Why is the US Mint Not Meeting Public Demand for Bullion Silver Eagles?



Demand for US bullion silver eagles is very high in 2021 for several reasons. Silver is in high demand by itself and the US is also changing the design on the reverse side of the US silver eagle in 2021 creating added demand from coin collectors who want both versions of the silver eagle that will be minted this year.

Meanwhile, the US Mint is struggling with its ability to supply the coins for various reasons. For one thing the Mint is trying to change the silver eagle design in mid year 2021. During the transition from the old reverse design to the new design, no coins at all will be produced for some period of time during this year. On top of that problem, this article appearing in the Numismatic News in March states that conflicting US regulations are also creating an obstacle for the Mint. This article says US law prevents the US Mint from paying more than the world spot market price to acquire silver. 

All this combined is creating a perfect storm in the bullion silver eagle market resulting in some of the highest premiums ever for these coins. Below are a couple of excerpts from the article in the Numismatic News.

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"As we have been informed by the U.S. Mint’s primary distributors, called Authorized Purchasers, the Mint has not been able to further ramp up production of gold and silver American Eagles because it has not been able to acquire sufficient metals to do so."

. . . . . 

"In 31 U.S. Code § 5112(f)(1), the statute requires that, “the Secretary shall sell the coins minted under subsection (e) [silver Eagles] to the public at a price equal to the market value of the bullion at the time of the sale, plus cost of minting, marketing, and distributing such coins (including labor, materials, dies, use of machinery, and promotional and overhead expenses).”

. . . . .

"Unfortunately, other statutes prohibit the U.S. Mint from offering to pay prices higher than established by the paper market spot prices. In 31 U.S. Code § 5116(a)(3) states in part, “The Secretary shall pay not more than the average world price for the gold.” 31 U.S. Code § 5116(b)(2) states in part, “The Secretary shall not pay more than the average world price for silver under any circumstances. As used in this paragraph, the term ‘average world price’ means the priced determined by a widely recognized commodity exchange at the time the silver is obtained by the Secretary.”

. . . . .

"Effectively, the U.S. Mint is prevented from complying with one statutory requirement to produce gold and silver American Eagles sufficient to meet public demand by another statutory requirement that prohibits it from paying a price higher than the paper market spot price."

Please click here to read the full article in Numismatic News

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My added comment: Private mints are able to offer a premium to the paper spot price of silver to get silver inventory. The US Mint is said to be unable to do that and is also switching over its coin dies during the middle of this year to make the new silver eagle design. All this suggests supply will fall well below demand in 2021 and premiums for silver eagles are likely to stay high and perhaps even increase.




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