by Sebastian Wieschowski

The price of gold continues to rise, showing no signs of weakness. So, following the principle of supply and demand, what should the physical market look like currently? One might assume that precious metal dealers in Europe and worldwide are being overwhelmed—and that mints around the world must be working around the clock to meet demand. Surprisingly, however, two of the world's most renowned mints have reported a significant drop in sales. Could this be a harbinger of the end of the gold boom?

The United States Mint and the Perth Mint in Australia have both reported a record decrease in their gold coin sales shortly after one another: the Australians saw sales of gold coins fall to their lowest level since June 2019, back to pre-COVID-19 levels, with only about 16,000 ounces sold in March. The situation is even worse in the USA: The United States Mint sold only 12,000 ounces of the "American Eagle" gold coin in March.

At first glance, these reports are indeed very puzzling, as the gold price is skyrocketing while apparently few are buying physical gold to store in safes. Upon closer examination, however, this development is not so surprising. We are currently seeing that the overwhelming majority of private investors around the world, and especially in Europe, have switched to the selling side.

No Vote of No Confidence Against Gold

The fact that most gold owners are selling now is not a vote of no confidence against gold—many bought their precious metal 10 or 15 years ago and can now reap a substantial return. It's not just modern gold investment coins being sold, but also scrap gold for recycling—which is not only good for one's wallet but also for the environment. Consequently, there is an incredibly large amount of physical gold available on the market. This means that precious metal dealers do not need to buy from mints because they receive sufficient quantities of physical goods on the secondary market.

In addition, particularly in German-speaking regions, there is a psychological effect: For many investors in Europe, the 2,000 euros per troy ounce mark was a barrier—at this price, there is a threshold for anonymous gold purchases in Germany, and for a long time, one could buy a troy ounce for under 2,000 euros. However, this has changed dramatically, yet many investors are still mentally fixed on the 2,000-euro mark. In consultancy discussions, it is often heard that customers are waiting for gold to fall below 2,000 euros per troy ounce again.

The Fear of Missing a Unique Opportunity

However, the dynamics of the gold price's upward movement in the spring of 2024 suggest that this wait could be a long one—thus, a different mood may soon prevail on the gold market, described in the Anglo-Saxon realm with the acronym "FOMO," meaning "fear of missing out," i.e., the fear of being too late for a unique opportunity. And each time the gold price has bounced back after a dip in recent weeks, this fear also rises among private investors.

Sebastian Wieschowski has been collecting coins since childhood and, after working as a journalist with a focus on finance and economy, has switched his focus on coins and precious since 2012. He is the author of several self-published books on Bullion Coins, Panda Coins, Fake Coins and Coin Grading and works for numismatic magazines. He is also a recurring expert on the German television program Münzengalerie (Coin Gallery), the longest running numismatic television show in the world. You can find out more about his work at coinosseur.com