April 1, 2014 / 9:49 PM / 5 years ago

Investors scoop up new U.S. platinum coins as gold slumps

By Frank Tang
    NEW YORK, April 1 (Reuters) - U.S. retail investors have
raced to scoop up the government's newly launched platinum
coins, data shows, as industrial metals prices outperformed
bullion, a long-time favorite among collectors.
    In the first three weeks since relaunching the American
Eagle platinum coins on March 10, the U.S. Mint sold some 10,000
ounces, data showed. In March, platinum prices rose
almost 1 percent, sharply outperforming gold's 3 percent fall. 
    Sales of the Eagle platinum coins remained small compared
with sales of lower-cost established products like silver coins,
but the total is almost a third of the 33,000 ounces sold in
2008 before the government abandoned the product due to weak
    Dealers said the early, brisk pace of sales reflects pent-up
demand and worries about future supplies from top-producing
country South Africa. Platinum held by the world's major
exchange-traded funds was currently at their highest level in at
least four years, Reuters data showed. 
    "The outright platinum market has actually been performing
better than gold and silver, and that has helped attract some
investors to the physical platinum market," Said Roy Friedman,
executive vice president at Dillon Gage, a major U.S. coin
wholesaler in Dallas.
    Investors have been piling into the platinum market on hopes
that an improving global economy will boost the metal mostly
consumed by the auto industry.
    The Mint resumed selling its platinum bullion coins on March
10, ending a four-year absence from the market.  
    Demand for gold coins, considered a benchmark for retail
appetite for bullion, sank as investors continued to liquidate
    Gold coin sales totaled just 21,000 ounces in March, its
lowest in seven months and its weakest March since 2007. It is
down 70 percent from a year ago.
    Wealthy investors continued to sell used coins, flooding the
beleaguered market with secondary supplies and hurting demand
for new 2014 coins.
    "The sales of new gold eagles have been impacted by several
large institutional investors' liquidation of previous years'
gold Eagles," Friedman. 
    "Consumers and investors alike have been taking advantage of
the lower-premium non-2014 coins."
    Investors started liquidating stocks of older-dated coins in
February due in part to the sudden recovery in bullion prices.
The sales were conspicuous coming early in the year, usually a
time when investors load up on new gold coins.
    The trend fed worries that investors are cashing in
stockpiles hoarded during the long rally in bullion prices that
ended last year. It also undermined hopes that tensions between
Russian and Ukraine may reignite demand for gold as a safe-haven
    Last year, gold price fell $225 on April 12 and April
15, a record two-day drop that unleashed years of pent-up demand
for gold coins among retail investors. However, the wave of
strong retail buying faded by the second half of the 2013.
    U.S. coin sales tend to be highly seasonal, with the
strongest performance at the start of the year as investors seek
the most-recent mintage, and the fourth quarter usually being
the quietest of the year.
    Meanwhile, sales of silver Eagles rose 60 percent
year-over-year to 5.35 million ounces in March, the highest in
14 months, as dealers stocked up on inventory after the Mint had
boosted its inventory.
    Increased supply of silver coin blanks and stronger
inventory at the U.S. Mint allowed dealers to buy more silver
coins in March, Friedman said.
(in ounces)
              Gold               Silver                Platinum
              2014     2013       2014        2013     2014
 January    91,500    150,000  4,775,000   7,498,000   n/a
 February   31,000    80,500   3,750,000   3,368,500   n/a
 March      21,000    62,000   5,354,000   3,356,500   10,000
 YTD Total  143,500   292,500  13,879,000  14,223,000  10,000
 (Reporting by Frank Tang; Editing by David Gregorio)
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