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Because of unprecedented demand, the U.S. Mint has announced they are out of certain types of gold, silver and platinum coins and won’t have any new ones minted until spring.

“The five coin proof set, silver proof set and premier silver proof set, and the 10 coin uncirculated set are no longer available,” said the Mint in an official statement.

According to details published on the U.S. Mint Website, sales of certain
precious metal coins and coin sets rose dramatically last year, surpassing
the 1 million-ounce mark for the first time since 1987.

In August, the Mint said American Eagle gold bullion had sold 1,025,000
ounces compared to about 489,000 ounces during the previous year, an
increase of about 110 percent.

Mint officials believe the increased demand is likely to remain high well
into 1999.

“The intense interest in the 1998 sets promises to carry over into the New Year as we introduce the first annual sets containing 50 State Quarters,” said Mint Director Philip N. Diehl in a press release.

Robby Noel, co-owner of the Patriot Trading Group — a precious metals
wholesaler — said the demand for gold and silver coins has gone up sharply
because of fears over the Y2K millennium bug and the prospect for runs on cash and because of the perception of instability in Washington with the Clinton administration.

“If you look at units sold in gold there is an interesting fact,” Noel
said. “At the start of 1998 when most people thought Clinton was toast, sales
went up mainly for one ounce units As the country moved into spring things
cooled off politically and so did sales.”

Noel pointed out that the Mint’s own figures substantiate another sharp
increase in sales by mid-summer because of concerns over the economic
calamities facing Russia, Asia and South America.

“Y2K awareness has also been a contributing factor,” Noel said. “The
smallest U.S. Eagle (gold coin), the $5 tenth of an ounce unit,
started to skyrocket,” and that unit is one of the most affordable.

Noel said that the price of precious metals reported on Wall Street “has
nothing to do with the real world of precious metals,” where gold and
silver are traded on paper and “players never have any intention of taking
delivery.” Physical metal buyers — in this case, ordinary consumers — who
actually take possession of the metals they buy is what has led to recent
shortages.

“Can the U.S. Mint keep up with demand? Maybe,” he said, “but if … stockpiles are any indication the answer is no.”

Current gold holdings in the U.S. Treasury are about 260 million ounces, he
said, but production is also down because the prices are depressed.
Consequently, he explained, there is a phenomenon occurring where gold and silver are relatively inexpensive at the retail level even though demand is
high and production has fallen off.

“As for 1999, the prices (retail customers pay) may not rise, per se,
however premiums could explode,” he said. For example, a junk bag of
silver, which should be selling for about $3,700 is currently priced at
$5,600. “The price of silver has not changed yet, but the supply and
demand factors have caused a huge premium increase,” Noel said.

He also said the price of gold is typically very “political.” That’s
because governments traditionally use the price of gold as an indicator of
the people’s confidence in their paper currencies. “The dollar is a
perception of value” rather than an actual one, he said.

“I have no doubt we will test this perception real soon,” Noel predicted.
“The Euro (the new unified European currency) is trying to sell perception
after a week and it doesn’t look good yet. That’s good news for the
dollar — for now.”



See Jon E. Dougherty’s daily column.

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