LONDON(BullionStreet) : Demand for gold bullion bars and coins remained robust in 2011 and into January 2012, observers said.

Demand is strong amongst the gold buying public but remains a fringe activity of store of value buyers rather than a mainstream phenomenon. At this stage very few retail investors have any allocation to gold whatsoever and very few have even owned a gold coin or bar in their life.

This is slowly beginning to change with a small minority of retail investors beginning to diversify into gold in order to protect against systemic risk in the banking and financial sector (MF Global) and from the monetary risk of currency debasement.

In Australia, the Perth Mint has reported very strong demand for gold and silver coins in recent weeks. The mint is a major supplier of coins to the UK and Europe.

The mint’s largest markets for coin demand include Germany and the U.S.

However, demand for gold bullion coins and bars remains tiny vis-vis capital invested in stocks and bonds and vis--vis cash on deposit.

This suggests that the recent uptick in demand for gold coins and bars is very sustainable – especially against the backdrop of the challenging macroeconomic, systemic, monetary and geopolitical risk in the world today in 2012. A backdrop that is likely to be with us for the foreseeable future.

Sales of gold American Eagle coins this month total 114,500 troy ounces, the highest volume in a year and the most since 133,500 in January 2011. This, in turn, was the highest month since sales topped 150,000 ounces in May, June and July of 2010.

Figures from the U.S. Mint show an 18% decline in gold American Eagle sales in 2011 from the previous year, although sales of the silver Eagles still rose 15%.

Silver remains more affordable than gold and many bullion investors see greater value in silver bullion. Some expect the gold silver ratio to continue to fall with many believing, like GoldCore, that the gold silver ratio will fall to 15:1 in the coming years.

American Eagles, the world's most popular minted bullion coins—are generally viewed as a good indicator of retail investment demand for bullion – particularly in the U.S.

January data from the US Mint on sales of gold coins presents an interesting picture, both in terms of seasonality and overall demand for the asset class.

Some background to start with. Gold prices have been moving sideways with some relatively moderate volatility in recent months. Between August 2011 - the monthly peak in US Dollar-quoted price and January 2012, price has fallen 4.55%, but in the last month, monthly move was 10.82% and year on year prices are up 30.4%.

Crisis-period average price is now at USD1,154/oz and the standard deviation in prices is around 337 against the historical (1987-present) standard deviation of 330. In 2011 standard deviation for monthly prices stood at 144(small sample-adjusted), well below historical volatility, due to a relatively established trend through August 2011. However, prices returned to elevated volatility in August 2011-January 2012.

These price dynamics would normally suggest rising caution and buyer demand reductions over time. And to some extent, this sub-trend was traceable in the data for US Mint sales in some recent months too.

For example, unadjusted for seasonal variation, August 2011 sales of Mint coins peaked at 112,000 oz with relatively moderate 0.67 oz/coin sold gold content. By November 2011, sales slowed down to a relative trickle of 41,000 oz at 0.71 oz/coin sold. December sales came in at 65,000 oz with gold content on average of 1 oz per coin sold.

Much media hullabaloo ensued with calls for catastrophic fall off in demand. There were renewed claims that a gold bubble is now in action and the decline in coinage sales is evidence of that.