This news was initially reported by Patriot News Radio, which you can listen to in this video
clip. While the information is true and current as displayed on the U.S.
mint page here,
it is not anything new. The Mint has not sold uncirculated
American Eagle silver coins directly on their site for two years, but has
continued minting “bullion coins” that are distributed to dealers.
UPDATE: On Tuesday morning the U.S. Mint reduced it allotment of Silver
Eagles for bullion dealers. Read
more here.
I called the U.S. Mint and they confirmed that they did not produce
American Eagle Silver Uncirculated coins in the past two years and thus far
in 2011 have no plans to re-start production. They also clarified that they
are still producing proof Silver Eagle coins, but they have
numismatic value and carry a much higher premium.
While the hype and rumors are misleading, I think the takeaway is still
the same – physical buying is overwhelming
supply. Strong demand for Silver Eagles pushed sales to an all-time
record of 6.4 million ounces during the month of January. This number is 50%
higher than any prior month in the U.S. Mint’s 26 years of published sales
history. The latest
data also shows that February sales set another all-time record for that
particular month and the 7th highest monthly sales ever.
But the truly significant point, as discussed in the last edition of the Gold Stock Bull
newsletter, is that those 6.4 million coins represent nearly 20% of total
domestic mine supply. The US mines only about 40 million ounces a year. If
sales continue at this pace, 100% of all silver mined will be exhausted by
Summer on just this one product, which typically represents only 5% of total
silver usage.
U.S. law requires that the mint use domestic supply for gold coins and
this is thought to also apply to silver, although there is some
ambiguity. So either Congress will need to pass a new law to allow the
American Silver Eagle to be struck from foreign mined silver or they will run
out of silver supply for minting. Here is the current message on the Mint’s
website regarding uncirculated American Silver Eagles:
Production of United States Mint American Eagle Silver Uncirculated Coins
continues to be temporarily suspended because of unprecedented demand for
American Eagle Silver Bullion Coins. Until recently, all available silver
bullion blanks were being allocated to the American Eagle Silver Bullion Coin
Program, as the United States Mint is required by Public Law 99-61 to produce
these coins “in quantities sufficient to meet public demand . . . .”
Although the demand for precious metal coins remains high, the increase in
supply of planchets—coupled with a lower demand for bullion orders in August
and September—allowed the United States Mint to meet public demand and shift
some capacity to produce numismatic versions of the American Eagle One Ounce
Silver Proof Coin.
However, because of the continued demand for American Eagle Silver Bullion
Coins, 2010-dated American Eagle Silver Uncirculated Coins will not be
produced.
The United States Mint will resume production of American Eagle Silver
Uncirculated Coins once sufficient inventories of silver bullion blanks can
be acquired to meet market demand for all three American Eagle Silver Coin
products.
So far they have not been able to acquire the necessary inventory, now
running into the third year of this issue. The problem with this excuse is
that the Mint could procure “sufficient inventories of silver bullion blanks”
if they were willing to pay a higher price. And as others have pointed out,
by stopping the production of US Silver Eagle Coins, the Mint is in violation
of Public Law 99-61 which requires them to produce these coins “in quantities
sufficient to meet public demand . . . ”
Continued shortages are likely to send premiums on Silver Eagles soaring,
particularly if the Mint has to stop production at some point. Despite silver
breaking out to 31-year highs, it still has much further to go. It has yet to
reach its nominal high around $50 or inflation-adjusted high around $150. If
you haven’t secured physical silver in your possession, you might want to get
on it while you still can.
