Eagle sales boost gold

That may have helped fuel a sharp rebound in goldfutures prices on Thursday, although the metal also got plenty of help from rising USRussia ten¬sion, a falling dollar and renewed buying of commodi¬ties across the board.

According to the Los Angeles Times, the Mint told coin deal¬ers last week that its inventories of oneounce Eagles had been temporarily depleted because of "unprecedented demand". The Mint sells only to a small number of dealers, who then distribute the coins to other sellers, such as coin shops. The prices retail investors pay change daily and are based on the market price of gold plus a small premium.

The govern¬ment has sold 60,000 oneounce gold coins this month, up from 47,500 in all of July and just 13,000 in June. Sales of US sil¬ver Eagle coins meanwhile have been hot all year, leading to rationing of those coins by the Mint.

Coin dealers confirm that they have been swamped with orders over the last month as the price of gold dived from US$977.70 (Bt33,173) an ounce on July 15 to $786 last Friday, the lowest since December.

Small investors apparently saw the price drop as a great chance to buy, the opposite of what normally happens, said Ken Edwards, a partner at California Numismatic Investments in Inglewood.

"Usually we see increasing buying activity as we go up and increasing selling activity as we go down," he said. "Not this time."

Gold for immediate delivery traded down $4, or 0.5 per cent, to $832.99 an ounce at 9.20am on Friday in London. A close at that level would make for a weekly advance of 5.7 per cent, the biggest increase since the five days to February 8, 2002.

Gold futures for December fell $0.60, or 0.1 per cent, to $838.40 an ounce in afterhours electronic trading on the Comex division of the New York Mercantile Exchange.

The Mint obviously was not planning for a spike in demand. Now it is losing goldcoin sales to other countries, including Canada, which makes the oneounce Maple Leaf.

"We are working diligently to build up our inventory and hope to resume sales shortly," the Mint said.

By running out at a time like this the government could just stoke demand on the part of potential goldbuyers who have been on the fence.

"It's human nature," said F David Breahm, marketing director at dealer Blanchard & Co in New Orleans. "When something's not there, people tend to want it."