Mint resumes selling certain gold coins amid strong demand


By Matt Whittaker and Kelly Nolan
The Wall Street Journal
Wednesday, November 18, 2009

NEW YORK -- Demand for gold coins and bars, already strong as the price of gold sets records, could rise as the U.S. Mint is set to resume selling certain types of gold coins Dec. 3.

Last year, the Mint had to halt sales of half-, quarter-, and tenth-ounce coins because of a shortage of blank coins. It now has enough supply to do so.

"The demand is strong, but we also need to have the blanks to be able to do it," spokesman Michael White said.

This year, the Mint has sold 1.13 million one-ounce American Eagle gold coins, already surpassing last year's overall total of 860,500 coin ounces. Last year's total also included fractional-size coins. For 2008, the Mint sold 172,000 American Buffalo one-ounce gold coins before running out. The mint sold none from December 2008 through September 2009. Since sales restarted in October, the mint has sold 140,000 Buffalo coins.

Investors are flocking to buy gold bars and coins as the metal's exchange price climbs to records. Dealers who buy from the world's mints are doing a brisk business and note a shift to strong buying on fears of inflation and as the U.S. dollar declines against other major currencies, compared with robust buying toward the end of last year as a haven amid investor panic. Dealers also said they aren't seeing many customers selling coins and bars they already own, indicating bullish sentiment.

Investors selling the U.S. dollar have been putting the money into assets like gold and other commodities, as well as stocks and higher-yielding currencies.

Late Wednesday in New York, gold for November delivery gained $1.90, or 0.2%, to $1,140.70 a troy ounce, a record close on the Comex division of the New York Mercantile Exchange. Gold has gained 29% this year, while the U.S. dollar has lost about 8% against a basket of major currencies.

At American Precious Metals Exchange in Edmond, Okla., gold coin and bar sales more than tripled from Jan. 1 through Oct. 31 from the same period a year ago, President and Chief Executive Scott Thomas said.

"We're certainly having an unprecedented demand for these products," Mr. Thomas said. He said strong demand will continue as gold's price remains supported by the likes of India and China looking to gold as an alternative to the U.S. dollar. Last month, India bought 200 metric tons of gold from the International Monetary Fund. Mr. Thomas said his company sees about four times as many customers buying gold as selling it.

The chairman and CEO of Blanchard & Co., in New Orleans, echoed this. "We get very few people who are selling," said Donald W. Doyle Jr., noting the lack of selling despite the price gold can fetch indicates people believe the price will continue to climb.

Blanchard has sold about the same amount of gold bullion year to date as last year, down 4% in dollar terms through Friday, but has seen a 65% gain in rare coin sales. Sales have been steadier this year at higher levels, compared with the increase in last year's fourth quarter.

Andy Schectman, owner of Miles Franklin, a precious-metals-products dealer in Wayzata, Minn., said his business has increased with the rise in gold prices.

Mr. Schectman said that last year was a record for his business, with about $120 million in sales. He said Miles Franklin is on target to beat that figure this year, with roughly $80 million in sales so far. He attributed the growth to investors buying commodities at the expense of the dollar, rather than more Main Street investors.

James Cook, president of Investment Rarities in Minneapolis, said his company is starting to approach the level of sales from the height of the financial panic last year, but sales are more consistent. The future of coin and bar sales likely will hinge on the effect of monetary policy on gold prices, he said.

"If we have a pickup in inflation, then gold and silver are going to continue to attract demand," Mr. Cook said. "But if we have this stagnant economy without inflation and without economic growth, I would expect all of this to peak out."

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