Actions of the US Mint Discourage Gold Ownership

January 21, 2009

Over the past several months, the United States Mint has announced a series of actions and policy changes that make it more difficult for the average individual to buy gold. There have always been plausible or semi-plausible explanations, but the consequence of each action has been to limit or discourage gold ownership.

The recent actions of the United States Mint in relation to gold are presented below. I have also included the US Mint's explanation for each situation, taken from official memorandums or press releases.

August 2008: The US Mint suspends sales of Gold Eagle bullion coins. Sales resume two weeks later on a rationed basis.

On August 14, 2008, the US Mint announced that they were suspending sales of American Gold Eagle bullion coins. The suspension was in place until August 25, 2008, when sales resumed under an allocation program. The program divides available gold coins into two pools. The first pool is divided equally among all authorized bullion purchasers. The second pool is allocated based on past sales performance.

When gold coin rationing (termed "allocation") was introduced, it was presented as a temporary measure. More than four months later, gold coin rationing continues. There has been no indication when authorized bullion purchasers will be able to order unrestricted quantities of gold bullion coins.

US Mint explanation:

"The unprecedented demand for American Eagle gold one-ounce bullion coins necessitates our allocating these coins among the authorized purchasers on a weekly basis until we are able to meet demand."

September 2008: The US Mint suspends sales of Gold Buffalo bullion coins. Sales resume more than one month later, but only to clear remaining inventory.

On September 25, 2008, the US Mint announced the sales suspension of 24 karat American Gold Buffalo bullion coins. Sales did not resume until November 2, 2008 when the US Mint was able to offer only its remaining limited inventory on an allocated basis.

US Mint explanation:

"Demand has exceeded supply for American Buffalo 24-Karat Gold One-Ounce Bullion Coins, and our inventories have been depleted. We are, therefore, temporarily suspending sales of these coins."

October 6, 2008: The US Mint announces that production will be halted for all but one gold bullion coin option.

Production was immediately halted for one-half ounce and one-quarter ounce American Gold Eagle bullion coins. Production of one tenth-ounce gold bullion coins was halted following depletion of the remaining blank supplies. Production of one ounce Gold Buffalo bullion coins was also halted following depletion of the remaining blank supplies.

These coins represent the US Mint's only fractional gold bullion coin offerings and the US Mint's only 24 karat gold bullion offering. The production halt seemed to be a temporary measure that would impact 2008 dated coins. The production halt has continued into 2009. There has been no indication when production will resume.

US Mint explanation:

"The United States Mint has worked diligently to attempt to meet demand, however, blank supplies are very limited and it is necessary for the United States Mint to focus remaining bullion production primarily on American Eagle Gold One Ounce and Silver One Ounce Coins."

November 10, 2008: The US Mint announces the discontinuation of numerous gold and platinum numismatic products.

The discontinuation of 22 different gold and platinum numismatic products was included as a broader measure to refocus the US Mint's line of products for coin collectors. Discontinued gold coin products included fractional uncirculated Gold Buffalo coins, one ounce uncirculated Gold Buffalo coins, fractional proof Gold Buffalo coins, and fractional uncirculated Gold Eagle coins.

Although the US Mint has constantly referred to the "unprecedented demand" for gold, they deemed their gold numismatic products to be "unpopular." Following the discontinuation announcement, sales of the 2008-dated versions of the discontinued coins surged and all numismatic Gold Buffalo and platinum coin offerings sold out in less than a month.

US Mint explanation:

"We are responding to the collector community which has spoken loudly and clearly. Customers have told us there are just too many products.  We agree, and it's time the United States Mint trims down and concentrates on the products our customers love most."

November 24, 2008: The US Mint announces the delayed release of all but one 2009 gold bullion coin option.

This delayed release served to prolong the previously announced production halts for fractional gold bullion coins and the 24 karat Gold Buffalo bullion coins. As noted previously, the production halt continues with no indication of when it might end.

The single 2009 gold bullion offering from the US Mint continues to be subject to rationing. As noted previously, there has been no indication of when the rationing will end.

US Mint statement:

"The quantities of blanks that we have been able to acquire from our suppliers continue to be very limited, while demand for bullion coins remains high. As a result, it is necessary for the United States Mint to delay the launch of other bullion coins until later in 2009. We will continue to monitor the situation and keep you informed as additional information becomes available."

January 6, 2009: The US Mint establishes a new pricing policy for gold and platinum numismatic products.

The new US Mint pricing policy adjusts the prices for gold and platinum numismatic products as often as weekly based on the average London AM Fix gold price. The prices for coins are based on a published table which seems to impute higher premiums than the old pricing system.

In the past, prices were established at the start of sales and remained fixed unless there was a significant move in the price of the underlying precious metal. At times gold numismatic products could be purchased for premiums as low as 10%. Under the new policy, prices are adjusted weekly to preserve permanently high premiums. Current premiums run 30% or more depending on the product.

US Mint explanation:

"Transparency, agility, and customer service are the catalysts for our new pricing method. The volatile precious metals market prompted our customers to suggest that we re-vamp our process, and we listened."

Conclusion?

The series of incremental changes outlined above has resulted in the following situation:

  • Production was halted for all of the US Mint's fractional gold bullion and 24 karat gold bullion offerings several months ago. There has been no indication when production might resume.
  • The only 2009 gold bullion coin available from the US Mint is the one ounce American Gold Eagle. Sales of this single bullion coin offering remain subject to rationing.
  • The US Mint's gold numismatic offerings for 2009 have been significantly reduced from the prior year. The remaining product offerings will be priced at prohibitively high premiums under a newly established pricing policy.

Whether or not it was the US Mint's intention, every significant action they have taken since August has either limited gold availability, eliminated gold product options, or increased the cost of acquiring gold. Has it all just been a consequence of surging global demand for gold, supply chain mismanagement, and bad timing for policy decisions? Or is there something else going on here?

Thank you to APMEX for confirming the status of the US Mint's 2009 gold bullion coins for this post.

Comments

By Rusty Spears on January 21st, 2009 at 10:18 pm

Yes. Something else is definitely going on here.

By Old Glory on January 22nd, 2009 at 12:42 am

Something else going on? You’re kidding right? If this isn’t the most blatant example of “new-speak” I’ve ever heard, then I don’t hear too well.

Let’s see: “Demand exceeded supply so we have to cut production.” This sounds like they can’t get any more supply or they don’t want to supply because of… what? Any intelligent business owner would ramp up production to make more profit on the increased demand.

I think it is safe to say our illustrious government (or whoever it is behind the curtain) knows the jig is up. Time to pull in all life boats and let the public be damned. There’s a fire in the house, block all the exits before the truth gets out.

Sad really. Sad what this country has come to. But, I’m glad to say I didn’t vote for any of the current crop of usurpers and rogues.

By AlPon on January 22nd, 2009 at 10:44 am

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Every citizen of the planet needs to read this book. It will rock your world and you will never be or think the same afterwards. I’m not selling anything. Unlike so many web sites trying to get rich by informing us of what we should already be aware of. My only motive is too circulate this publication. To help the citizens of the US and the world in general to see and discern the truth. The REAL truth.
At the risk of disappearing or being ‘rubbed out’ I am revealing this to all the world. The name of this tome is “The Protocols of the Elders of Zion”. If you can’t find it with your browser, as I said, they want this kept under wraps, I will provide it free as a WORD or PDF document. Just request a copy from alanponelli@hotmail.com. I will promptly reply and attach said doc to my email.
Let’s see how many people have a quest for the truth or just like to hear their own gums slam together.

By tekhen on January 22nd, 2009 at 10:56 am

I asked the same question on a PMs forum last week.
IMO, the premiums reflect closely to what spot should be. 2009 will be an interesting year for those who invest in PMs.

Even if the mint suspends/cancels certain products at the least my hope is that they will allow for the survival of fractionals.

By Hal on January 22nd, 2009 at 11:19 am

Great outline of the Mint issues! This is totally crazy to me and huge problem indicating that there very well could be some dire financial times ahead for the US.

By Lagavulin on January 22nd, 2009 at 1:15 pm

As a couple commenters hinted, the reality is that the Mint HAS to increase premiums, to close the dealer-arbitrage opportunity between the real price of gold in the physical market and the clearly false prices reported in the commodity spot-markets. If they held to historical premiums, dealers would be buying & re-selling with every dollar they have to pocket the “free” difference in price discrepancy. Then the Mint really WOULD have to stop selling altogether.

So this is clear evidence that spot-/futures-prices do not reflect real market demand. The interesting story will be over the next few months as commercial buyers are bound to start buying on the under-valued commodities floors and taking physical delivery. While it’s not entirely attractive having to re-sell kilo size bars, still, when it offers a fast 30% return at a time when there’s virtually no profit to be had anywhere else…well, like I said, it should be interesting to watch…

By John on January 23rd, 2009 at 10:39 am

I think there is little to no question as to what is going on. There are three reasons the Mint isn’t producing coins anymore, and none of them have anything to do with the nonavailability of blanks.

1) The government knows that we are going to return to some version of the gold standard. So, the Mint has been ordered by the Treasury to stop producing bullion coins. It wants to retain the gold it has.

2) The Mint could buy more gold in the open market, but that would thwart the plans of the anti-gold forces, especially the big bank short sellers, who have been working with the Federal Reserve for so long to hide the irresponsible money printing policies of this government. This is the same reason silver is not being purchased. If the Mint goes out and buys enough gold and silver to meet the full demand for coins, that act would raise the price, making the big banks who have big short positions very unhappy.

3) Buying large amounts of gold and silver would lower the comparative exchange value of the dollar, since both metals are actually currencies in the human psyche, not commodities. That would adversely affect the dollar at a time when the U.S. Treasury is trying to con foreign investors into buying what will soon be worthless Treasury bonds. People would rush into gold and silver rather than the U.S. dollar, and that would hurt the big banks, and the fiat money giveaway plans of the government.

By Joe on January 23rd, 2009 at 11:46 am

Great Article, but I was wondering if there is something “more” happening here.

During the first half of 2008 the US (and all) mints would have been purchasing there input supplies (read gold, silver, etc) at ever rising prices. This would be for immediate delivery as well as forward purchases in the back half of the year. After the price break down in the middle of the year the mints would find themselves holding or in a position to take forward delivery of supplies that they can no longer sell for a profit. Hence the “demand out strips supply” (because the machines are not working) , the “mint announces the discontinuation of numerous gold and platinum numismatic products” (because they will be manufacturing and selling at a loss) , type statements.

After the price run up and subsequent fall back to earth in the early 80’s many bullion shops found themselves in a situation that they had negative equity in the business input supplies, found themselves upside down, and went bankrupt. You can apply the same logic to the problems with the housing market, and the now called “toxic” waste on the banks balance sheets etc. These assets, including the mints, are no longer worth what they paid for them, and in the mints case, I think that they are simply trying to save face, there by not having to admit that they screwed up royally.

By richard mruz on January 24th, 2009 at 9:54 am

here’s what is scary; so far only 9 people have bothered to read and reply to a situation that SCREAMS of no supply of basic commodity and furthermore, no inclination to produce anymore!! they are locking down the supply of gold and silver and nobody says a thing…where’s lou dobbs? where’s bill ‘the dolt’ o’reilly? where’s a factual account and public outcry?

By winston on January 24th, 2009 at 5:19 pm

It is world wide ! South Africa needs new infrastructure to meet demands of workers and the Government to be in compliance . Hence no one will invest in non certified mines.
They also have had a power shortage for quit a long while.
Coal mines are also needed to produce synthetic fuel to help balance their needs.
Everyone has a skeleton and a closet . The all come out when things are bad and they want others to be blamed.

By ray on January 30th, 2009 at 12:09 am

what’s going on is the gov’t is pulling back GOLD supplies in preparation for a massive inflationary period that will slam the US in 1-2 years, brought on by the TARP, and more than a $5 trillion mount everest pile of cash the treasury printed and continues to do so to keep credit flowing…its not working, and they still seem to think the only solution is to use your treasury and your tax dollars to fix the problem in a matter of months when it took almost 15 years for this unprecedented great depression like environment to develop.

grab your gold now, don’t wait, the price will continnue to climb as your paper money becomes worthless…

By William Nolley on April 16th, 2009 at 10:26 am

After living in South Africa for over 6 years and travelling throughout Africa, I am convinced that Americans have been “sold out” and that one must think ‘outside the box’ in order to grow wealth.

I am now currently residing in Virginia.My company is involved with several African governments who wish to sell their gold under all the proper protocols. If you have any interest in acquiring gold in large quantities, please email me at southgarden1@aol.com. Your information will be kept confidential as our mission is to have US citizens and other “free nations” have direct access to this precious “currency”, now more than ever.

All the best.
WTN
Director
SGI, LLC

By Eleanor McDermott on November 13th, 2010 at 3:09 pm

How can the government (U.S. mint) justify the cost of presidential dollars and the America the beautiful quarters being wrapped and boxed to be distributed by the banks at a cost of millions of dollars to tax payers, while suggesting laying off thousands of federal workers to bring down the deficit? The system used for the distribution of the State quarters worked without the added cost of jobs and money.

By Robert on September 7th, 2011 at 3:12 pm

Government is about Control . Every government needs slaves , and the U.S.A. is no different. By keeping the people poor , they are keeping the people (general public)under control. If you have no assets you cannot fight for yourself. Government is angry , they can print more money, but they cannot print GOLD. Everyone in America should have some gold hidden. Your GOVERNMENT DOES NOT WANT THE PEOPLE TO HAVE GOLD , THEY WANT TO CONTROL !!!

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