US Mint suspends sale of 24-karat gold coins
Sep 26 02:57 PM US/EasternBy MARTIN CRUTSINGERAP Economics Writer
WASHINGTON (AP) - The U.S. Mint is temporarily halting sales of its popular American Buffalo 24-karat gold coins because it can't keep up with soaring demand as investors seek the safety of gold amid economic turbulence.
Mint spokesman Michael White said Friday that the sales were being suspended because demand for the coins, which were first introduced in 2006, has exceeded supply and the Mint's inventory of the coins has been depleted.
The Mint had to temporarily suspend sales of its American Eagle one-ounce gold coins on Aug. 15 and then later that month announced sales of the American Eagle coins would resume under an allocation program to designated dealers.
White said the Mint expected to soon start distributing available Buffalo gold coins through a similar allocation program.
Through Thursday, the day the Mint suspended sales of the American Buffalo, the Mint had sold 164,000 of the coins this year, up 54 percent from the same period a year ago.
"People are scared. Gold has become a safe haven," said Michael Maroney, a vice president of sales at gold dealer Monex Precious Metals in Newport Beach, Calif.
Maroney said that demand for the one-ounce American Eagle coins was "through the roof." He said Monex still had American Buffalos available Friday because the company had recently stocked up on them.
With the financial crisis gripping markets in recent weeks, investors have rushed to safe havens such as gold and Treasury securities. Demand for three-month Treasury bills last week pushed their yields down sharply to levels not seen in decades.
Investment advisers, however, caution that the volatility often seen in gold prices could make investments in this area more of a risky decision if gold prices suddenly begin to fall sharply.
As the financial crisis unfolded in the past few weeks, American Gold Exchange Inc. saw demand for coins go up about 50 percent, according to Bill Musgrave, a vice president of the Austin, Texas-based gold dealer.
The Mint introduced the American Buffalo gold coin, the country's first 24-karat gold coin, in 2006. Congress authorized production of the coin in an effort to capture a portion of the global market for pure gold coins, competing with such coins as the Canadian Maple Leaf.