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Gold rush forces US to
suspend Eagle sales


28/11/09.The rush by retail investors into gold has forced the US
government to suspend sales of the American Eagle, the world's most
popular bullion coin, after it ran out.

The suspension, the second since the start of the financial crisis in August
2008, is the latest sign of investors seeking a safe haven in bullion amid
the woes of the US dollar. Gold sales have also benefited from concerns
about the health of Wall Street and worries over a possible spike in
inflation due to a lax monetary policy.

"The US Mint has depleted its current inventory of 2009 American Eagle 1
ounce bullion coins due to the continued strong demand," the mint said. It
added that selling would resume "once sufficient inventories ...can be
acquired to meet market demand".

The suspension helped push spot gold prices yesterday to a fresh all-time
high of $1,194.90 a troy ounce, up 0.5 per cent on the day. Bullion later
pared gains to trade at about $1,183 an ounce as the US dollar
strengthened.

The mint suspended sales last year after the collapse of Bear Stearns and
Lehman Brothers triggered a wave of buying that depleted its stocks.
Dealers have reported occasional shortages of other popular coins.

Philip Newman, director at GFMS, a London-based precious metals
consultancy, said demand for physical gold in North America had picked
up in the past two months.

The US Mint has sold about 1.19m ounces of American Eagles so far this
year, up almost 75 per cent year-on-year and on track to be the highest
annual volume in 10 years, according to official data. Sales of American
Eagle silver coins have hit 26m ounces, the highest level in at least 23
years.

Although gold and silver coins account for a relatively small portion of the
precious metals market, analysts see them as a good indicator of retail
investor appetite. Gijsbert Groenewegen, managing director at Silver
Arrow Capital, a New York-based precious metals hedge fund, said
investors were shifting from paper to physical assets. "Bullion is the only
asset without counterparty risk."

The scarcity of American Eagle coins ahead of the Christmas period,
which usually sees strong demand for bullion, pushed the coin's premium
higher. FideliTrade, a major US-based coins bullion dealer, quoted the
American Eagle at almost $60 above spot gold prices, much higher than
quotes for other coins. Traditionally, the American Eagle and the American
Buffalo are the world's best-selling gold coins, followed by the Canadian
Maple Leaf, the Austrian Philharmonic and the South African Krugerrand.