Market Report

U.S. MINT’S GOLD EAGLE SALES ROSE 383% IN 2020

Even as gold prices began falling in September 2020, Citicorp was predicting record highs by the end of 2020. On Tuesday, September 22, Bloomberg reported Citigroup was predicting “gold could hit a record before the year-end, aided in part by the risks surrounding the U.S. presidential election.” Uncertainty over the outcome and potential delays with the vote count could

“be under-appreciated by precious metals markets,” said Citicorp analysts, including Aakash Doshi, in its quarterly commodities outlook.

Citigroup analysts forecast a $200 per ounce surge from levels of around $1,900, which implied $2,100 gold by December 31. Citigroup cited rising investor concern about the election, which took on added tension after the death of Justice Ruth Bader Ginsburg and the race to replace her on the

U.S. Supreme Court. The election “could be an extraordinary catalyst for gold flat price and volatility skew late in the fourth quarter, even though historically there is no clear pattern for gold trading or price volatility into and after U.S. elections,” Citi said. “That is one reason why we expect gold prices to hit fresh records before year-end.” In addition, Citi is positive on gold amid low-interest rates.

For reference, Citi’s report was written when the gold futures price traded at $1,894.20 an ounce on the COMEX (Gold Futures). The record high price for the most-active futures price was $2,089.20 per ounce on August 7.

THE U.S. MINT’S GOLD EAGLE SALES ROSE 383% IN 2020 VS. 2019

During the first eight months of 2020, 589,500 Troy ounces of Gold American Eagles were sold by the

U.S. Mint versus only 122,000 ounces for the same eight months in 2019, a 383% increase. This was despite periodic work shutdowns this year due to the coronavirus and a complete cessation of production of the popular $5 tenth-ounce gold Eagles for three months. Production of the $5 gold Eagles finally resumed in July, with 35,000 of the smaller coins sold in July and another 30,000 sold in August.

During the summer months of July and August 2020, the total Gold American Eagle ounces sold reached 210,500 ounces, up 1,459% versus just 13,500 ounces sold in July and August of 2019.

For the first eight months of 2020, 16,294,000 one-ounce Silver American Eagles were sold by the U.S. Mint, a 32.8% increase over the 12,269,000 ounces sold in the same eight months of 2019, despite several work stoppages in the popular silver Eagle series. Premiums to dealers also rose sharply on most gold and silver American Eagle coins, partly due to rising demand and periodic supply shortages.

It is important to note that many of these new bullion buyers are introduced to coin dealers for the first time and are then introduced to rare coin collecting. This influence historically has created a broader and stronger market for rare coins.

PANIC GOLD BUYING IN TURKEY IS A TYPICAL REACTION TO A COLLAPSING CURRENCY

Gold has been rising when the dollar falls and falling a bit when it rises. Still, when the dollar begins to fall farther and faster, you can expect a strong rush to gold, as has been happening in Turkey and – to a lesser extent – in countries such as Russia and Argentina, where the currency is

chronically weak. The Wall Street Journal wrote about this in an article entitled, “In Turkey, Weak Lira Powers Fresh Gold Rush: Turkish households bought record volumes of gold this summer – and safe boxes to keep it at home.”

The Journal describes long lines in front of gold outlets since June. “I’ve been at the Bazaar for 20 years and I never experienced that,” said Ozgur Anik, general manager of Ozak Precious Metals. “When gold prices are at record highs, people normally sell their gold. This time, they kept buying more.” The average daily volume of gold sold at the Bazaar shot up 10-fold, to 4,500 pounds from 450 pounds, Mr. Anik said.

Gold is a form of long-term savings in Turkey, and most people keep their gold savings at home, but some are now buying gold for speculation. “I’ve been chatting with hundreds of people who are thinking about selling their cars or houses to invest in gold,” said Gunay Gunes, operator of a busy gold booth in the Bazaar. Due to rising demand, Turkey has had to import more gold this summer. From January to August, Turkey imported $15 billion in gold, up 153% from a year ago, according to the Turkish Trade Ministry.

With negative interest rates throughout the world and collapsing currencies, you can expect this gold-buying mania in Turkey to be repeated throughout more countries.