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Wsj - Sales Of Silver, Gold Coins Surge

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JULY 7, 2009

Sales of Silver, Gold Coins Surge


Sales of gold and silver bullion coins were up sharply in the first half of 2009, when dealers were citing strong physical demand amid worries about other investments.

Sales remained strong but abated somewhat in late spring and early summer, but there are at least some signs it might be on the rise again, said one dealer. “Over the last 30 days, business has picked up again mostly because, I believe, there is a lot of skepticism still in the market about which way the economy is heading,†said Scott Thomas, president and chief executive of American Precious Metals Exchange in Edmond, Okla.

Bullion coins are meant to provide investors with a convenient and cost-effective way to add small amounts of precious metals to their portfolios. It is valued by the weight and the type of precious metal.

This is different from numismatic coins, which are valued on the basis of factors such as limited mintage, rarity, condition and age. The only coin in this category sold by the Mint in the first half is the 2009 Ultra High Relief Double Eagle Gold Coin that was launched in January. Sales hit 68,445 in the first half, the Mint reported.

The outlook for bullion-coin sales may hinge on whether inflation begins to rear its head or whether there are more credit-market problems, said James Cook, president of Investment Rarities in Minneapolis.

The U.S. Mint said it sold 680,500 one-ounce American Eagle gold bullion coins in the first six months of the year.

By contrast, in the first half of 2008, the Mint sold 180,000 one-ounce Eagle coins and 67,000 American Buffalo coins. (Release of 2009 Buffalo bullion coins is planned for later in the year, the Mint said.)

For all of 2008, sales of one-ounce American Eagle bullion coins totaled 794,000 and sales of one-ounce Buffalo coins totaled 172,500.

Any comparison to year-ago totals must take into account Mint sales of half-, quarter- and tenth-ounce American Eagle bullion coins that have been suspended this year due to a shortage of blanks. When including these, the combined weight of all Eagle gold coins sold in the first half of 2008 amounted to 197,500 ounces, still far short of the 2009 total of 680,500.

For all of 2008, a total of 1,172,000 Eagle coins were sold totaling 860,500 ounces, which, in turn, was a sharp increase from 409,500 coins totaling 198,500 ounces in 2007.

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So is this a good sign or a bad for the gold bulls? You could interpret this as a sign of gold's rising importance with all the money printing that has gone on or take the contrarian view that gold is the new bubble.

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I'm less bullish on gold now but the fact that is has drifted lower for months rather than crashed is encouraging.

The inflation risk may still be there in the future but it seems very distant and financial armageddon also seems less likely than a few months ago.

My concern is that the recession will just make everyone poorer and the appetite for gold, for investment, coin collectors and jewelery will shrink

If and when the banks become recapitalised and release money into the economy it might be better to be in shares rather than gold

I'm holding what I have as worst case scenario insurance but I don't see any profit in it any more.

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