(Reuters) – U.S. gold coins have been flying off dealers’ shelves this week as retail investors snapped up bargains since the metal’s historic plunge in price.
The spike in gold coin sales reflects a desire among mom-and-pop investors to have physical metal as a store of value in troubled economic times.
In contrast, retail and institutional investors have fled gold exchange-traded funds and futures contracts in recent months as fears of inflation have waned. Gold is seen as a hedge against inflation.
Sales of the American Eagle gold bullion coins totaled a whopping 77,000 ounces in just two days, exceeding the entire month of March, when dealers sold 62,000 ounces.
“We haven’t had two back-to-back days like this since 2008 after the collapse of Lehman Brothers,” said David Beahm, vice president at New Orleans-based coin dealer Blanchard & Co.
Beahm said that one customer bought an entire 500-ounce gold “monster box” usually delivered by the U.S. Mint to coin dealers which then sell the 1-ounce coins individually to customers.
Buying took off on Monday when 35,500 ounces of coins were sold – that’s more than 10 times the daily average at 3,250 ounces in the first three months of 2013 – and accelerated on Tuesday with 42,000 ounces sold.
If the pace of buying continues, April’s sales are likely to beat January’s total of 150,000 ounces, which was the highest in three years.
Collectors typically snap up the newest mint in the first month of the year, but dealers also said lower prices had attracted buyers earlier this year.
American Eagle silver coin sales was at 503,000 ounces on Monday, nearly three times higher than the daily average in the first quarter.
In addition, demand remained very strong for Gold Maple Leaf and Silver Maple Leaf coins even after the gold’s drop, said Chris Carkner, Royal Canadian Mint’s managing director in sales.
Trading was higher than usual on Monday with investors buying gold coins at discount prices, Ray Nessim, CEO of major U.S. coin dealer Manfra, Tordella & Brookes told Reuters.
Monday’s trading volume at Bullionvault, an online precious metals exchange, was six times higher than usual with a 50 percent increases in new account openings.
Gold fell by a combined $225, or 15 percent, on Friday and Monday to under $1,400 an ounce, its lowest price in over two years, as investors liquidated bullish bets en masse after months of disappointment over the performance of the precious metal. <GOL/>
Retail investors entered the coin market as they considered prices to be cheap. Bullion’s fundamentals have not drastically changed even after a bearish call by Goldman Sachs and a plan by Cyprus to sell some of its gold reserves.
On the other hand, investors have fled gold exchange-traded funds. Holdings of major global gold ETFs are at their lowest since late 2011.
Gold, a traditional safe haven, has been used by retail and institutional investors as a hedge against inflation because of central banks’ monetary stimulus.
However, inflation has failed to materialize as feared despite rounds of asset purchases known as quantitative easing after the 2008 economic crisis.
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