Why Gold’s Physical Sales Are Going Strong



US gold coin sales rise

The WGC’s (World Gold Council) latest reports for third-quarter demand show that the demand for gold coins and gold bars is strong. The steep fall in prices in the current year provided additional support to the fast-growing consumer demand for gold. Tremendous growth is seen in the US retail investment demand. A jump of almost 200% year-over-year is witnessed. The US retail investment demand stands at about 32.7 tons.

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Why did demand rise?

After a stable second quarter in 2015, gold prices bottomed in July. ETF selling and bearish speculative investor positioning helped the downward price movement, and watchful consumers responded immediately. Demand for jewelry, bars, and coins jumped. Investors in the United States displayed a heightened level of price-sensitivity as the price fell.

The rise in demand for gold coins may also have a backing from global financial crises like the Greek bankruptcy event, as well as the Chinese economic downturn and sudden currency devaluation. The sale levels of the US gold eagle coin seen in the third quarter of the current year are at their highest since the financial crisis that started in 2008. In volume terms, sales figures hit 397,000 ounces.

Tracking miners and ETFs

ETFs and precious metals futures have suffered in 2015. The month of November brought more carnage to miners as well. The VanEck Vectors Junior Gold Miners ETF (GDXJ) and the Global X Silver Miners ETF (SIL) fell 14.6% and 18.1%, respectively, on a trailing-30-day basis. Both ETFs take their prices from the mining industry.

The mining stocks that have been the most impacted include Buenaventura Mining (BVN), Alamos Gold (AGI), and Yamana Gold (AUY). These three companies together contribute 8.3% to the VanEck Vectors Gold Miners ETF (GDX).


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