Pay Attention GLD, PHYS, PSLV, and SLV investors: the U.S. Mint's gold sales numbers show that April was the strongest month in the Mint's history. The U.S. Mint sold a staggering $311 million worth of gold in the month! Though an increase in sales was expected since the gold price dropped, these numbers blew away even the most optimistic estimates. Silver sales also were very strong and again breached the $100 million level and, as we mentioned in our previous article, are on pace to surpass total U.S. silver mine production by a significant amount.
Analyzing the U.S. Mint Sales Numbers
When analyzing sales numbers, it is important that investors go past the headlines and dig deep into the true nature of the sales. For brevity we are only showing the last few years of sales, but for doing comparisons we have used data from the beginning of the current bull market in 2001. We use the average monthly London silver or gold price fix to calculate the dollar value of the month's bullion sales.
To start, let's take a look at the U.S. Mint sales numbers for silver and gold for April and compare them to the same month in previous years. We are doing a year-over-year comparison because coin sales are very seasonal in nature and to get a fair read, we have to compare April to April.
The first thing that stands out about these numbers is that gold sales were extraordinarily strong and registered $311 million worth of sales for April. No other April comes close to this amount, and the dollar amount of sales was the highest the U.S. Mint has ever sold in a single month as shown in the table below.
Gold sales are the headliner of this month's U.S. Mint report, but silver sales were also very strong. April's silver sales were the strongest April on record in terms of ounces sold - which was 50% higher than the second highest April. On a dollar basis, the month also registered more than $100 million in sales, and the U.S. Mint is well on track to have the strongest silver sales year ever.
Though U.S. Mint sales only represent a small percentage of total worldwide gold and silver investment demand, they do give investors insight into what retail customers are doing in the precious metals markets. Based on this data, retail investors are snapping up gold and silver at an increasing rate as prices drop.
This is very telling because how many bubbles do we see that end on large price drops that increase demand for the plummeting asset? This is the opposite behavior to what we expect to see in a popping bubble - usually everybody tries to run for the exits and demand drops as the price declines.
When the NASDAQ bubble popped, did we see investors buying technology stocks in larger amounts than before it plummeted? When the real estate bubble popped, did we see investors scrambling to buy everything they could as prices were plummeting? The answer is no on both accounts.
This means that gold and silver investors should batten down the hatches and hold or increase their positions - because bubble markets don't end on record-breaking demand while prices drop. We do not know how long this correction may last, but as long-time gold and silver investors know, it takes courage to make money in these markets - but there is money to be made.
Disclosure: I am long SIVR, SGOL, PSLV. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.