May 28, 2022

Can the US Mint Handle Demand for the Ultra High Relief Gold Double Eagle?

For much of the year, the United States Mint has been touting the upcoming recreation of what they have called the “nation’s most beautiful coin.” Augustus Saint Gaudens’ design for the Ultra High Relief Gold Double Eagle will be recreated as a one ounce 24 karat gold coin available for sale to the public.

The Mint’s intention to recreate the coin was first announced this March, followed by an official unveiling in July, and a well publicized first striking in November. The US Mint intends to strike the coins throughout 2009 in quantities necessary to meet public demand. So far, coin collectors have responded enthusiastically to the upcoming offering. With the recent main stream attention on gold, there will likely be interest from the broader public as well. Is the United States Mint prepared to handle the potentially significant demand for the new gold coin?

This year the US Mint, as well as most other world mints, have had continuous problems procuring sufficient gold blanks to meet the incredible demand for bullion coins. The US Mint in particular has been forced to suspend sales of some gold bullion offerings and continues to distribute coins though an allocation program since they are unable to meet the full demand.

Next year the US Mint will be at odds with itself as it struggles to meet growing demand for their regular bullion coins and new demand for a potentially hot collectible coin.

To estimate how much demand the new coin might generate, we can look at the US Mint’s 2006 release of the 24 karat American Buffalo Gold coin. Similar to next year’s offering, the coin design was taken from an old collector favorite, in this case the Buffalo Nickel. The coins were offered as one ounce bullion coins and one ounce collector proof coins. Sales of the coins began in late June 2006. In just over six months, the US Mint sold approximately 337,000 bullion coins and 252,000 proof coins for a total of 589,000 ounces worth of gold. Sales of the regular 2006 American Gold Eagle bullion coins totaled only 261,000 ounces.

Even if only the collectible versions of coins are considered, this represents a 50% increase in demand for gold coins. Since the US Mint has been unable to meet the full demand for regular gold bullion coins this year, the prospects that they can handle the additional demand for a popular collectible gold coin on top of already robust gold bullion coin demand seem remote.

Another aspect to consider is that the Ultra High Relief Gold Double Eagles are struck on specialized blanks. The coin will have a thickness of 4 millimeters which is more than 50% thicker than most one ounce gold bullion coins. So far the US Mint has been procuring these specialized blanks from Gold Corp., a wholly owned subsidiary of the Western Australian Government, who operate the competing Perth Mint. Notably, the Perth Mint recently announced that they would be forced to cease taking orders for precious metals until January 2009 due to “unprecedented demand.” So, not only will the US Mint need to procure a large amount highly specialized blanks from an already tight market, they will need to procure them from a competitor struggling to meet their own demand.

Taken together these factors do not bode well for a smooth release of this “recreated materpiece.” I envision a frustrating series back orders, delays, and eventual order limitations for the new coin. The US Mint intended the Ultra High Relief Gold Coin to be “a prestigous example of the highest level of artistic excellence in American coin design.” Instead they might just end up with another gold related headache.

US Mint 2008 Gold and Silver Dwindle, 2009 Releases Delayed

The United States Mint recently released a memo to authorized bullion purchasers regarding the remaining 2008-dated bullion coins and the upcoming 2009-dated bullion coins.

The only 2008 dated bullion coins still being sold by the US Mint are the 1 ounce American Gold Eagle and 1 ounce American Silver Eagle. Final allocations for these coins will take place December 15, 2008. All of the fractional Gold Eagles, Gold Buffaloes, and Platinum Eagles are no longer available.

Sales of 2009-dated 1 ounce Gold Eagles and 1 ounce Silver Eagles will begin on December 29, 2008. Availability will be subject to allocation. The remaining 2009-dated bullion coins will be delayed. The US Mint cites “very limited” supplies of blanks from suppliers amidst high demand.

The full US Mint memo is reproduced below:

November 24, 2008

MEMORANDUM TO ALL AMERICAN EAGLE AND AMERICAN BUFFALO BULLION COIN AUTHORIZED PURCHASERS

SUBJECT: 2008 and 2009-Dated Bullion Coin Products

With the exception of the American Eagle Gold One-Ounce and American Eagle Silver One-Ounce Bullion Coins, all 2008-dated bullion coins have been depleted. Weekly allocations will continue for these two products.

The final 2008 allocation for these coins will be provided on Monday, December 15, 2008.

There will be no bullion allocations during the week of December 22, 2008.

2009-dated American Eagle Gold One-Ounce and American Eagle Silver One-Ounce Bullion Coins will be made available for sale via the standard allocation process on Monday, December 29, for pricing December 30 and order pick-up on Friday, January 2, 2009.

Allocations for these products will continue until the United States Mint is able to meet demand.

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.

Thank you for your patience and your continued support of the United States Mint Bullion Coin Program.

US Mint to sell final inventory of 2008 American Buffalo Gold Bullion Coins

The following memo was sent by the US Mint to authorized bullion purchasers.

MEMORANDUM TO ALL AMERICAN BUFFALO BULLION COIN AUTHORIZED PURCHASERS

SUBJECT: 2008–Dated American Buffalo Bullion Coins

On Monday, November 3, 2008, the United States Mint will resume taking orders for 2008-dated American Buffalo One Ounce Gold Bullion Coins.

Final inventory for these bullion coins is based on current in-house blank supplies and supplies are limited. The United States Mint will allocate these remaining coins among the Authorized Purchasers (AP’s).

The United States Mint will use a slight modification of its standard allocation process, which is as follows:

Monday morning, the inventory available for sale that week will be divided into two equal pools for this bullion coin product.

The first pool for this bullion coin product will be allocated equally to all active American Buffalo One Ounce Gold Bullion AP’s respectively (active AP’s are those which have purchased American Buffalo One Ounce Gold Bullion Coins in the past three fiscal years).

The second pool will be allocated based on each AP’s sales performance for this bullion coin product in the last three fiscal years (e.g., an AP who purchased 30% of all American Buffalo One Ounce Gold Bullion Coins during this time will be allocated 30% of this second pool).

Each AP will be advised via fax Monday morning (or if a government holiday, Tuesday morning) of its allocation, and will have until 3 p.m. on the following Friday to place an order for its allocated coins.

Any unordered coins remaining after 3 p.m. Friday will be put back into the pool for allocation the following Monday only until coin inventory for this product is depleted.

Included in the communication with each AP’s initial allocation on November 3 will be its allocation percentage based on sales performance.

Thank you for your patience and your continued support of the United States Mint Bullion Coin Program.

US Mint to Sell Final Inventory of 2008 Platinum Eagles & 1/10 oz. Gold Eagles

A few weeks back the US Mint announced that they would be taking unprecedented actions to deal with the demand for bullion coins. This included production halts for some bullion coins and limited production for others until existing blank inventories were depleted. Read the full US Mint memo with details of the actions.

Yesterday the following memo was released announcing that starting Monday, the US Mint will resume taking orders for the remaining 1/10 oz. Gold Eagles and Platinum Eagles. The memo also provides some insight into how the US Mint will ration the remaining supplies.

October 24, 2008

MEMORANDUM TO ALL AMERICAN EAGLE BULLION COIN AUTHORIZED PURCHASERS

SUBJECT:       2008–Dated Bullion Coin Products

On Monday, October 27, 2008, the United States Mint will resume taking orders for 2008-dated American Eagle One-Tenth Ounce Gold Bullion Coins and all sizes of American Eagle Platinum Bullion Coins.

Final inventory for these bullion coins is based on current in-house blank supplies and some supplies are very limited.  The United States Mint will allocate these remaining coins among the Authorized Purchasers (APs).

The United States Mint will use a slight modification of its standard allocation process, which is as follows:

Monday morning, the inventory available for sale that week will be divided into two equal pools for each bullion coin product.

The first pool for each bullion coin product will be allocated equally to all active American Eagle Gold One-Tenth Ounce and American Eagle Platinum APs respectively (active APs are those which have purchased American Eagle Gold One-Tenth Ounce or American Eagle Platinum Bullion Coins in the past three fiscal years).

The second pool will be allocated based on each AP’s sales performance for each bullion coin product in the last three fiscal years (e.g., an AP who purchased 30% of all American Eagle Gold One-Tenth Ounce Coins during this time will be allocated 30% of this second pool).

Each AP will be advised via fax Monday morning (or if a government holiday, Tuesday morning) of its allocation, and will have until 3 p.m. on the following Friday to place an order for its allocated coins.

Any unordered coins remaining after 3 p.m. Friday will be put back into the pool for allocation the following Monday only until coin inventory for each product is depleted.

Included in the communication with each AP’s initial allocation on October 27 will be its allocation percentage based on sales performance.

Please note: The inventory for the American Eagle Platinum One-Tenth Ounce Bullion Coins is very limited and will be allocated to the Authorized Purchasers with the highest sales performances for the past three fiscal years for this product.

Available inventory will remain on allocation each week for the American Eagle Gold One Ounce and American Eagle Silver Bullion Coins.

We will keep you informed when more information becomes available for the American Buffalo Bullion Coins.

Thank you for your patience and your continued support of the United States Mint Bullion Coin Program.