Playing the long gold and silver game

I have asked several times in recent weeks what buyers of American Eagle gold and silver bullion coins are trying to tell us.

With the end of April soon upon us, it is time to ask the question again.

Bullion Eagle sales have been strongly trending lower as the year has progressed.

April is setting itself up as the worst month yet.

It all began back in February following the usual strong January.

To set the stage, the January gold sales were 117,500 ounces compared to 124,000 in 2016.

The difference seems to be simply a normal fluctuation.

Then sales for both metals fell sharply compared to the same month in 2016.

Let’s look at gold first.

Gold saw a February monthly sales number of 27,000 ounces compared to 83,500 in 2016.

March came in at 21,000 ounces compared to 38,000 the year before.

April so far is a tiny 5,500 ounces compared to 105,500 in 2016.

Sales so far in 2017 have reached 171,500 ounces compared to 351,000 in 2016.

That is a decline of 51 percent.

For silver, the pattern is similar.

January did not seem unusual.

The sales of 5,127,500 compared to 5,954.500.

In February, most buyers disappeared.

Sales were 1,215,000 ounces compared to 4,82,000 in the same month in 2016.

March teased us with a glimmer of hope by recording an uptick from February.

The number was 1,615,000, but that was still strongly below the March 2016 performance of 4,106,000.

Now near the end of April the sales number is 835,000.

This compares to 4,072,000 in the same month in 2016.

Buyers have taken 53.5 percent fewer silver Eagles this year than they did in 2016.

Any sales during the remainder of this week will change the figures, but I don’t think enough coins will be sold to alter the narrative.

Buyers have significantly cut back their gold and silver Eagle purchases.

Why?

What are they waiting for?

Is their confidence in President Trump so high they don’t feel they need to buy as much precious metal as in prior years?

Do they see a buying opportunity down the road and are saving their money for it?

Have they diverted their funds to tech stocks, which have driven the NASDAQ to a new record of over 6,000?

The Dow Jones Industrials are close behind nearing 21,000 again.

If stocks are partying like its 1999, it might pay to remember what happened.

The stock hangover began in 2000.

Precious metals began their massive uptrend in 2001.

Gold and silver Eagle buyers are more sophisticated than Wall Street will admit.

They have long memories.

They play a long game.

No matter what we might think about Eagle sales in April 2017, it pays to remember this.

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

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