Gold Coin Sales Fall as Prices Stagnate

SYDNEY—Sales of gold coins from some of the world’s largest mints declined last year as stable prices discouraged investors and demand declined in Asia.

The U.S. Mint and Australia’s The Perth Mint recorded markedly weaker sales of gold bullion coins as the broader market muddled through a year in which gains were capped by expectations for higher interest rates as the U.S. recovery gained steam. Gold is often seen as an alternative store of value during periods of economic uncertainty.

The Perth Mint said it sold 373,351 ounces of gold bullion coins last year, down 28% from 2013. Sales of The U.S. Mint’s American Eagle coins were down 39% at 524,500 ounces.

“Gold prices didn’t move a great deal. For us, that meant fewer sales than in previous years,” said Shane McCulloch, who owns Newcastle Coins in the heart of the central business district of Newcastle, a two-hour drive north of Sydney.

Spot gold—the price paid for physical metal, rather than futures—largely moved between $1,350 and $1,150 a troy ounce last year, closing 2014 down just 1.8%. That compares with a slide of 28% in 2013.

Coins are favored by price-savvy mom-and-pop buyers—who often stock up when the market dips, reasoning that they will hold their value for the long term—because coins are far cheaper than the larger bars bigger investors buy.

Victor Thianpiriya, a Singapore-based commodity analyst for Australia and New Zealand Banking Group Ltd. , said lesser appetite last year from China and India, the world’s two largest gold markets, knocked the confidence of retail-level gold investors around the world. Sentiment had already been shaken because coin sales soared in 2013 as prices fell, and the market railed to rebound in 2014, he said.

The World Gold Council, an industry body, agreed much of last year’s decline in gold-coin sales was a result of weaker sales in Asia, typically a price-sensitive market that flares up when values dip, and one that had come off a strong previous year.

“Chinese investment demand…paused to catch its breath,” the council said in a quarterly report in November. Restrictions on gold-coin imports into India hurt total sales, the group said.

In the U.S., “rangebound prices and continued signs of economic improvement kept investment demand in check,” the World Gold Council said.

In contrast, many sellers reported solid silver-coin sales.

The reason for the divergence: Silver performed less well than gold last year, prompting bargain hunters to snap up more silver. The gold-silver ratio—which shows how many ounces of silver are needed to buy an ounce of gold—has widened to around 1:74 from 1:62 at the start of last year, suggesting to investors that silver may be undervalued compared with its sister metal.

“The fact is, silver was looking really, really cheap versus gold,” said ANZ’s Mr. Thianpiriya.

The U.S. Mint’s silver-coin sales rose to 44.0 million ounces from 42.7 million in 2013.

“Our silver sales have been strong,” said Mr. McCulloch, who has run Newcastle Coins for 10 years and sells products—including Perth Mint bullion coins—to residents in Newcastle as well as to investors online. “I have a long list of people after some types of silver coins of which I just can’t get enough.”

The Perth Mint reported a decline in its own silver bullion-coin sales, although said that was partly the result of limited production rather than weaker demand. It recorded sales of 7.0 million ounces in 2014, compared with 8.1 million in 2013.

You must be logged into post a comment.