Record Demand Lifts Gold Prices, U.S. Mint Suspends Sales

Silver in High Demand, Other Mints Under Pressure

Year to date, approximately 17.6 million American Silver Eagles have been sold, far outpacing the 11 million sold in the first four months of 2012. Recall that earlier this year the US Mint received more than 3.9 million orders for the 2013 American Silver Eagle on its first day of availability, the highest one-day sales total in the history of the program. A few days later, the US Mint had to suspend American Silver Eagle sales to replenish supply. The US mint is not the only one facing heavy pressure to keep up production to meet buyer demand. Britain's Royal Mint as well as the Canadian Royal Mint are both seeing a massive increase in precious metal demand. The former sold more than three times as many gold coins this month than the same period last year. Month-over-month, sales are up more than 150 percent. The Canadian Mint is struggling to meet demand for its popular gold and silver Maples.

Take Home Message

Despite the huge sell-off in gold and silver, demand for physical assets is near all-time highs. The US Mint has suspended one-tenth ounce Gold Eagle sales due to demand. The Royal Canadian and Britain Mints are also having trouble keeping up with demand. Silver and gold are being bought in record amounts. This demand has led to the price of gold and silver starting to rebound off their lows from last week following the historic two-day sell off. I see this demand as driving gold prices higher, despite the action in paper trading instruments and futures contracts that were responsible for driving the price lower. It appears a bottom may be in for gold, especially if it holds over $1,400 and silver above $23. Investors should avoid the GLD and SLV until any further redemption is complete to avoid losses. Instead, if you can get some I recommend picking up physical assets.