December 2, 2022

Demand For Silver Bullion Coins Hits Record High On Bargain Prices

Sales of American Silver Eagle bullion coins hit an all time record high during 2011 according to production figures from the U.S. Mint.

Sales of the Silver Eagle bullion coins increased by 13.3% in December to 2,009,000 compared to last year’s sales of 1,772,000.  For all of 2011, total Silver Eagle sales came in at an all time record high of 39,868,500 ounces, up 15.0% from the prior year’s total of 34,662,500 ounces.

In addition to the silver bullion coins, the U.S. Mint also produces proof and uncirculated American Eagle silver coins which can be purchased by the public directly from the U.S. Mint.  Commencing in 2010, the U.S. Mint began producing the America the Beautiful Silver Bullion 5oz coin.  During 2011, the U.S. Mint sold 397,700 of the 5oz coins, which represents almost another 2 million ounces of physical silver demand during 2011.

The U.S. Mint does not sell the American Silver Eagle bullion coins directly to the public.  The bullion coins are purchased from the U.S. Mint by a network of authorized purchasers who in turn resell them to secondary retailers for public sale.

Monthly sales of the Silver Eagle bullion coins during 2011 are shown below.

Silver had a volatile year during 2011, reaching a high of $48.70 in April and then dropping to a low of $32.50 in May after the COMEX repeatedly raised margin requirements on silver futures (see How the COMEX Crashed The Silver Market).  After recovering to $43.49 in August, silver declined to end the year at $28.18, off 8.1% for the year.

Despite the volatility in silver prices during 2011, investor demand for physical silver remained exceptionally strong.  After the significant price pullback from the April high, many analysts and armchair commentators who never owned an ounce of silver in their life were predicting a plunge in demand for silver.  The exact opposite occurred as long term investors took advantage of what is another historic buying opportunity comparable to 2008.

The case for buying silver remains rock solid and patient long term investors have been well rewarded.  As opposed to buyers of paper silver products such as the iShares Silver Trust ETF (SLV), holders of physical silver are invested in precious metals as part of a long term wealth preservation and appreciation strategy.  While speculators in paper silver products trade in and out, usually winding up with losses from my observations, long term holders of physical silver have seen the value of their holdings rise significantly.

Silver - courtesy kitco.com

As central banks of the world continue to print money at an accelerated rate, 2012 should be a year of strong gains for both gold and silver.  A steady plan of silver and gold bullion accumulation remains a no-brainer decision.  Since 2008, sales of silver eagle bullion coins have soared.  Last year, extremely heavy demand for silver resulted in periodic product allocations by the U.S. Mint.

In an excellent article by Steve Angelo, it was shown that massive physical demand for both the American Silver Eagles and Canadian Maple Leaf coins resulted in official coin sales surpassing the total silver production of both the United States and Canada.

Expect demand for silver bullion products during 2012 to surpass the record year of 2011.  Shown below are the yearly sales figures since 2000 for the American Silver Eagle bullion coins.

American Silver Eagle Bullion Coins
YEAR OUNCES SOLD
2000 9,133,000
2001 8,827,500
2002 10,475,500
2003 9,153,500
2004 9,617,000
2005 8,405,000
2006 10,021,000
2007 9,887,000
2008 19,583,500
2009 28,766,500
2010 34,662,500
2011 39,868,500

 

US Mint Silver Eagle Bullion Sales On Pace For Record High

Since Congress authorized the production of American Eagle Bullion coins in 1986, it has become one of the easiest ways for investors to accumulate a physical position in precious metals.   American Eagle Bullion coins have been available in gold and silver since the program’s inception.  Platinum has been available under the Bullion coin program since 1997.

The bullion coins are priced at the current market price of gold, silver or platinum plus a dealer markup.  The US Mint does not sell the bullion coins directly to investors but instead sells the coins to a network of Authorized Purchasers who resell  the coins to the public.  Unlike commemorative or numismatic coins, the bullion coins will closely track the price of the underlying precious metal making it easy for investors to follow the value of their bullion holdings.

The American Eagle Silver bullion coin is available only in the one ounce size and is particularly attractive to small investors as a cost effective way to hedge against inflation and debasement of paper money.  The US Mint’s American Silver Eagle Bullion program has been successful from the start.  The first year’s sales of bullion Silver Eagles in 1986 was 5,096,000.

Between 1987 and 2007 sales of the Silver Eagle averaged 7.1 million coins per year.  The lowest year on record for sales was in 1996 when sales of the coin were only 3.6 million.  Since 1986, sales of the American Silver Eagle  exceeded 10 million coins only two times during 2002 and 2006.

The financial crisis of 2008 resulted in a surge of Silver Eagle sales as worries intensified over the integrity of paper money and the soundness of the financial system.   During 2008 Silver Eagle sales soared to 19,583,500 coins which was a record high.  In 2009, sales continued to explode reaching 28,766,500 coins and 2010 was another year of record sales at 34,662,500.

Year to date sales of the Silver Eagle bullion coins during 2011 has now reached 25,530,000.  Based on average monthly sales during 2011, sales for the entire year could easily reach 42 million coins, up 20% over last year.

Investors in silver have preserved their purchasing power and increased their wealth.  As previously discussed, the dip in silver prices during May was a buying opportunity and silver prices should be hitting all time highs before year end (see How Soon Will Silver Hit New Highs?).

American Silver Eagle Bullion Sales 2011

 

 

2011 American Silver Eagle Release Date

Sales of the 2011 Silver Eagle bullion coins will begin on Monday, January 3, 2011. This will mark the first day that authorized purchasers may place orders for the coins with the United States Mint.

The American Silver Eagle has been issued in bullion format each year since 1986. Each coin contains one troy ounce of .999 fine silver, with the weight and purity guaranteed by the United States government. The program was authorized by Congress to provide a convenient and cost effective method for Americans to invest in physical precious metals.

The United States Mint sells bullion coins to a small group of official distributors who resell the coins to secondary retailers who in turn sell to the public. This authorized purchaser system is believed to be the most effective and efficient means of distributing the coins to the public, although recently this has been called into question.

Under typical procedures, the group of eleven primary distributors will be able to place orders for 2011 Silver Eagle bullion coins directly with the US Mint. The price paid will be based on the London Silver Fix on the first business day following the order, plus a premium of $2.00 per coin. Minimum order requirements are for 25,000 ounces of silver per order, with orders above the minimum placed in 500 ounce increments.

The bullion Silver Eagles are packaged in plastic tubes containing 20 one-ounce coins. Twenty five tubes are placed into molded plastic shipping containers, containing 500 ounces of silver. The plastic tubes and shipping containers are imprinted with the United States Treasury Department Seal.

The United States Mint is currently selling 2010-dated Silver Eagles. If any inventory of these coins remains on January 3, 2011, the prior year coins will be sold on a ratio basis for any primary distributors placing orders for coins bearing the new date.