May 1, 2013 / 6:11 PM / in 5 years

Gold ETF posts record outflow in April, U.S. coin sales spike

* SPDR Gold Trust lost 142 T in gold valued at $6.6 bln

* American Eagle gold coins up 10 times yr/yr to 209,500 oz

* Dealers report 20 pct premium per US silver coin

By Frank Tang

NEW YORK, May 1 (Reuters) - Gold’s historic sell-off last month has intensified a disconnect between funds which sold on dissatisfaction over bullion’s underperformance and individual investors who could not get enough physical gold coins and bars at bargain prices.

In April, holdings at the world’s largest gold-backed exchange-traded funds (ETFs) the SPDR Gold Trust posted their biggest monthly outflow in tonnage terms in 8-1/2 years.

In contrast, sales of the U.S. Mint’s American Eagle gold coins rose to their highest monthly tally since December 2009.

While equities ETFs are often used by longer-term retail investors, high-profile hedge fund managers, including John Paulson and other institutional investors, are by far the biggest shareholders of gold ETFs.

“It’s been primarily the financial component that has been selling. I don’t think that we have seen a lot of small holders changing their view on gold,” said Nicholas Johnson, a portfolio manager who helps manage the $30 billion in commodities at PIMCO in Newport Beach, California.

Johnson said he expects tremendous Asian buying on dips and demand by central banks there to more than offset fast-money-type selling by Western financial institutions.

Bullion held by the SPDR Gold Trust dropped by around 143 tonnes in April from March - valued at $6.6 billion at Wednesday’s prices - for its biggest monthly decline since its launch in November 2004.

It now held 1,078.5 tonnes of gold, the lowest level since 2009, versus 1,221.26 tonnes at the end of March.

Gold prices had dropped $225 per ounces between April 12 and 16 on fears of a withdrawal of the Federal Reserve’s monetary stimulus and after the European Central Bank and the International Monetary Fund asked Cyprus to sell reserves as part of a bailout deal.


In contrast, gold coins and bars, favorites by longer-term individual investors who want to gain exposure to the precious metal, soared after gold’s spectacular sell-off.

Shops selling gold coins, jewelry and bars around the world reported an unprecedented surge in demand and mints and refineries were working over time to keep up.

Sale of the American Eagle gold coins, jumped 10 times year-over-year in April to 209,500 ounces, the highest level since December 2009, U.S. Mint data showed.

In the first four months this year, sale of the U.S. gold coins increased to 502,000 ounces in 2013 from 116,200 ounces in the same period last year.

The strong performance came even after the U.S. Mint had suspended sales of its one-tenth ounce gold coins last week as surging demand depleted its inventory.

New Orleans-based retail coin dealer Blanchard & Co said huge demand from both new and existing clients boosted its April American Eagle gold coin sales up 400 percent versus March‘s.

In addition, the Mint’s American Eagle silver coin sales also climbed to over 4 million ounces in April from around 1.5 million ounces in the same month in 2012.

Dealers reported as much as $5, or a 20 percent premium per one-ounce American Eagle silver coin, partly due to a lack of coin blanks and production lag as U.S. Mint has been rationing them after a brief halt in January.

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