The Global Landscape of Gold and Silver Demand: A Diverging Markets

The precious metals market is experiencing a period of contrasting trends across key regions. This analysis delves into the demand for gold and silver in the United States, Thailand, and Australia, revealing insights for investors seeking to navigate this dynamic landscape.

United States: Silver Surges, Gold Remains Steady

Sales of the newly released 2024 American Eagle silver dollars by the United States Mint totaled 89,273 coins within just three days of their release, demonstrating strong investor interest.
The Uncirculated 2024-W American Eagle 1-ounce gold coin, limited to a maximum of 13,000 coins, saw initial sales of 1,073 coins at $3,170 per coin.

The surge in demand for Silver Eagles in the US is likely driven by a combination of factors.

Investors may view silver as a hedge against inflation, as it has historically been perceived as an asset that retains purchasing power.

Rising geopolitical tensions may prompt investors to seek refuge in traditionally safe-haven assets like silver.

Investors may add silver to their portfolios for diversification and risk mitigation purposes, as it does not always move in tandem with stocks and bonds.

On the other hand, demand for Gold Eagles remains relatively stable, which could be attributed to its higher price point and potential impact on consumer affordability. Additionally, the US Federal Reserve's monetary policy tightening may influence investor sentiment towards gold, as rising interest rates could make gold less attractive compared to interest-bearing assets.

Thailand: Central Bank Bolsters Gold Holdings

The Bank of Thailand (BOT) has nearly tripled its gold reserves since the Great Financial Crisis, increasing from 84 tonnes to 236 tonnes.

BOT Deputy Governor of Monetary Stability, Alisara Mahasandana, emphasized gold's role as a safe-haven asset amidst high inflation, geopolitical risks, and bond market uncertainties.

Thailand's substantial increase in gold reserves highlights the growing recognition of gold as a strategic asset in times of economic and geopolitical uncertainty. Central banks worldwide are increasingly turning to gold to diversify their reserves and hedge against potential risks.

Australia: Silver Sales Struggle Amidst Rising Prices

Perth Mint silver coin sales in May 2024 witnessed a significant 58% year-on-year decline to 796,934 ounces, marking the lowest May figure in five years.

Year-to-date sales of Perth Mint silver coins have dropped 51% year-on-year to 4.12 million ounces, suggesting a potential impact of higher metal prices on consumer demand.

The decline in Perth Mint silver coin sales in Australia can be attributed to the rising price of silver, which may have discouraged some price-sensitive consumers. This suggests that the affordability of precious metals plays a crucial role in driving consumer demand, particularly in regions with higher living costs.

The Perth Mint has witnessed a notable decline in silver coin sales, particularly in the European market. This downturn is attributed to the recent Value Added Tax (VAT) hike implemented by Germany, a significant consumer of Perth Mint silver coins.

The Importance of Gold Bullion Coins for Passive Income

Beyond capital appreciation, owning physical gold bullion coins presents an opportunity for passive income generation. These coins can be the source of steady stream of income due to the rally of precious metals.

Conclusion

The global demand for gold and silver highlights a multifaceted market with diverse trends across different regions. While the US and Thailand demonstrate robust demand for precious metals, Australia's market reflects a sensitivity to rising prices. Investors seeking a hedge against inflation and market volatility should carefully consider their investment goals, risk tolerance, and economic outlook when making decisions about allocating their assets to gold and silver.