Today I am going to explain why US gold and silver coin sales are irrelevant, though they are frequently reported by the US media as a weathervane for global gold and silver demand. Total 2018 sales of American Eagle gold coins sold by the U.S. Mint reached 245,500 ounces, the lowest on a year-over-year basis since 2007. Silver coin sales were 15.7 million ounces, also the lowest since 2007 on an annual basis, according to the U.S. Mint. Just 30,000 ounces of American Eagle platinum coins were sold during 2018. For those of you that follow me on social media, you know that I stated one should establish long positions in platinum after it breached the $865 an ounce mark, after which this price breakthrough happened and the price of platinum quickly soared to over $1,000 an ounce over the next six trading days. For the first seven months of 2019, the US mint reported that they sold 196,000 ounces of American Eagle gold coins, 11.262 million ounces of American Eagle silver coins, and only 40k ozs of platinum coins.
Extrapolating the gold and silver ounces to a full year of sales would yield 336,000 AuOzs and 19.3M AgOzs. Though both are considerable increases over 2018 figures, these amounts still represent less than 0.001 troy ounces of gold and less than 0.059 troy ounces of silver per US citizen. To this, I say who cares? Why? The Western mainstream media always fawns over sales of physical gold and silver in the United States, and especially misrepresents the physical gold and silver market during times in the past several years when US gold and silver coin sales were in precipitous decline to imply that the gold and silver coin market is collapsing. Even during these instances, I say, “Who cares?” because these Western generated news articles always completely ignore the sales of physical gold and silver that happen in the rest of the world among the 7.371 billion citizens that live outside of the United States of America.
For example, comparatively speaking, if we analyze the gold and silver buying habits of one nation, though a nation of more than 1.46 billion people (China), and thus much more important to the overall global trend of gold and silver purchases than a nation with 1.1 billion less people (America), here is the data, per the Shanghai Gold Exchange, as of the end of July. Chinese citizens took delivery of 233,043,583 troy ounces of gold from the Shanghai Gold Exchange alone, not to mention additional gold they may have purchased from other distribution channels. From the same SGE distribution channel, Chinese citizens took delivery of 693,575,446 troy ounces of silver. These figures are respectively 1,189 times the weight of American gold eagle coins sold and more than 61 times the weight of American silver eagle coins sold over the same time period, and this is why I stated above, “Who cares if American eagle gold and silver coin sales are up, down, sideways, or the same as last year?” Clearly, other global markets for physical gold and silver sales dwarf the weight of gold and silver sold in America so concentration on these other markets are more important to understand and gold and silver ounces of American eagle coins is almost irrelevant when viewed from a global perspective. The much more important global data on physical gold and silver sales is why US gold and silver coin sales are irrelevant.
In noting that physical gold and silver market data from China dwarfs any activity in the United States, we have not even considered other enormous physical gold and silver markets in Asia such as India and Japan. If we factor into the above data, Indian gold and silver purchases from another 1.35 billion people that universally view gold, and not the US dollar or Indian rupee, as money, the data of global physical gold and silver purchases would undoubtedly grow significantly larger. However, the punitive and enormous 12.5% import tax levied on gold by the Indian government has birthed an enormous black market in India for physical gold and gold smuggling activities and gold sales that transpire to escape this punitive tax make it nearly impossible to accurately assess the weight of annual physical gold sales in India. Despite the unavailable nature of physical Indian gold sales, understanding the size of the physical Indian gold market compared to the United States would still lead to the conclusion that US gold and silver coin sales are irrelevant.
Furthermore, the Indian government additionally charges a 3% GST (Goods and Services Tax) on refined gold, punishing Indian citizens with an effective 15.5% tax to convert their unsound, rapidly degrading Indian rupees into the sound money of physical gold, thereby ensuring that millions of Indians that purchase physical gold will due so on the unreported black market. Can you imagine if you had to pay a 15.5% tax every time you desired to convert your domestic currency into another global currency or anytime you traveled to another nation and needed to execute a ForEx transaction? Or perhaps this is the manner in which the Indian government acknowledges that nothing but gold is money, as Indian citizens can convert their rubbish Indian fiat currency rupees into other rubbish global fiat currencies for nominal fees, but should they wish to convert their rupees into a true wealth preservation vehicle like gold, the Indian government levies a 15.5% tax on this wealth preservation strategy to discourage intelligent behavior.
Given the Indian government’s punitive tax on freedom, a Mumbai gold dealer estimated that up to 200 tonnes of gold may be smuggled into India this year to avoid the gold tax, a figure that is the equivalent of 6,430,200 troy ounces of gold. Thus this means that sales of up to 6.4M gold ounces are unreported in India, which makes obsessing over the sale of less than a quarter million ounces of American eagle coins downright silly. Again, global figures and estimates for gold sales that should be the true data discussed to determine the global price trajectory of gold in future years is constantly dismissed by the mainstream media in favor of US centric data, such as the paltry 245,500 ounces of American gold coins sold in the first 7 months of this year by the US mint. Consequently, no matter how much lipstick American politicians and bankers try to paint on the lips of a gluttonous American economy that has fed at the trough of free money created by Central Bankers over the last decade, a pig with lipstick is still a pig, and a gluttonous pig is a pig whose intestines will inevitably burst and defecate over the rest of the global economy in the process.
P.S. Just because I published an article on gold and silver today does not mean that I believe gold and silver prices are going to rise in the immediate term. I provided my assessment for the direction of gold and silver prices over the next week to my patrons today that is completely independent from the information contained in this article.
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