US physical bullion buying lackluster
The US Mint’s gold sales have been on a downtrend. While the US Mint sold 46,500 ounces of gold in March, the figure for April was 29,500 ounces. As of May 27, the US Mint has only sold 15,000 ounces of gold. This reflects weak demand for gold bullion.
Sales for the first four months were 175,500 ounces—down 3.6% YoY (year-over-year).
Silver coin sales are also lackluster. While the US Mint sold 3.5 million ounces of silver coins in March, the sales for April declined to 2.8 million ounces. As of May 27, silver coin sales were just 1.65 million ounces.
Investors are probably waiting for clarity on the timing of the Fed’s rate. Any hike would put downward pressure on the bullion prices. This might stimulate more demand.
Physical buying supports prices
Strong physical bullion buying helps support precious metals’ prices. Gold prices were supported by physical gold buying in China and India after its prices increased in 2013. As you can see in the above graphs, the spikes in January 2015 indicate the physical gold buying in the wake of economic and political uncertainty in the Eurozone and the removal of the currency cap by the Swiss National Bank.
In contrast, weak physical bullion buying is negative for bullion prices (GLD) (SLV) as well as precious metal equities’ prices—including Primero Mining (PPP), Coeur D’Alene Mines (CDE), Pan American Silver (PAAS), and Agnico Eagle Mines (AEM). Agnico Eagle Mines forms 4.8% of the VanEck Vectors Gold Miners ETF (GDX).
In the next part of this series, we’ll look at the central banks’ gold buying and selling trends.