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Bargain Hunters Bought Gold, Silver Bullion In July; But Can Momentum Last?

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(Kitco News) - Bargain hunters took advantage of a sharp drop in gold and silver prices, buying bullion coins as the market hit a four-month and 15-month lows respectively.

The latest data from the U.S. Mint shows that it sold 21,500 ounces of gold in various denomination of American Eagle and American Buffalo gold bullion coins. Sales are up more than 168% compared to last month’s anemic sales of only 8,000 ounces total. Last month was the strongest sale pace in five months.

Some market participants said that July sales could be the turning point in what has been a dismal physical market.

It seems that the summer slump ended early this year,” said Charles Thorngren, CEO of Noble Gold Investments. “Increases of this magnitude are precursors for a dramatic upturn in the spot price markets. These factors are pointing toward a big push in August with sales momentum and some help from retail numbers, we should be moving through some plateaus.”

However, others are not convinced that the physical market has turned a corner, as it remains sensitive to the price. While gold sales are up significantly from the previous month, overall sales are down considerably compared to the previous year. Year to date, the U.S. Mint has sold 281,000 ounces of gold, down significantly compared to 662,00 ounces sold in the first seven months of the year in 2016.

Maxwell Gold, director of investment strategy at ETF Securities said that it’s not surprising that investors jumped into the physical market last month as prices briefly fell to nearly $1,200 an ounce.

While there is strong support on price dips from physical buyers, Gold, noted that investment demand in futures and ETF markets remain the biggest factor for the yellow metal.

“The pickup in sales last month is encouraging, but the trend is much lower with a stagnated pace,” he said. “I think if we get supportive levels between $1,250 and $1,300 for a sustained period then we may see investors dip back into the physical market because they will be more confidence that prices have found a new base level.”

Along with gold, silver coin sales saw a dramatic rise last month, as prices fell their lowest level in more than a year. In July the U.S. Mint sold 2.27 million one-ounce American Eagle Silver coins, up from 986,000 coins sold in June. Demand was even up compared to last year, which saw 1.37 million coins sold in July 2016.

However, total silver sales for the year, are still down dramatically from the previous year. In the first seven months the mint has sold more than 14.5 million coins, down more than 47% compared to 27.62 million coins sold during the same time frame last year.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.