The Golden Truth: The U.S. Mint Has Suspended Production Of Silver Eagles

Wednesday, December 29, 2010

The U.S. Mint Has Suspended Production Of Silver Eagles - Again

I was not aware of this until today, but the press release reads like silver eagle production has been suspended for awhile. Here's the press release: LINK

I was told a while ago by someone who is in a position to know that the Mint was under instructions to produce as many gold and silver eagles as possible this year in order to avoid the perception that silver supplies are tight. This is why big coin dealers like Tulving seem to have an endless supply of silver eagles.

However, this same source also said that he expected, based on thorough knowledge of the entire industry, that there would be a severe silver shortage starting sometime in 2011.

I guess that shortage may have started a bit early...

12 comments:

AnonymousWednesday, 29 December, 2010
"I was told a while ago by someone who is in a position to know that the Mint was under instructions to produce as many gold and silver eagles as possible this year in order to avoid the perception that silver supplies are tight."

This is a really stupid strategy if true. How long do they think they can kick the can down the road? 3 more months?

FWIW, the 2010 proof silver eagles are already sold out also. They went on sale in November.
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DukeWednesday, 29 December, 2010
This is only for the "Uncirculated" coins - still producing "bullion" silver eagles.
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Scottj88Wednesday, 29 December, 2010
Excellent information. How long has it been on suspension for? I believe in this perception game as well!

I am blogging about this as well at

http://thehardrightedge.com
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Keep up the good work!
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Scott J
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AnonymousWednesday, 29 December, 2010
The US Mint is required by law to coin as many eagles as it takes to meet the demands of the public. You can thank Ron Paul for that law. If they cannot produce coins as required by law it means the are completely unable to find a supply of silver in which to coin the eagles from. Low physical supply available, I think so!!!
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Dave in DenverWednesday, 29 December, 2010
Actually anonymous, I believe that is a requirement that is tied to the Constitution. They also are required to use gold/silver produced from U.S. mines, however - and I don't remember where I read this - that requirement has been suspended and they are using Mexican silver as well.

Actually Duke, all coins produced by the Mint are "uncirculated" by definition. It is the "bullion" silver eagle production which has been suspended.

My colleague and friend "Andy" asked APMEX about that and while they are taking orders for 2011 silver eagles on their website and the woman said that they "expect" to be able to ship by Jan 14, she stressed that the Mint is often unreliable in terms of a firm shipping date.

FWIW, U.S. mines produce 30 million ozs of silver/yr. This year the Mint has sold something like 40 million silver eagles. Ergo the production suspension. I believe they are building inventory in order to try and start meeting 2011 demand.
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MarkWednesday, 29 December, 2010
Dave,

Apparently you are not aware of the various ASE products produced and sold by the Mint. The "Uncirculated" coins are in a totally different category and are meant for collectors. See the following description from the mint's website: http://www.usmint.gov/mint_programs/american_eagles/index.cfm?action=AmEagUnc

And from a Dec 22 article:
"...The US Mint does have quantities of 2010-dated Gold and Silver Eagles still available. These coins will remain on sale until the inventory has been depleted. If any inventory remains on January 3, 2011, the 2010-dated coins will be sold on a ratio basis to authorized purchasers ordering 2011-dated coins..."
http://news.coinupdate.com/gold-and-silver-eagle-bullion-coins-0593/

As was mentioned above, it is pretty amazing that the Proof ASE's were only on sale for just over a month before the mint pulled the plug on them. They sold just under 835,000 ounces at the same time the bullion coins were setting a one month sales record of 4.26 million oz
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Bron SucheckiWednesday, 29 December, 2010
If the bullion coins have been suspended then this statement by the US Mint doesn't make sense "because of the continued demand for American Eagle Silver Bullion Coins, 2010-dated American Eagle Silver Uncirculated Coins will not be produced".

If you look at http://www.usmint.gov/mint_programs/?action=american_eagles it is clear there are three Eagles - proof, uncirculated and bullion. So bullion has not be suspended.

I think it is also necessary to distinguish between a shortage of silver planchets/blanks versus actual shortage of silver. I am not seeing any problems in the wholesale market with supply of 1000oz silver bar at this time.
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AnonymousWednesday, 29 December, 2010
The press release specifically says "bullion" silver eagles are not suspended, just the "uncirculated".

"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."
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MarkWednesday, 29 December, 2010
Oh, and on the sourcing of silver for ASE's, the mint can purchase silver from any available source (see the last sentence below) Notice that the law never says "must", but instead uses "may". The US stockpile was supposedly drained after the 3rd year of the ASE program.

"...1) The Secretary may buy silver mined from natural deposits in the United States, or in a territory or possession of the United States, that is brought to a United States mint or assay office within one year after the month in which the ore from which it is derived was mined. The Secretary may use the coinage metal fund under section 5111 (b) of this title to buy silver under this subsection.
(2) The Secretary may sell or use Government silver to mint coins, except silver transferred to stockpiles established under the Strategic and Critical Materials Stock Piling Act (50 U.S.C. 98 et seq.). The Secretary shall obtain the silver for the coins authorized under section 5112 (e) of this title by purchase from stockpiles established under the Strategic and Critical Materials Stock Piling Act (50 U.S.C. 98 et seq.). At such time as the silver stockpile is depleted, the Secretary shall obtain silver as described in paragraph (1) to mint coins authorized under section 5112 (e). If it is not economically feasible to obtain such silver, the Secretary may obtain silver for coins authorized under section 5112 (e) from other available sources..."
http://www.law.cornell.edu/uscode/31/usc_sec_31_00005116----000-.html

For gold it just states from gold mined within the US or from reserves held by the US. I wonder why they can't seem to get any 24K gold for the Buffalo coins? Maybe we no longer have any in reserve -- is just a little coin melt all that's left at Ft Knox? Actually for the Buffalo the requirement is "the Secretary shall commence striking and issuing for sale such number of $50 gold bullion and proof coins as the Secretary may determine to be appropriate, in such quantities, as the Secretary, in the Secretary’s discretion, may prescribe." For Eagles the law states "Notwithstanding any other provision of law, the Secretary shall mint and issue, in quantities sufficient to meet public demand"
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AnonymousWednesday, 29 December, 2010
The coinage act of 1792 defined 1 dollar as a coin containing 371.25 grains of Ag (silver.) There are 480 grains in 1 troy oz. Thus 1 silver dollar contains (77.37% Ag) just a bit less than one troy oz of Ag. A quarter dollar (371.25/4 grains Ag) a half-dollar (371.25/2 gr. Ag) a dime or tenth of a dollar (371.25/10 gr. Ag) This stems from the fact that Hamilton and Jefferson when setting up the US Treasury to comply with Art. I section 8 that demands that "Congress shall... coin [not print from thin air] the money and regulate [make uniform] the value thereof [i.e. each coin from a US Mint must comply with the Coinage Act of 1792.] Additionally, Article I section 10 requires that "No State shall... make anything but gold and silver coin tender in payment of debt."
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EconomicDisconnectWednesday, 29 December, 2010
Makes me think of the exchange between The Bernank and Ron Paul when he asked about the FED's abilitiy to create money and The Bernank started with the coin clause and Paul yelled "COINS!??" Too funny.

Almost 2011, should be interesting.
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AnonymousWednesday, 29 December, 2010
Zero Hedge also made this mistake a few months back.

There are three versions of the silver eagle: bullion, uncirculated, and proof. The latter two are intended more for coin collectors. The Mint suspended the minting of uncirculated and proof silver eagles in 2009 in order to produce regular bullion silver eagles to meet the demand. In 2010 they resumed production of proof silver eagles, but the uncirculated version is still suspended. There are hopes among coin collectors that uncirculated production may finally resume in 2011.

You can tell whether a silver eagle is uncirculated/proof or bullion by checking the back. The uncirculateds have a "W" mint mark on the lower left side of the coin, while the bullion versions have no such mint mark.

Bullion: http://www.apmex.com/Resources/Catalog%20Images/Products/48687_Rev.jpg

Uncirculated: http://www.apmex.com/Resources/Catalog%20Images/Products/35608_Rev.jpg

Hope this explanation helps clear things up for everybody.
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