Gold Slumps to Seven-Month Low

Answer: Gold bullion and Internet stocks.

Question: What are two things many people don’t want today?

Gold futures prices slipped to a seven-month low Wednesday, and now have lost ground in all but three sessions this month, as demand for gold coins has plunged at a time of increased bullion sales by central banks.

Purchases of American Eagle gold coins this year have “all but collapsed,” Gold Fields Mineral Services Ltd. said in an annual survey Wednesday.

Overall, investor demand for gold plunged 46% in 1999, a year in which German investors, traditional mainstays of the gold market, sold more of the metal than they bought for the first time since 1993, the report said.

What’s more, “In the last two weeks, there have been reports of a larger-than-expected number of investors selling [gold] back into the market,” said Daniel McConvey, senior gold analyst at Goldman, Sachs & Co. in New York.

May gold futures slid $2.60 to $275.50 an ounce Wednesday on the Comex in New York, the lowest price since late September.

The price is down about 15% from this year’s high of $326.90 in February.

The U.S. Mint didn’t sell any gold coins in February and only 3,500 ounces in March--about 1% of sales a year earlier, according to Mint figures. “Obviously, if the U.S. Mint isn’t selling any coins,” demand is weak, McConvey said.

The hot stock market early this year might explain the lack of demand for gold then. As for the recent reported selling, it’s conceivable that some investors who lost in stocks are raising cash by selling their gold. But there’s no way to know for sure.

Meanwhile, central banks have sold about 150 tons of gold from official reserves so far this year, said Philip Klapwijk, managing director at Gold Fields. That continues the trend of recent years, as many central banks cash in gold to buy bonds or other financial investments.