Bullion Coin Demand ‘off the Charts,’ Why Isn’t Gold Price? Former U.S. Mint Director Weighs in – the Daily Coin

Bullion coin demand ‘off the charts,’ why isn’t gold price? Former U.S. Mint director weighs in by Anna Golubova for KitCo News

The precious metals market is seeing incredible demand for bullion coins, yet gold prices are stalling. Former U.S. Mint director Ed Moy points to the financial crisis for clues as to why gold will hit new record highs before this bull run is over.

The U.S. Mint said last week that it was still rationing its silver coins sales due to strong demand, while distributing its gold and platinum coin sales to authorized purchasers only, with the policy in place “for the foreseeable future.”

The last time such rationing happened was during the financial crisis, Ed Moy, who served as the U.S. Mint director from 2006 to 2011, and is currently chief market strategist at Valaurum, told Kitco News.

“It happened for the first time under my tenure. What we found out was that a couple of things had come together. One was the financial crisis, and the demand for both gold and silver bullion coins skyrocketed. And our problem was getting our supply chain to catch up to demand. The process is very specialized, and some fabricators can only produce so much capacity,” Moy said.

This time around, in addition to supply chain problems, there are also COVID-related problems, with people getting sick and production being halted several times.

“With all those interruptions and high demand for gold in light of inflation and economic uncertainty, I am not surprised that the Mint has rationed whatever supply they can make,” Moy said.

Right now, bullion coin demand is “off the charts.” This is very striking considering that what the Mint manufactures is in addition to what is already in the market.

“When demand for the Mint’s coins goes up, it means that all the coins that have been produced are not enough to satisfy demand. Therefore, the Mint needs to inject additional supply,” Moy noted.

In 2020, the Mint sold 845,000 ounces of its American Eagle gold bullion coins versus the 150,000 ounces sold in 2019. The American Eagle silver bullion coins’ sales also surged to 30 million ounces from 15 million in 2019. This hasn’t stopped in January of 2021, with additional 220,500 ounces of the gold American Eagle coins sold and another 4.8 million ounces of its silver counterpart.