Gold bullion coin demand slides

Everybody knows demand for the U.S. Mint’s popular gold coins is very high in January because collectors and investors want the new date as fast as possible and dealers need initial inventory to offer the new date to them.

The result this year is the odd situation where gold American Eagle sales in January are almost precisely equal to the sales total for the next three months combined.

Talk about front-end loaded bullion coin demand.

In January, the Mint sold 62,500 one-ounce bullion coins. In the next three months the combined sales number is 64,000.

However, if we look at the number of ounces sold, which includes all four sizes from tenth ounce to one ounce, the Mint sold 91,500 ounces in January and 90,500 ounces in the following three months.

For the gold Buffalo, the pattern is the same. There were 41,500 of the one-ounce coins sold in January. The next three months' total is – you guessed it – 41,500.

There was no surge in demand for gold bullion coins in April as there was last year when a $200 drop in the price of an ounce of the metal made many people believe they were getting coins at bargain prices.

Time has proven that they were not the bargains they were thought to be, but the comparison of sales numbers of April 2013 to April 2014 shows just how much the market has changed in a year.

Last year the April monthly sales figure was 187,500 one-ounce coins. For April 2014, the number is 26,000, a drop of 86 percent.

If you feel it is unfair to compare the two months because of the unusual circumstances that prevailed in 2013, then a look at the sales levels of the first four months of 2013 compared to the first four months of 2014 is instructive.

In 2013 sales were 434,000 one-ounce coins. In 2014 the number is 126,500, a drop of 71 percent. That is a better number, but not by much.

The decline in Buffalo sales is a milder 37 percent for the first four months of the year compared to 2013.

The simple fact is buyers are increasingly getting cold feet about purchasing more gold bullion coins.

Why is something we can only guess at. Do they feel alternative investments are better? Do they feel that a financial meltdown is no longer as likely and are cutting back their insurance purchases?

Or are they just plain tired of buying an asset that has been falling in value since its 2011 peak of almost $1,900?

Gold closed yesterday at $1,283.10. That’s up from the $1,201.90 year-end 2013 figure, but not enough to stir those who dream of $2,000 gold, or $5,000 gold.

What will the rest of the year bring?

An ongoing decline in gold’s price would continue to depress sales of gold bullion coins. A strong turnaround in price would prompt increases.

Which will it be?

Buzz blogger Dave Harper is winner of the 2013 Numismatic Literary Guild Award for Best Blog and is editor of the weekly newspaper "Numismatic News."