Thursday, January 1, 2015

1/1/2015: US Mint Gold Coins Sales: 2014

End of 2014 and Q4 2014, so time to update my relatively infrequent coverage of data for US Mint sales of gold coins. Here's the data for the sales of American Eagles and Buffalo coins.

Starting with quarterly data:

  • Sales of US Mint gold coins in Q4 2014 reached 183,500 oz up on 141,000 oz in Q3 2014 and the highest reading since Q1 2014. However, y/y Q4 2014 sales were down 4.2% having posted a rise of 24.2% y/y in Q3 2014. There is quite a bit of volatility in Q4 sales. For example, Q4 2013 sales were down 29.5% y/y and Q4 2012 sales were up 74% y/y.
  • Sales of US Mint gold coins also fell in terms of average coin weight. In Q4 2014, average coin sold carried 0.57 oz of gold per coin, down from 0.61 oz in Q3 and down from 0.71 oz/coin average in Q4 2013. Still, Q4 2014 reading was second highest in oz/coin sales terms in 2014.

Chart below illustrates.

Monthly trends were less favourable in December. Volume of gold sold via coinage sales by the US Mint fell well below the period average and the series have now been trending below historical averages (both across 2006-2014 range and 2012-2014 averages) since May 2013.

The same dynamics: falling oz/coin average, and falling number of coins sold can be traced in full year sales figures, as illustrated in the chart below.

As above clearly shows, the decline in total number of coins sold has been relatively moderate, compared to historical trend, with sales of 1,322,000 coins in 2014 running very close to 2006-2013 average of 1,361,625 coins. But sales in oz terms have been poor: in 2014 total sales of US Mint gold coins run at 702,000 oz against the 2006-2013 average of 983,250 oz. Thus 2014 was the third worst year on record (since 2006) in terms of sales of coinage gold, but ono the fifth worst year on record in terms of sales of coins by numbers. The average coin weight at 0.53 oz per coin in 2014 was the poorest on record.

Year on year full-year dynamics were poor as well: total coinage gold sold by oz fell 36% y/y in 2014 and there was a decline of 22% in the number of coins sold. Meanwhile price of gold declined (based on month-end USD denominated prices) by 9.94% y/y.

Most of the poor performance in US Mint sales took place in H1 2014, when coinage gold sales in oz terms fell from 790,500 oz in H1 2013 to 377,500 oz in H1 2014.

In the end, 2014 was a poor year for US Mint sales. Even stripping out the sales of the American Buffalo and looking at the American Eagle sales alone - thus allowing the data to cover 1986-2014 period - the trend remains to the downside for both oz sold and coin numbers, with oz sold under-performing the downward trend.

That said, sales of American Eagles remain above the averages for both coin numbers and gold volumes once we strip out 1998-1999 anomalies.

All in, the explanation for 2014 performance is continued decline in demand for gold coins from shorter-term investors seeking safe haven. In general, this is expected and is likely to continue: gold coins are normally the domain of collectors and longer-term long-only investors. We are witnessing a moderation in demand trends toward 1987-1997 and 2000-2008 averages. 

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