COVID-19 pandemic erupted, so too did demand for newly minted platinum, gold, and silver coins from the US Mint.
In times of crisis and doubt, investors move some assets to safe-havens. The demand is so high it is currently stripping the Mint’s supply. And if history is any indicator, it will not fade any time soon.
Sales of the American Eagle Platinum, America’s official bullion coin, were the highest since the launch of the program in Y 1997, spiking from 9,300 oz in February to 31,200 oz in March. To date, Y 2020 sales have now exceeded annual sales going back to Y 1999.
Gold sales are also strong. American Eagle Gold (22ct) and American Buffalo gold (24ct) is up from 7,000 oz and 1000 oz in February to 151,500 oz and 47,500 oz in March respectively, both gold bullion coins had their 3rd best month in 10 yrs.
And American Eagle silver sales kept pace with its platinum and gold cousins. Sales jumped from 650,000 oz in February to 5,482,500 oz in March. They are the 7th highest in the history of the program, which began in Y 1986.
Many bullion investors are individuals seeking a hedge to manage risk. They are not institutions as they do not have sophisticated financial instruments like derivatives at their disposal. What they do have is cash and access to precious metal bullion coins.
Speculators are in the bullion game too.
Gold prices went from 1,471 in March to 1,726 in April. Silver prices went from 12.11 to 15.70 and platinum from 588 to 784 over the same frame.
The action is so fierce that the existing supply of these bullion coins is not enough to meet demand. So, the United States Mint has to mint new ones to fill orders from distributors who have no inventory left yet still have customers clamoring for more. As a result, the Mint is making bullion coins at a pace not seen since the Y 2008 Financial Crisis and the Great Recession.
Making things complex; the Mint’s facility in West Point, NY is currently idled due to a COVID-19 cases in the surrounding area. It makes the majority of precious metal bullion coins.
The pressure for increased production will not let up any time soon.
Expect demand to continue at least until we reach something resembling normal. When we saw the last economic, the Financial Crisis and Great Recession, it took 11 yrs until precious metal bullion sales finally settled back to their pre-crisis levels.
Given that both fiscal and monetary stimulus already exceeds the last crisis precious metal bullion coins will remain in investors’ portfolios in the years ahead.
Have a healthy day, Keep the Faith!