World mints report soaring demand for gold coins

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SamLinder's picture
SamLinder
Status: Diamond Member (Offline)
Joined: Jul 10 2008
Posts: 1499
World mints report soaring demand for gold coins

(Cross-posted from Gold's near future forum due to importance.)

Reading this makes me start to wonder - if everybody is on a buying
spree, is it wise to follow the herd mentality or to play the
contrarian? Other questions I have are:

1. Where is all this gold coming from? If the mints are working
overtime to produce product, where are they getting the raw material
considering there is a finite amount of gold in the world?

2. If the demand is so strong, why has gold essentially plateaued lately?

http://jessescrossroadscafe.blogspot.com...

"Those entrapped by the herd instinct are drowned in
the deluges of history. But there are always the few who observe,
reason, and take precautions, and thus escape the flood. For these few
gold has been the asset of last resort."

Antony C. Sutton

"Gold
has worked down from Alexander's time... When something holds good for
two thousand years I do not believe it can be so because of prejudice
or mistaken theory
."
Bernard M. Baruch

World mints report soaring demand for gold coins
Fri Mar 13, 2009 8:36am EDT

LONDON (Reuters) - Mints around the world say demand
for gold coins has risen sharply as interest in the precious metal
soars on the back of financial instability and concerns over the
inflation outlook
.

The Royal Canadian Mint, which produces
Maple Leaf bullion coins, said it quadrupled its production capacity
late last year as demand for gold and silver bullion products leapt.

Gold
was one of the few commodities to rise last year as turmoil in the
financial sector sharpened investors' appetite for assets seen as a
safe store of value, such as bullion
.

Spot gold rallied to
an 11-month high of $1,005.40 on February 20 as a slide in equity
markets increased interest in the precious metal. Demand for physical
gold products such as coins and bars has been particularly strong,
traders say.

The United States Mint said sales of its one-ounce
American Eagle gold bullion coins rocketed to 710,000 ounces in 2008,
from 140,000 ounces a year before.

"The demand for gold and silver has been unprecedented," a spokesman for the Mint told Reuters.

The
chairman of the French Mint, Christophe Beaux, said sales roughly
doubled last year in value terms and are expected to rise by another 50
percent this year.

The 2009 catalog the mint had produced was almost entirely pre-sold, he said. The French Mint produces 100 euro gold coins, and plans to mint 10-ounce and 1-kilo coins this year.

In
South Africa -- the world's second-largest gold producer -- Natanya van
Niekerk, deputy general manager for numismatics at the South African
Mint Company, said she had seen a big increase in demand for gold.

"I think we will see this same trend in this and the next quarter," she said. "Gold surely has been resilient in these times."

Michael O'Kane, head bullion trader at the New Zealand Mint, said many overseas buyers had come into the New Zealand market. "We're seen as a safe-haven market," he said.

He
said buying had been strong since the collapse of U.S. investment bank
Lehman Brothers in September, as investors moved money from banks into
hard assets like gold.

The mint was averaging "a month's transactions in a day," he said, adding he saw demand continuing to rise.

strabes's picture
strabes
Status: Diamond Member (Offline)
Joined: Feb 7 2009
Posts: 1032
Re: World mints report soaring demand for gold coins

Sam,

1.  the gold comes from new mining and from the bullion sitting in vaults and mints in bar form.  mints are happy to melt down bars and sell to retail coin buyers for a big premium. 

2.  you should watch price action on core gold.  Don't worry about mints saying "demand is unprecedented."  Coins are just the retail part of the overall gold market.  There's more money sitting in Swiss vaults, bank vaults, etc in 1000oz and 1kg bars.  

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