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Dec 11, 2012 04:49 PM IST | Source: ft.com

Sales of American Eagle bullion soar

Demand for gold coins in the US has leapt since the presidential election, as small investors and wealthy individuals fret about the lack of action to address America's ballooning debt.


Demand for gold coins in the US has leapt since the presidential election, as small investors and wealthy individuals fret about the lack of action to address America's ballooning debt.


The US Mint's sales of American Eagles, one of the most popular bullion coins, jumped by 131 per cent in November to hit their highest level in more than two years, while the Royal Canadian Mint had its strongest month of sales for the year so far.


Terry Hanlon, president of metals at Dillon Gage, one of the largest bullion dealers in the country, said that sales had risen sharply "within a day or two" of the election.

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"You've got a lot of people who are very worried about the economy. With the election they saw that nothing was going to change," he said.


While coins are a small part of the overall gold market, the jump in sales highlights gold's role as the favoured investment of disenchanted Americans. The political gridlock in Washington and the prospect of further quantitative easing when the Federal Reserve's "operation twist" expires at the end of this year have fuelled demand for precious metals among small investors.


"They don't believe in Uncle Sam any more," said the head of precious metals at a large bank.


Tobina Kahn, who runs a jewellery dealership in Chicago, said: "Obama did me a favour in some ways. Now people are buying gold and jewels not because they like them but because of fear. They're trying to protect their wealth."


Despite the increase in coin purchases, the gold market has struggled for momentum in recent weeks. Prices last week dropped below $1,685 a troy ounce for the first time in a month and some hedge funds have begun to lose patience with the precious metal's lacklustre performance.


"The institutional investors cut back and are more on the sidelines now," said James Steel, head of precious metals strategy at HSBC in New York. "But the coin market is dominated by retail investors and the man on the street is still pretty committed to gold."


The jump in sales of American Eagles was amplified by a rush among dealers to stock up before the end of the year when the US Mint switches production from "2012" to "2013" coins.


But dealers said the rise in sales largely reflected a big increase in demand. Mr Hanlon said that Dillon Gage had seen record sales volumes on several days in November and that overall sales had risen 32 per cent by volume from October's levels.

Other mints also witnessed a buying spree. "November was a very strong month for gold Maple Leaf sales," said Chris Carkner, head of bullion sales at the Royal Canadian Mint, whose Maple Leaf coins are one of the world's top bullion coins by circulation along with American Eagles.

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