A run on Gold Eagles?!

(Will a bullion coin become rare?)

Silver Stock Report

by Jason Hommel, April 27th, 2009

Most people have never held a gold coin in their hands.  Historically, an ounce of gold was worth a year's wages.  Today, you can get one for about a thousand bucks.

Seems like they must be rather common then.  Not really.  Still, most people have never held one or seen one.  It's the lack of demand, and lack of knowledge out there.

But demand is soaring from about 0% to maybe about one person in 23,000 of the population actually wanting one.  Actually it's less people, since most people who have one, actually have more than one.  ($14,000,000 million cash in the banks / $600 million market = 23,000).

Or 80,000 silver stock report readers, out of 300 million US population = 1 in 3750.  But most of my readers don't have one either, they are mostly just "potential" buyers.

What's going on?

First, the Mint suspended production of proof and fractional gold and silver coinage to allocate enough gold to the gold bullion program of regular, circulated gold eagles.

US Mint Suspends Production of More Gold and Silver Coins
March 14, 2009
http://goldandsilverblog.com/us-mint-suspends-production-of-more-gold-and-silver-coins/

This means they don't have enough regular gold eagles to meet current demand, and explains why dealer premiums for gold eagles are increasing.

Premiums are increasing because they are forced to ration, as demand exceeds supply. 

That was over a month ago.  Premiums for U.S. Gold Eagles have increased slightly in the last month, and the regular discount for dealers seems to have vanished.   That has forced us to pass on the extra cost to our customers, and Eagles are selling in the coin shop now at $110/oz. over spot.

One online wholesaler has been sold out for nearly a month now.

It seems to me that now would be a good time to try to stock up on Gold Eagles while the premium remains as low as it is, and if you can still find them.

The U.S. Mint has already increased supply of Gold Eagles 400% in 2008, to 710,000 oz. and it was not enough.

Mints Rush to Meet Gold Coin Demand
April 8, 2009
http://moneynews.newsmax.com/streettalk/gold_coin_demand/2009/04/08/201050.html

Now, in 2009, sales are really taking off.

Mint Stats: 1 Ounce Gold Eagles See Sales Take Off
April 22, 2009
http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=6618

After skyrocketing the last week of March to sales of 129,500, at a time when gold hovered around $928 an ounce, the one ounce gold had returned to more conservative sales levels of 32,000 and then 42,500 a week.

But the race is on again, with sales almost doubling from last week to 86,000.

86,000 per week is a pace of 4.5 million in a year, which would be over 6 times the sales in 2008, which were already up 400% from the previous year.

I know of at least three other mints who supply gold and silver coin blanks to the U.S. Mint.  Without naming names, let me say that they are backordered, and that I would be very reluctant to order anything directly from any of those other three mints.  Backorders should usually mean their businesses are booming, but it can also mean they are having financial difficulty, such as floating on customer money, and heading towards bankruptcy. 

Businesses that are close to bankruptcy have difficulty expanding.  Given that sales volumes are increasing perhaps at least one of the suppliers is not having financial difficulty, but it's hard to say.

Someone asked me again today just now if the Governent will ever make gold illegal again.  Probably not anytime soon.

Why would they make it illegal if they are selling it?

They are dumping gold into the market to suppress the price.  There's no reason for them to stop that game plan as long as it is working for them.

If they made it illegal, everyone would want what they can't have, and prices and premiums would skyrocket, as illegal drugs cost more due to the danger of trading in them.

I've been stocking up on Gold Eagles to run the Rocklin Coin Shop.  We now have 189 of them in the coin shop, and 20 for our "buy it now" shipping department, who can also pull inventory from the Shop if they need to.

Buy it now from our shipping department, 10 AM - 4 PM, M - F, Pacific, from:
Breana    (530) 913 4359  silver_support@vzw.blackberry.net

Today, Breana is spending some time at the Coin Shop with me for cross training.  I'm sure she will be busy today.


Sincerely,

Jason Hommel

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Buy silver at auction at  www.seekbullion.com
Auctions end M-Th, Sat, At 7PM Pacific, but you can place bids anytime, 24/7. 

Buy it now from our shipping department, 10 AM - 4 PM, M - F, Pacific, from:
Breana    (530) 913 4359  silver_support@vzw.blackberry.net
Janelle    (530) 913 0553  silver_support1@vzw.blackberry.net

"Buy it now" at www.momsilvershop.com
Mom will ship overseas, and also in lots of more or less than 100 ounces.

See us also at:
Rocklin Coin Shop
4870 Granite Drive, Rocklin, CA 95677
http://rocklincoinshop.com/