Sales of retail gold coins are revealing just how desperate investors are to find a safe haven.
People have always been willing to shell out more for retail coins than gold sold in the spot market. But that premium has more than doubled — and at times quadrupled — over the past two weeks as investors seek a safe place to park their cash in the face of global market turmoil.
Dealers such as Gainsville Coins have never seen prices this high for this long. “Virtually every dealer in the country” has been so overwhelmed by demand that orders are backed up by at least a month, said Everett Millman, a precious-metals specialist at the Florida firm.
The coronavirus pandemic that’s roiled markets isn’t just stoking demand for the haven. It’s also paralyzing supply. Around the world, flights are getting canceled, trucks are getting held up and metal refiners are shutting, making it harder for traders and banks to shuttle their gold to vaults in major trading hubs such as London and New York.
“Some wholesalers are currently not taking orders,” said Ronan Manly, an analyst at Singapore dealer BullionStar. “Wholesalers, mints and refiners are either low on stock or out of stock.”
Supply for bullion coin orders is limited at the Royal Canadian Mint, which has temporarily suspended production in response to public-health measures to contain the virus, according to spokesperson Alison Crawford.
American Eagle gold coins are selling at a 5% premium, the highest over the spot price since the 2016 Brexit vote, according to Gainsville Coins’ Millman.
Spot gold is trading down about 1.3% near $1,610 an ounce, after rising the past three sessions. Bullion futures also fell to settle at $1,634.30.
Along with surging prices, Gainsville Coins is facing a month-long delivery backlog.
“When you look at a jump in the premium like that, that’s definitely an indication that demand is higher than supply,” Millman said. “All the supply chains are backed up for at least a month.”
As recently as two weeks ago, premiums for gold coins were at 1% or 2%, according to Millman. Silver coins are also in demand, with premiums for that metal at 50% over the spot price, compared with just 5% a couple of weeks earlier.