Stock prices climb a wall of worry.
Gold prices do too.
When gold prices were setting records in
2010 and 2011, investors flocked to gold and precious metals investments like
they haven’t since the top of the last bull market in the late 1970s.
That was a time when gold and silver buyers
were lined up outside coin stores like the bread and soup lines of the United States
during the Great Depression.
The data from the U.S. mint on gold coin
sales is the perfect indicator of the level of gold investment demand. And
since contrarian investors know the best time to buy any investment is when no
one else is, it’s a helpful guide on when to buy gold.
That’s why we see it as a very good sign
for future gold price rise that gold coin sales are down sharply from their
recent highs.
Consider this.
The latest data
from the U.S. mint says February gold coin sales are down 60% from the same
time last year.
That’s a massive decline. But there’s more
perspective here that signals a big drop in gold investment demand.
We’ll compare sales data on the world
standard of bullion coins for gold investment purposes - the U.S. one ounce
American Eagle gold coins.
In February 2011 there were 72,500 one
ounce American Eagle gold coins sold by the U.S Mint.
In February 2012, after gold prices peaked
above $1900 an ounce in August 2011, and there were 20,000 sold that month.
The chart below which shows the ratio
The chart below which shows the ratio
In February of 2013 there were 68,000 sold.
This year there was once again a major
slide. Last month there were only 22,000.
All of this shows investor interest and
demand for gold is down significantly. Contrarian investors know that’s a good
thing.
More than two years of steady declines in
the value of gold investments has produced a major wall of worry about the
future prospects for gold investments.
That’s a very positive indicator about the
future price of gold.
Good investing,
Andrew Mickey
Executive Editor, Contrarian Insights
Executive Editor, Contrarian Insights
