Surging Gold: Coins in High Demand

After a brief lull, gold is fast regaining its popularity as the choicest investment option, especially in the trying times. The metal proved to be the best alternative to the volatile paper currency at the time of economic downturns. During the global recession of 2008, gold surged to record highs as the investors the world over began converting their cash holdings into the yellow metal. As the world economy seemed to be returning to normalcy, the commodity witnessed price correction, more significantly from December 2009 onwards. However, with the progress of the Fiscal Year 2010, the news of the Euro Zone Crisis started pouring in and acting as a major damper to the already shaky market sentiments. The fears of a second round of troubles gave a fresh boost to the gold demand in all forms, including coins.

The European sovereign debt crisis has made gold bullion particularly sought-after in Europe. The South African gold coin Krugerrand is currently enjoying higher valuation of the Canadian bullion, Gold Maple leaf. Meanwhile, the premium on the British bullion, Gold Sovereign is accelerating by the day. However, rooting to the concerns over the Euro Zone crisis, the rest of the world economy has made global investors wary of the foreign exchange rates moving against their home currencies. The sharp rise in the demand for the United States Gold Eagles is a proof of the sagging market view. The US bullion deliveries in the month of May 2010 shot up to double on a year-on-year basis. The US is also plagued by its own slow recovery and rising national debt, which has touched the unprecedented levels. The figure is estimated to be over $13 trillion!

The exact implication of the Greece-led instability is still a matter of debate, with conflicting news and opinions coming up often. Though the gold prices remain high, the uncertainty is making the investors wary of offloading their bullion inventories. However, in an interesting development, a member of the United States House of Representatives Anthony David Weiner from New York has accused Goldline Inc. of artificially promoting the demand for the American Eagles. In a statement from his office, the company is defined as “aggressive sales tactics, conservative spokespeople and rhetoric to sell over-priced gold coins to unsuspecting consumers.” It is hard to ascertain the proportion of the total coin demand so created and what comes out of the political roe over the issue. Meanwhile, the demand for BU and Mint State 20 cents is also picking up, such that much of the earlier price correction has already been covered.