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.
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.
By Jason Hamlin
American silver eagles
