Sunday, January 1, 2012

Gold Investing - An Event That Didn't Happen

Gold has certainly had some serious setbacks in the last few months. After reaching a lofty high of $1900.30 in September, the end of December saw the price drop to $1531.00. One thing I was watching for was for a possible drop below 2010's ending number of $1421.60.

There are powerful forces against the rising price of gold and it was certainly possible for this take-down to occur in the thinly traded markets that are normally associated with end-of-year activity. If it had happened, we would have had to listen to anti-gold faction crowing about how the gold bubble had burst and to look for a steady price decline.

As it stands now, the gold bubble hasn't burst and has an 11 year pattern of higher year-over-year closing prices (you can see all of these prices on my Gold Investing Home Page ). Spot gold ended 2011 at $1566.40, a gain of $144.80 (not quite 10%) for the year.

Here are the December and total 2011 Gold Eagle totals from the U.S. Mint (assuming no adjustments to these totals in the first few days of 2012):

one-ounce gold eagles - 65,500, year-to-date 910,000;
half-ounce gold eagles - 0, year-to-date 65,000;
quarter-ounce gold eagles - 0, year-to-date 82,000;
tenth-ounce gold eagles - 0, year-to-date 370,000.

A total of 1,000,000 ounces of gold were used to mint these 1,427,000 bullion coins in 2011. Silver Eagles for 2011 had an ending number of 39,868,500.

On a positive note, the U.S. Mint announced last Wednesday that they anticipate having enough American Eagle gold and silver bullion coins to meet demand in early 2012. For the last several years, the Mint has had to allocate their early sales of gold and silver Eagle bullion coins (to its authorized dealers) due to an unprecedented demand and a lack of coin blanks (planchets). It was reported on Reuters web site and you can find it here. Two other items from the Mint: 1) the 24k Gold American Buffalo won't be available until March 2012; and 2) they will begin accepting orders for the 2012 dated one ounce, half-ounce, quarter-ounce and tenth-ounce American Eagle gold and silver coins starting on Jan 3rd, 2012.

One last article I would like to call your attention to is by Egon von Greyerz, the founder and managing partner at Matterhorn Asset Management out of Switzerland. This entry appeared on the King World News Blog on 12/29/2011. He gives his thoughts on why gold has gone down and his prediction for what gold will do in 2012. The article can be read here.

Thanks for reading. Happy New Year.

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