How interest rate hikes and a lack of scarcity brought the U.S. Mint’s American Eagle gold coin sales to the lowest levels in a decade

U.S. government data regarding the Mint’s recent sales figures has provided us with some fascinating revelations. American Eagle gold coin sales have fallen to their lowest in 11 years, not seeing so few sales since April 2007. 4,500 ounces of American Eagle gold coins were sold in April 2018, which is 25 percent less than the amount sold around the same time just last year. March was even worse, being 29 percent lower than April. Silver, on the other hand, has risen 10 percent since the same time last year. What’s going on?

In a previous article published on March 30, 2018, entitled, “What’s going on with gold?” I stated this:

As of now, gold is trading right below its peak levels in 2017, but enthusiasts expect it to increase in the near future. In 2018 alone, gold has grown 3.5 percent. Due to concerns of an incoming trade war between the United States and China, the Federal Reserve is expected to lower its interest rates, which is beneficial to the gold industry because it makes gold investment more appealing than Treasury bonds and other savings. For investors, McDonald suggests considering the Gold Miners ETF (GDX), since the fund’s assets have reached its highest levels since the end of 2017. Let us know in the comments if you think gold is doing well or not!

Well, it turns out that those of us that thought that the Federal Reserve would lower its interest rates were wrong! Fate would have it that in late April, the Federal Reserve announced that the U.S. economy is remaining on track for continued growth and that more hikes in interest rates were to materialize in the near future rather than the predicted decrease. This news led to a decrease in spot gold prices, which, coupled with an increasing variety of appealing investment alternatives and the increased re-selling of gold coins on the market, is eating away at the demand for the Mint’s newly issued gold coinage. Since a decrease in demand is what appears to be hurting the Mint’s sales of the American Eagle gold coins, the most logical step to increase sales would be to find ways to increase demand. I have seen many a collector comment either on blogs or in message boards that the Mint needs to lower its mintage limit of new products to increase the demand and hype for new coins. I would have to personally say that I agree with these avid collectors.

Scarcity and demand hold an intimate relationship in any economic endeavor, and one of the reasons that older coins remain in such higher demand compared to newer issues is because they are far scarcer in quantity. Even if the scarcity were artificially driven, I think that the Mint would benefit by minting far fewer new issues than they currently do, many of which have no mintage limits whatsoever. Many collectors dream of being the owner of a coin or set which has only one or two known authentic specimens. Rather than putting out fewer new issues with virtually unlimited mintages, the Mint might perhaps consider the opposite sales approach — producing more new issues with lower mintages. The collector community is hungry for new Mint issues that create lines around the street corner like the first time the Kennedy half dollar was introduced in 1964.

It’s been some time since I’ve seen any of the Mint’s products sell out on its website, but gold, in particular, appears to be suffering the worst of the impact. This is a shame since I really do enjoy the design of the American Eagle gold (and silver) coins on an aesthetic level. Even though the markets are quite often unpredictable, there are things that the Mint can still do to protect American interest in gold coins. This is not to disparage the Mint, or anybody who works there, just a piece that voices the concerns of the collector community. We want the Mint, and the hobby, to succeed for many generations to come.

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