US Mint Sells More Gold Coins In May Than Any Month Since January 1999

Tyler Durden's picture

If anyone wants to know the reason why PHYS is once again trading at about a 10% premium to NAV all over again (yes mere days after the follow on offering) look no further than the US mint. Reuters reports that "The U.S. mint sold 190,000 1-ounce American Eagle gold coins in May, the largest number since January 1999, and the most in any month so far in 2010, according to a spokesman for the U.S. agency." At least the mint still has gold coins to satisfy record demand. Buyers in Europe unfortunately are not so lucky, which is why in Greece recently an oz of sold for as high as $1,700.

In January 1999, the U.S. mint sold 208,500 gold 1-ounce coins, with only five other months exceeding May's gold coin sales since the program was launched in 1986, the Mint's spokesman told Reuters.

While in 2010 the U.S. Mint has sold only 1-ounce gold coins, in past years it has sold other coin sizes as well.

Comparing only American Eagle gold 1-ounce coins, the biggest monthly sale occurred in October 1986 with 609,500 coins sold, the Mint said.

Many investors, both retail and institutional, have sought gold as a safe-haven asset in times of economic uncertainty. Sales of the American Eagle coins increased by 214 percent in the month over April during a time when concerns about sovereign debt in the euro zone raised fears of a larger macro-economic effect.

The price of gold bullion reached a record high last month at $1,248.95 per ounce.

As the US Treasury will gladly tell you, there are some products for which demand increases proprtionally with price. While Tim Geithner would like you to believe this means Treasuries, gold is rapidly replacing Treasuries in this regard. As to questions about whether gold is in a bubble, we can't claim to know the answer at this point. Please ask us again when gold trades at $5,000.

h/t Rusty Shackleford

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nuinut's picture

Even more relevant: How many will they sell in June?

Temporalist's picture

Nah, what is more relevant is when will they run out.  So far less than 1% of the population even thinks about buying gold so if there was a spike in demand from that 1% imagine if 2% wake the fuck up.

BobWatNorCal's picture

Sorry, complete newbie here. Are we talking about these guys?

http://catalog.usmint.gov/webapp/wcs/stores/servlet/CategoryDisplay?cata...

Production of United States Mint American Eagle Gold Proof and

Uncirculated Coins has been temporarily suspended because of

unprecedented demand...

Pegasus Muse's picture

“If anyone wants to know the reason why PHYS is once again trading at about a 10% premium to NAV all over again (yes mere days after the follow on offering)...”

 

Yes, it’s good to see PHYS rising.  That will help those unfortunate naive Sprott investors who watched in dismay as their holdings decreased 10% ($12.50/unit down to $11.25/unit) instantaneously after Sprott announced its surprise Follow-On Offering to sell more units after the close on 25 May.  No doubt someone was liking that deal.  It just wasn’t the investors that placed their trust in Sprott to deal with them in a fair and honest manner.

 

Yep, at this rate those investors will make up their losses in no time.  They just need to carefully watch unit valuations and be ever mindful of the next No-Notice Rip-Off coming their way by virtue of yet another Follow-On Offering when the unit price to NAV premium gets a little too rich for the Sprott Boyz' blood.  It will be “skim some off the top” time again for our favorite ... and most hyped ... gold fund from north of the border.

 

Caveat emptor with the Sprott Physical Gold Trust (PHYS) folks.  Caveat emptor.

truont's picture

The NAV premiums are NOT a secret.  Suckers bought the 20% NAV premium because they really, REALLY wanted in on the fund.  CEF has similar NAV premium gyrations, but not up to 20%.

At least PHYS actually HAS gold bullion bars.

If GLD offered delivery of their "gold" then PHYS would have a NAV premium of 0%, since no one would care about Sprott's fund.

Clearly, PHYS offers something that GLD cannot satisfy...maybe real gold?

Pegasus Muse's picture

Agree – the NAV premiums are not a secret.  The intent to execute and date of Follow-On Offering (the Rip Off Event) is secret (to the best of my knowledge .... and I've been trying to resolve this issue with Sprott Investments, so far, with no success). 

It is not just the “suckers” that bought PHYS at a 20% NAV premium that were ripped off on this deal.  Every investor who put their money with Sprott got scammed.  What about the guy who bought PHYS at $10.50/unit and watched it go up to $12.50/unit commensurate with the increase in the price of gold?   He’s up 19% (12.50/10.50) and feeling good about his decision to invest with Sprott.  Then out of the blue Sprott drops the Follow-On Offering bomb which Nucs the unit price of PHYS down to $11.25/unit.  That investor watches in shock and disbelief as his profit drop from 19% to 7% (11.25/10.50) in an instant.  Instead of reaping the $2.00/unit profit for which he risked his capital, he now sees his profit reduced by more than half (to 75 cents).  He was caught unaware and unable to react.  While this maneuver may be legal, it is still patently unfair to PHYS investors.  Eric Sprott would not want to be treated that way.

I agree the real drawing card for Sprott is ability to cash out for gold bars – that is, if you have enough invested in the fund to purchase a 400 oz. bar. 

But that investor friendly provision is totally negated, imho, by the sneaky underhanded Follow-On Offering business.  Sprott ought to publically announce the intent to do a Follow-On Offering before executing it.  That would allow his investors the opportunity to remain invested or to sell their units, as they see fit.  That is the honorable way to treat the people who entrusted you with their money.     

tmosley's picture

Well, he should have bought physical gold then.  If you want to track something perfectly, you HAVE TO OWN IT.  The follow on offer was a non-event, because they were simply buying more gold.  Having more gold to back up your shares is somehow bad?

If you don't want the swings that come from owning a managed product like phys, just buy it yourself.  It's that simple.

Pegasus Muse's picture

I own physical purchased with regular money.  With IRA money you cannot own physical and hold it yourself.  You have Custodial Account counterparty risk.  Looking at the available options to buy PM with IRA money, I opted for Sprott because he says he'll cash you out in gold bars and because he stores his metal outside the USA (at the Royal Canadian Mint).  However, his sneaky Follow-On Offering "gottcha" trick is a negative that more than offsets the positives. 

I could cash out the IRAs and take the tax and penalty hit and be free buy PMs without contraint.  After my experience with Sprott I'm thinking seriously about doing just that.

Ragnarok's picture

The more gold the common American has, the better.

nuinut's picture

Who is hoovering up the domestic weak hands via Cash4Gold, Kmart and Sears?

It's not 1933 all over again, is it?

Temporalist's picture

And people will sell their jewelry at Cash4gold, Kmart and Sears for 1/2 the value.  Word of mouth (public knowledge) will end that as the price rises...although there is no accounting for stupidity too I suppose.

Gold...Bitches's picture

Word of mouth (public knowledge) will end that as the price rises...although there is no accounting for stupidity too I suppose.

I wish I could agree with you.  However, you can't fix stupid...

No matter how many stories regarding the low prices these places pay, people will still line up all day long all the way through this thing.

Ragnarok's picture

Don't know, but a couple months ago when I was traveling to Panama there were US customs officials at the gate questioning the passengers if they were transporting cash/cash-equivalents out of the country.  What the fuck business is it of theirs, as long as US citizens pay their world wide income taxes?

 

BTW, does anybody know the rules of exporting gold from the U.S. if you're a citizen, a resident or a non-resident?

akak's picture

Believe it or not, gold is NOT considered a "cash equivalent" or "monetary instrument" by the US government (at the present time), so one can legally travel with just as much gold as one can carry.  How long this state of affairs may last, I would not care to guess, but my gut feeling tells me not long.

DoChenRollingBearing's picture

That's NOT what US Customs told me akak.

If you want to take out more than $10 k worth (without declaring it), talk to a good lawyer first.

I did fill out the form the first time as it was >$10,000 worth.  The other time, my wife and I just took 5 ozs each.

akak's picture

Interesting. 

I am not doubting you at all, but I did contact US Customs myself as well, and was told that gold is NOT a declarable item as far as they are concerned, as it is not officially any sort of monetary instrument or cash equivalent.  But as with dealing with the IRS, we know that two people are not going to necessarily be told the same story.

EDIT: Apparently, gold COINS are declarable, but only for their face value.  However, "Gold bullion is not a monetary instrument", according to their website.

In any event, NONE of this should be the concern of TSA, especially if one is flying domestically.  I have read of several cases where passengers flying with gold and/or silver were harassed or detained by TSA only for that reason, which was blatantly illegal.

DoChenRollingBearing's picture

Ahh, that's interesting, because what we have taken out are Eagles.  (also note the Las Vegas court case about an employer paying his employees in Eagles valued at what they say: $50, the IRS LOST hahaha)

I still would be very careful about taking out large value gold without declaring...

Spot on re TSA harrassing people...  Esp. people taking FRNs.  But, my experience re TSA's machines getting anyone excited (2 times) is that the gold went through without comment.  "YMMV"

Hephasteus's picture

Oh wow. That statement was really naive. You need to hit the books.

seventree's picture

I don't know what the official rules are, but any transfer or movement of any significant cash or cash equivalent to anyone anywhere just might be terrorism-related, and that's an area where government makes up its own rules. You can invoke your inalienable rights as an American citizen, but nobody can hear you inside that little room that only opens from the outside.

If the above sounds ravingly paranoid -- thank you for noticing.

Kali's picture

Yes, if we don't even have honest money, how can we have honest law?

Rusty_Shackleford's picture

Exactly. 

Unsound money is at the base of all of our problems, because at it's core, it is dishonest.

SWRichmond's picture

Marc Faber: become your own central bank.

economicmorphine's picture

Do a simple test.  Ask 10 of your friends if they're buying gold.  When I did this, I went oh for 10.  I suspect my experience isn't all that unique.  I visit 2 coins shops from time to time.  They both tell me the same thing.  Joe the Plumber is a seller, not a buyer.  Just saying.

Temporalist's picture

I have been begging my friends and family for years now and I don't think but one said they would even consider it until 2 weeks ago I got someone to say they want to but the price is too high - which of course sent me into a long explanation about the dollar, fiat currency, etc.  The last email I sent, telling them to buy at $1030 the nominal all time high back then, I was ridiculed.

Gold is consolidating into fewer and fewer hands as the poor and needy sell their gold because they need to pay off the credit card bill to pay for the 50" LCD or vacation or the prior year's Starbucks expense or rent.

Silver will explode soon.  The PM meme grows.

SecretGoldfish's picture

my family also has deaf ears, at best.  like frogs in the amazon, when they start asking me where to buy color, i'll see it as an indicator of change.

 

tmosley's picture

I convinced my father to buy XX oz (a large amount) of silver.  I was stunned when he finally acquiesced and came up with such a large number.  At least I know now that our family won't be poor (and knocking at my silver lined door) in the future.

Edit:  I thought better of disclosing the amount...

43 Steelie's picture

0 for 10 here as well. I got a friend to dabble in silver but he only bought 10 oz and I doubt will buy anymore.

0 for 50 if you include people at work (supposedly intelligent professionals who have been in the finance industry for on average 15-20 years).

I keep saying that once they start asking me where to buy is when I might have to stop accumulating.

nuinut's picture

I have had more success in that regard.

Give them this... Aristotle on Gold

Barmaher's picture

Aristotle was a scuba diver?

Gold...Bitches's picture

Same here.  I've only got two people to dip in out of the many I speak to about this.  One is my brother and the other is a friend from 1st grade to today.  Both would regularly listen when i told them to buy or sell some stock for the last fifteen years.  Then I tell them to get some gold, and they dont want to do it and drag their feet.  Both finally did, but DAMN, it was a lot of work to get them to put a toe in the water.

 

junkyard dog's picture

That's ok, zero of my asshole friends are buying gold and they have the money. But what is worse is, I bought a Howard Beale shirt with the grim reaper riding on the top of an ambulance labeled Euro and Ben Bernanke holding on to the back waving. Not one person who looked at the shirt understood the meaning; about 20 people. I got so tired of explaining it I took the fucking shirt off.

Just like when I wear my 0H hat. People ask, are from Ohio?

Damnit, now I have gotten myself upset again. I'll be back in a minute. I am going to go stick my paw in a light socket. It helps me relax.

 

 

ApplesConspiracy's picture

I feel your pain, I have had all too many similar T-shirt experiences with a crowd that doesn't "get it"

SWRichmond's picture

I wear my ZH Tshirt as a filter; same results.

Pat Hand's picture

3 for 10.  but I have smart friends

callistenes's picture

The mint will claim to have 'run out' of blanks. Just like they did a few years ago.

nuinut's picture

They may be telling the truth....

RockyRacoon's picture

They were telling the truth.  (Those are called planchets, by the way.)  The mint buys planchets from several suppliers and the suppliers were having trouble getting bullion.  The U. S. Mint is mandated to make and provide for sale according to demand.  But when the planchet supplies became scarce they had to do without.  There was some rumor that a Canadian supplier was consulted but a kerfuffle ensued.  The gold and silver for U. S. legal tender coins is by law to be provided from U. S. mined bullion.  The Mint has secured planchets aplenty lately and there should not be a problem unless the demand spikes considerably.

Gold...Bitches's picture

I somewhat agree with you.  If there were no problem, full steam ahead, then they'd go back to doing more than just the 1 oz size coin, etc...  Have they started back up with the commemoratives again?  Or are those off the table and just the 1oz eagles available?

RockyRacoon's picture

Other than the First Spouse gold coins there are no gold commemoratives made currently.  These are not what you'd want for anything other than as a collectible.  Premiums are too high but that is what they were minted for.  There are various silver commemoratives, however.   Generally whatever some special interest group can squeeze a few Congress Critters to pass a law for. 

2010 First Spouse Series One-Half Ounce Gold Proof Coin

http://catalog.usmint.gov/webapp/wcs/stores/servlet/CatalogSearchResultV...

Hephasteus's picture

The mining operations seem a bit strange.

Alot of backhoes but they abuse thier equipment and have breakdowns.

http://www.cash4gold.com/

Here they are trying to get over a nasty swap operation to get to the rich veins.

http://www.youtube.com/watch?v=NkYZpJPqolE&feature=related

Here they are eating people out of house and home in the new K-mart mine.

http://www.youtube.com/watch?v=7qcPo5619BU&feature=related

Ancona's picture

The only safe haven from fiat collapse is [and not necessarily in order]

 

Gold

Silver

Food

Lead

High speed lead delivery devices

A companion

tomb traider's picture

High speed lead delivery devices.. Priceless

Gold...Bitches's picture

Ummm.... I think you forgot something.  As long as you are an organic life form (I am assuming here) you might want to add water to your list.

dumpster's picture

High speed lead delivery devices

A companion

but you repeat yourself

Mongo's picture

Israels days are counted. When first nukes/missiles from Iran head for Israel you will see gold fly high

tmosley's picture

I think the nukes will be going the other way, actually.