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As a general rule, the most successful man in life is
the man who has the best information
In World War I severe
material shortages played havoc with production schedules and caused lengthy
delays in implementing programs. This led to development of the Harbord List – a list of
42 materials deemed critical to the military.
After World War II the United States created the
National Defense Stockpile (NDS) to acquire and store critical strategic
materials for national defense purposes. The Defense Logistics Agency
Strategic Materials (DLA Strategic Materials) oversees operations of the NDS
and their primary mission is to “protect the
nation against a dangerous and costly dependence upon foreign sources of
supply for critical materials in times of national emergency.”
The NDS was intended for all essential civilian
and military uses in times of emergencies. In 1992, Congress directed that
the bulk of these stored commodities be sold. Revenues from the sales went to
the Treasury General Fund and a variety of defense programs - the Foreign
Military Sales program, military personnel benefits, and the buyback of
broadband frequencies for military use.
American
Silver Eagle
The American Silver Eagle is
the official silver bullion coin of the United States. It was first released
by the United States Mint on November 24, 1986 and is struck only in the one
troy ounce size.
The Bullion American Silver
Eagle sales program ultimately came about because the US government wanted,
during the 1970s and early 1980s, to sell off what it considered excess
silver from the Defense National Stockpile.
"Several administrations had sought
unsuccessfully to sell silver from the stockpile, arguing that domestic
production of silver far exceeds strategic needs. But mining-state interests
had opposed any sale, as had pro-military legislators who wanted assurances
that the proceeds would be used to buy materials more urgently needed for the
stockpile rather than merely to reduce the federal deficit." Wall Street Journal
The authorizing legislation
for the American Silver Eagle bullion sales program required that the silver
used for the coins had to be from the Defense National Stockpile. By 2002 the
DNS stockpile was so depleted of silver that if the American Silver Eagle
bullion sales program was to continue further legislation was required.
On June 6, 2002, Senator
Harry Reid (D-Nevada) introduced the Support of American Eagle Silver Bullion
Program Act to “authorize the Secretary of the
Treasury to purchase silver on the open market when the silver stockpile is
depleted."
2002 - 10,539,026 Bullion American Silver Eagles were sold.
2003 - 8,495,008 Bullion American Silver Eagles were sold, silver
averaged $4.88 an ounce for the year.
2004 - 8,882,754 Bullion American Silver Eagles were sold. For 2004 the average cost of an ounce of silver was $6.67.
2005 - 8,891,025 Bullion American Silver Eagles were sold. Silver averaged $7.32 an ounce.
2006 - 10,676,522 Bullion American Silver Eagles were sold. Silver averaged $11.55 an ounce
2007 - 9,028,036 Bullion American Silver Eagles were sold.
2008
- 20,583,000 Bullion American Silver Eagles were sold. Silver averaged $14.99 an ounce and almost 80% more Bullion American Silver Eagles were sold then in any previous year.
The US Mint suspended sales of the silver bullion coins
to its network of authorized purchasers twice during the year.
In March 2008, sales increased nine times over the
month before - 200,000 to 1,855,000.
In April 2008, the United States Mint had to start an
allocation program, effectively rationing Silver Eagle bullion coins to
authorized dealers on a weekly basis due to "unprecedented demand."
On June 6, 2008, the Mint announced that all incoming
silver planchets were
being used to produce only bullion issues of the Silver Eagle and not proof
or uncirculated collectible issues.
The US Mint is required by law to mint the bullion Silver Eagles to meet
public demand for precious metal coins as an investment option. The
numismatic versions of the coin (proof and uncirculated) were added by the
Mint solely for collectors.
The 2008 Proof Silver Eagle became unavailable for purchase
from the United States Mint in August 2008.
2009 - 30,459,000 Bullion American Silver Eagles were sold
On March 5, 2009, the United States Mint announced that
the proof and uncirculated versions of the Silver Eagle coin for that year
were temporarily suspended due to continuing high demand for the bullion
version.
On October 6, 2009, the Mint announced that the
collectible versions of the Silver Eagle coin would not be produced for 2009.
The sale of 2009 Silver Eagle bullion coins was
suspended from November 24 to December 6 and the allocation program was
re-instituted on December 7.
Silver Eagle bullion coins sold out on January 12,
2010.
The average cost of an ounce of silver in 2009 was $14.67
2010
No proof Silver Eagles were released through the first ten months of the
year, and there was a complete cancellation of the uncirculated Silver
Eagles.
Production of the 2010 Silver Eagle bullion coins began
in January instead of December as usual. The coins
were distributed to authorized dealers under an allocation program until
September 3.
In 2010 the US Mint sold 34,700,000 Bullion American
Silver Eagle Coins.
2011
According to the USGS’s most recent Silver
Mineral Industry Survey, silver production fell to 37 tonnes
in October - compared to 53 tonnes year over year (yoy).
In 2011, the United States produced approximately 1,054
tonnes of silver – down from 2010’s
production of 1,154 tonnes and down from
2007’s production of 1,163 tonnes.
The US imported 6,600,000 oz
of silver for consumption in 2011 – up from 2007’s imports of
4,830,000 oz.
In 2011 the US Mint sold 39,868,500 Bullion American
Silver Eagle Coins.
2011 was the first year in which official coin sales
will surpass domestic silver production.
Jeff Clark of Casey Research
writes “For the first time in history, sales
of silver Eagle and Maple Leaf coins surpassed domestic
production in both the US and Canada. Throw in the fact that by most
estimates less than 5% of the US population owns any gold or silver and you can see how precarious the situation is.
A supply squeeze is not out of the question – rather it is coming to
look more and more likely with each passing month.”
2012
United States Mint Authorized Purchasers (AP’s)
ordered 3,197,000 Bullion American Silver Eagle Coins on January 3rd,
the first day they went on sale. That opening day total catapulted January
Bullion Eagle sales higher than half of the monthly totals in 2011.
As of January 25th 2012, 5,547,000 Bullion
American Silver Eagle Coins had been sold.
Bullion Silver Eagles are guaranteed for weight and
purity by the government of the United States and because of this the US
government allows bullion Silver Eagles to be added to Individual Retirement
Accounts (IRAs).
Conclusion
The twin policies of zero interest rates and the
continual creation of money and credit being enacted today, by all
governments and central banks, means that the purchase of precious metals is
the only way to protect the value of your assets.
“Mark
my words, if the interest rates on U.S. government debt truly reflected both
the real level of inflation in this country and the rising risk of some form
of default, rates would already by sky-high and the U.S. would resemble a
massive Greece." John Embry, Chief Investment Strategist, Sprott Asset Management
Investors are currently risk
adverse and mining stocks are not well understood by the general investing
public, but at least one thing is going to become very apparent to most -the best way to hedge yourself
against inflation could be owning silver.
Junior resource companies offer the greatest leverage to increasing
demand and rising prices for silver. Junior resource companies are soon going
to have their turn under the investment spotlight and should be on every
investors radar screen. Are they on yours?
If not, maybe they should be.
Richard (Rick) Mills
rick@aheadoftheherd.com
www.aheadoftheherd.com
If you're interested in learning more about the junior resource sector,
and several quality silver companies, please come and visit us at www.aheadoftheherd.com
Site membership is free. No credit card or personal information is asked
for.
***
Richard is host of Aheadoftheherd.com and invests in the junior resource
sector. His articles have been published on over 400 websites, including:
Wall Street Journal, SafeHaven,
Market Oracle, USAToday,
National Post, Stockhouse,
Lewrockwell, Uranium
Miner, Casey Research, 24hgold, Vancouver Sun, SilverBearCafe, Infomine, Huffington Post, Mineweb, 321Gold, Kitco,
Gold-Eagle, The Gold/Energy Reports, Calgary Herald, Resource Investor,
Mining.com, Forbes, FNArena,
Uraniumseek, and
Financial Sense.
***
Legal Notice / Disclaimer
This document is not and
should not be construed as an offer to sell or the solicitation of an offer
to purchase or subscribe for any investment.
Richard Mills has based this
document on information obtained from sources he believes to be reliable but
which has not been independently verified; Richard Mills makes no guarantee,
representation or warranty and accepts no responsibility or liability as to
its accuracy or completeness. Expressions of opinion are those of Richard
Mills only and are subject to change without notice. Richard Mills assumes no
warranty, liability or guarantee for the current relevance, correctness or
completeness of any information provided within this Report and will not be
held liable for the consequence of reliance upon any opinion or statement
contained herein or any omission.
Furthermore, I, Richard
Mills, assume no liability for any direct or indirect loss or damage or, in
particular, for lost profit, which you may incur as a result of the use and
existence of the information provided within this Report.
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