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Surfing the Third Wave

Should this blog be called the Third Wave? Perhaps.

Most collectors know that 2008 was a time of unprecedented demand for the U.S. Mint’s American Eagle gold bullion coins.

This is the third time in the history of the program, which began in 1986, that the Mint has had to worry about ramping up production rather than cutting it back.

Back in 1986 when the program was begun, American investors and collectors were basically starved of American gold coins. The only ones that had been struck since 1933 were the 1984 Olympic $10 and the 1986 Statue of Liberty $5, and both of those were for the collector market not the investor market.

When the U.S. Mint invaded the province of the Krugerrand and the Canadian Maple Leaf, demand for the American Eagle was huge. 1,362,650 were sold in 1986 and sales didn’t even begin until October. Image the Mint trying to meet that kind of demand today.

In 1987 another 1,045,500 were sold.

Then totals backed off. In some years quite a lot. In 2001 the total of one-ounce gold coins produced was 143,605. That was just after the Second Wave of demand, which hit in 1998 and 1999 when totals were 1,468,530 and 1,505,026, respectively. Sales were spurred on in part by predictions of Y2K computer clock induced doom.

Here we are at the Third Wave and everybody knows the Mint is struggling to keep up with demand. Total sales of the one-ounce American Eagle was 789,500 in 2008.

Since the prior two waves of demand lasted for two years, does that mean 2009 will continue to see totals rise only to see then decline in 2010? We’ll see.