November 26, 2022

U.S. Mint Runs Out of Silver Bullion Coins – Gold and Silver Coin Sales Hit Record Levels in November

rooseveltLong term proponents of sound money cannot seem to get enough of U.S. Mint produced gold and silver bullion coins.  Ever since the financial crash of 2008 many Americans remain profoundly skeptical of the paper dollar system backed by the “full faith and credit” of a nation that has borrowed itself into poverty and promised more in social benefits than the economy can possible provide.

From 2000 to 2007 sales of the U.S. Mint American Eagle gold bullion coins averaged about 341,000 ounces annually.  After the crash of 2008 exposed the risk of paper assets, sales of the gold bullion coins have averaged about 1,011,300 ounces annually from 2008 to 2013.

Year to date sales of the American Eagle gold bullion coins as of the end of November totaled 800,500 ounces, surpassing total 2012 sales of 753,000 ounces.  For November the U.S. Mint sold 48,000 ounces of gold bullion coins, slightly below the sales figures of 48,500 for the previous month.  Since 2000 investors have stashed away 8.8 million gold bullion coins currently worth about $11 billion.

Gold has retained its value throughout human history and strong demand for gold over the ages has resulted in the depletion of most gold deposits on the planet.  As noted in a previous post, about 75% of all gold deposits have already been mined which forebodes a future gold shortage.

american-silver-eagleAs noted in a previous post, sales of the U.S. Mint American Eagle silver bullion coins hit record annual sales volume in  November.  The U.S. Mint sold a total of 41,475,000 silver bullion coins as of November 30th, surpassing the previous record sales year of 39,868,500 coins in 2011.

Sales of the American Eagle silver bullion coins for November came in at 2,300,000, a decline of 787,000 coins compared to 3,087,000 in the previous month.  The lower sales figures for November do not reflect a drop in demand for silver bullion coins but rather the opposite due to the fact that the U.S. Mint has run out of coins due to unprecedented demand.

This same shortage situation existed last year when the Mint ran out of silver bullion coins in mid December  with orders for the new 2013 silver bullion coins not being accepted until January 7, 2013.  This situation resulted in a three week period during which the American Eagle silver bullion coins were simply not available.

The period of time during which silver bullion coins will be unavailable from December 2013 to January 2014 will be even longer than last year.

peace dollar

According to coinupdate.com silver bullion coins will not be available for investor purchase for over a month and supplies will be rationed when available.

The United States Mint recently provided authorized purchasers with information on year end ordering procedures and the availability of 2014-dated releases for the American Eagle and American Buffalo bullion programs. Based on the details provided, it seems that the American Silver Eagle bullion coins will experience roughly one month of unavailability between the final allocation of 2013-dated coins and the release of the first 2014-dated coins.

The situation for American Silver Eagle bullion coins differs from the prior year. Authorized purchasers will be offered the last weekly allocation of 2013-dated coins on Monday, December 9, 2013. With demand continuing to run ahead of the available supplies, the allocation will likely be quickly depleted.

The 2014-dated Silver Eagle bullion coins will not be available to order until Monday, January 13, 2014. The initial release will be subject to the US Mint’s allocation program, which rations supplies amongst the authorized purchasers.

With such a severe shortage of silver bullion coins, expect buyer premiums to increase significantly over the next two months.

U.S. Mint Silver Bullion Coin Sales Hit Record High

proof-silver-eagleAs discussed in a previous post, sales of the American Eagle silver bullion coins were on track to post record sales volume in 2013.  It’s now official – sales of U.S. Mint silver bullion coins surged past the old record set in 2011 and are track to hit a record high of 45 million ounces in 2013.

According to the U.S. Mint year to date sales of the American Eagle silver bullion coins total 40,175,000.  The previous record was set in 2011 when sales of the silver bullion coins came in at 39,868,500.  Based on monthly sales volume, the U.S. Mint might sell an additional 5 million coins by year end.

The American public loves the American Eagle silver bullion coins and can’t seem to get enough of them.  After an exuberant rise to almost $50 per ounce during 2011 silver has corrected in price to the low $20’s.  Although the decline in silver has elicited numerous bearish commentary in the mainstream press, long term investors seem to be doubling down as the price of silver price has become irresistibly cheap.  Yearly sales of the silver bullion coins have increased by almost 500% since 2008.

Total yearly sales of the American Eagle silver bullion coins are shown in the chart below with the 2013 total as of November 12, 2013.

2013-W Proof Silver Eagle

proof-silver-eagle

In addition to the silver bullion coins the U.S. Mint produces a proof silver eagle coin.  According to the Mint News Blog the 2013-W Proof silver Eagle has already sold out and 2013 is the third year in a row that this popular product has sold out well before year end.

Sales for the 2013 Proof Silver Eagle originally began at the US Mint on January 24, 3013. Opening orders were slower compared to the prior two years, however the pace of orders remained brisk throughout the year. The coin typically represented one of the US Mint’s top sellers on the weekly sales reports.

Recently, weekly sales had spiked, with 29,613 units orders in the previous reporting period and an indication of 29,025 units ordered in the week just ahead of the sell out. Sales data shows total orders at 880,030 units. This is a bit higher than recent prior years.

In 2011, the individual proof Silver Eagle had sold out on November 22 after reaching sales of 850,000. In 2012, the sell out had occurred on November 13 when sales had reached 819,217.

The American Eagle silver bullion coins cannot be purchased by individuals directly from the U.S Mint.  The coins are sold only to the Mint’s network of authorized purchasers who buy the coins in bulk based on the market value of silver and a markup by the U.S. Mint.  The authorized purchasers sell the silver coins to coin dealers, other bullion dealers and the public.  The Mint’s rationale for using authorized purchasers is that this method makes the coins widely available to the public with reasonable transaction costs.

1881-CC-Morgan-Dollar

The U.S. Mint American Eagle silver bullion coins remain a popular method of building wealth with periodic purchases.  The American public can’t seem to get enough of the bullion coins and the desperate actions of global central banks to keep the financial system afloat with a deluge of paper money can only cause more financial anxiety and more silver purchases going forward.

American Silver Eagle Coin Sales On Verge of Record Shattering Year

american-silver-eagleThe American public’s love affair with the U.S. Mint American Eagle silver bullion coin continues unabated.   Ever since the financial meltdown of 2008 there has been an explosion in demand for the silver coins.  Average yearly sales of the silver bullion coins have increased by almost 500% since 2008 and sales for 2013 are on the verge of shattering all previous yearly sales records.

According to the U.S. Mint, sales of the American Eagle silver bullion coins totaled 3,087,000 ounces for October up slightly from September monthly sales.   Demand for the silver coins has remained robust throughout the year and total annual sales at the end of October reached 39,175,000 million ounces.

The all time yearly sales record for American silver bullion coins was 2011 when sales hit 39,868,500 ounces.  Based on current monthly sales the total number of silver coins sold in 2013 should be in the neighborhood of 45,000,000 ounces or almost 13% higher than the record hit in 2011.

Total yearly sales of the American Eagle silver bullion coins are shown in the chart below with the 2013 total through the end of October.

The market value of all silver bullion coins purchased since 2000 is $5.9 billion.  We know that silver prices will fluctuate over the years.  We also know that the “all mighty government” cannot produce silver coins by the trillions like they do with the U.S. dollar.  Based on the irresponsible financial conduct of both the Federal Reserve and the Federal government, is it any wonder that citizens are voting with their pocketbooks and moving into real stores of value such as silver?

SILVER DOLLARSThe American Eagle silver bullion coins cannot be purchased by individuals directly from the U.S Mint.  The coins are sold only to the Mint’s network of authorized purchasers who buy the coins in bulk based on the market value of silver and a markup by the U.S. Mint.  The authorized purchasers sell the silver coins to coin dealers, other bullion dealers and the public.  The Mint’s rationale for using authorized purchasers is that this method makes the coins widely available to the public with reasonable transaction costs.

The U.S. Mint American Eagle silver bullion coins remain a popular method of building wealth with periodic purchases.  The American public can’t seem to get enough of the bullion coins and the desperate actions of global central banks to keep the financial system afloat with a deluge of paper money can only cause more financial anxiety and more silver purchases going forward.

Silver Soars On Strong Physical Demand and Bargain Prices

proof-silver-eagle3There is no denying that it has been a really tough year for silver investors with silver dropping from $32.23 in January to a yearly low of $18.61 in June.  Is the silver price correction finally over?  The ridiculously low price of silver has resulted in a strong surge of demand worldwide and the price of silver has soared by 23% since the June low.

No one knows if the three year bear market in silver is finally over but investors seem to have made up their minds that the current price of silver is at give away levels.  The World Gold Council reported last week that bar and coin purchases rose to record levels last quarter.  Silver demand in India and China remains very strong and U.S. investors have been buying American Eagle silver bullion coins at a record pace.

Sales by the U.S. Mint of the American Eagle silver bullion coin may hit an all time record this year based on year to date sales data.  The all time record year for sales of the silver bullion coins was in 2011 when the Mint sold almost 40 million one ounce coins.

Sales of the silver bullion coins since 2000 are shown below with sales for 2013 as of July 31st.

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
2012   33,742,500
2013   29,450,000

TOTAL 261,593,000

With sales of almost 30 million coins through July, annualized sales based on monthly sales to date would result in a record smashing year with investors purchasing over 50 million American Eagle silver bullion coins.  With governments worldwide printing money to prop up a financial system overwhelmed by debt it’s probably a very safe bet that the price of silver will continue to increase in price.

Since 2000 investors have bought over a quarter of a billion silver eagle bullion coins with a current estimated value of over $5.7 billion.  The U.S. Mint American Eagle bullion coin program has been one of the most successful mint products ever produced.

The Price Correlation Between Silver and Crude Oil

1881-CC-Morgan-DollarBy: GE Christenson

Crude Oil bottomed (weekly data) about 12/25/1998 at $10.75. It rose erratically for several years, hit another low on 8/24/2007 at $68.70, and then rallied dramatically to an all-time high of $147.20 on 7/11/2008. Subsequently, crude collapsed to $35.35 on 12/26/2008.
High to Low Ratio: 147.20 / 10.75 = 13.69
Total time: 12/25/98 to 7/11/08 = 9.55 years
Final blow-off Ratio: 147.20 / 68.70 = 2.14
Time for Blow-off: 8/24/07 to 7/11/08 = 0.88 years
Collapse Ratio: 35.35 / 147.20 = 0.24
Collapse time: 7/11/2008 to 12/26/2008 = 0.46 years

Silver bottomed (weekly data) about 11/23/2001 at $4.01. It rose erratically for several years, hit another low on 2/5/10 at $14.78, and then rallied dramatically to a nearly all-time high of $48.58 on 4/29/2011. Subsequently, silver collapsed to $18.53 on 6/28/2013.
High to Low Ratio: 48.58 / 4.01 = 12.11
Total time: 11/23/01 to 4/29/11 = 9.44 years
Final blow-off Ratio: 48.58 / 14.78 = 3.29
Time for Blow-off: 2/05/10 to 4/29/11 = 1.23 years
Collapse Ratio: 18.53 / 48.58 = 0.38
Collapse time: 4/29/11 to 6/28/13 = 2.17 years

So What?

Both crude and silver took about 9.5 years to rally from a significant low to an important high. The high to low ratios were similar – over 13 and over 12. Both collapsed after their blow-off highs and fell 76% and 62% from their highs. Crude rallied during the next four years and is now over triple its crash low. Silver, a much smaller and more volatile market, seems likely to do something even more dramatic.

Questions

Assume market prices for crude oil are based on supply and demand of physical crude oil. Do you think supply and demand for physical crude oil changed sufficiently between the crude low in August of 2007 to the high in July 2008 to the low in December 2008 to justify a rise from $68.70 to $147.20 and then a fall to $35.35?

Answer one: Obviously it did; the market price changed and the market price is always correct.

Answer two: Perhaps politics, High Frequency Trading (HFT), and derivatives also affected the supply and demand of paper contracts for crude such that the price of crude more than doubled and then collapsed by 76% in about 1.3 years.

You choose the best answer.

Assume market prices for silver are based on supply and demand. Do you think supply and demand for physical silver metal changed sufficiently between the silver low in February 2010 to the high in August 2011 to the low in June 2013 to justify a rise from $14.78 to $48.55 and then a fall to $18.53?

Answer one: Obviously it did; the market price changed and the market price is always correct.

Answer two: Perhaps politics, High Frequency Trading, and derivatives also affected the supply and demand of paper contracts for silver such that the price of silver more than tripled and then collapsed by 62% in about 3.4 years.

You choose the best answer.

Why Discuss This Parallel?

Sentiment for silver and gold was (June 2013) exceptionally low – at multi-year or multi-decade lows depending on who is measuring sentiment. As of the end of June 2013 there seemed to be “no light at the end of the tunnel” for silver bulls and there was no joy in “silver-ville.” Most people I know wanted nothing to do with silver or gold.

It was about the same with the crash low in crude 4.5 years ago in December of 2008 and the S&P500 crash low in early 2009. But the world economies demanded crude oil while the supply was flat or declining. Consequently the price rallied back to over $105 this month – about triple its collapse low price.

I think it is quite reasonable to expect that silver will also rally substantially from here. In fact an explosive rally would not be surprising. What seems likely is a multi-year rally (that culminates in another price blow-off) to four or six (or ten) times the low price in June, the inevitable price collapse, and then some months or years in a trading range at prices that make sub-$20 silver look like an absolute bargain. I suppose that if the US congress balances the budget AND world peace is confirmed, then silver prices are unlikely to rally… but I would rather bet on higher silver prices.

How are crude oil and silver similar?

Both had a nine plus year rally to a blow-off peak, collapsed, and rose again. Crude began its rally about three years before silver, and peaked about three years earlier. Both are essential for modern economies and their prices on the paper exchanges are heavily influenced by politics, HFT, and derivatives. The supply of crude is probably declining and the supply of silver is growing quite slowly. The world-wide demand for crude is likely to increase, even with slowly growing economies. The world-wide demand for silver is likely (my opinion) to dramatically increase due to increasing industrial demand and potentially explosive investor demand. There is good reason and good historical precedent to expect the price for both commodities to increase substantially, with great volatility.

Do you remember when crude was priced under $5.00 per barrel and silver was priced under $2.00? Given the penchant for governments around the world to run huge deficits, amass unpayable debt, and increase the money supply (monetize bonds) in seemingly unlimited quantities, do you think either $250 crude or $100 silver is unlikely in the next several years?

Neither do I!

We will see $250 crude, $10 gasoline, and $100 silver, unless the world’s economies and governments become responsible and accountable.

Have you purchased your Silver Eagles today?

Read: Silver – Keep It Simple
Read: Gains In Silver Will Be Historic

GE Christenson
aka Deviant Investor

How To Buy Physical Silver With A Zero Chance Of Loss

silverAnything that sound too good to be true, well, you know how that ends.

But there actually is a way to purchase physical silver with a zero chance of loss, courtesy of the Royal Canadian Mint (RCM).

For the first time ever, the RCM is offering a coin with a face value of $100 at a price of $100.  Here are the details courtesy of the mintnewsblog.

Following the success of their “$20 for $20″ silver coin program, the Royal Canadian Mint has launched a new series which uses the same concept for a larger face value.

Orders are now being accepted for the first “$100 for $100″ silver coin, which is the initial release for the Wildlife in Motion series. The RCM indicates this is the first time in history that $100 can buy a coin worth $100.

Buffalo $100 Silver Coin

The reverse of the coin designed by Claudio D’Angelo features three members of a herd of stampeding bison racing across the grassy prairie. The bison are pictured in profile, illustrating the movement and momentum of the massive creatures. The background shows foothills which are backed by a jagged mountain with clouds above. The inscriptions read “Canada 2013″ and the legal tender face value of “$100 Dollars”.

The obverse of the coin features the portrait of Queen Elizabeth II designed by Susanna Blunt.

The 2013 $100 for $100 Bison Silver Coin is struck in 99.99% pure silver with a weight of 31.6 grams (1.016 troy ounces) and diameter of 40 mm. The maximum mintage is limited to 50,000 pieces with a limit of three coins per household.

These coins are available for sale priced at their face value of $100 CAD. The product page can be found here.

This is about as close to a sure thing as you can find in life.  The coin will always have a value of $100. If silver prices increase to $200 per ounce, the coin would be worth about $200 based on the silver content of 1.016 troy ounce.

U.S. Mint Runs Out of Gold Bullion Coins

tenth oz gold-eaglesWe already knew from numerous previous reports that demand for physical gold and silver has soared since the early April precious metals crash.  Further confirmation of vanishing physical gold and silver inventory was provided today by the Untied States Mint.  Authorized purchasers of gold and silver bullion coins were informed by the U.S. Mint that sales of the one-tenth ounce American Eagle bullion coin would be immediately suspended due to depleted inventories of the coin.

As short term paper speculators run from the precious metals markets, long term investors have been lining up around the block to buy physical gold and silver.  Numerous coin and bullion dealers have reported growing shortages of gold and silver and premiums have expanded as demand overwhelms supply.

Based on mid month sales reports for the American Eagle gold bullion coins, it looked like monthly sales would exceed 167,000 ounces, the highest since December 2009 when the financial system was still in a meltdown.  As of today, U.S. Mint sales of gold bullion coins has reached 183,500 ounces, an astonishing increase of 818% over the prior year’s monthly sales of 20,000 ounces.  April sales to date have increased by 196% over March sales.  For all of 2012, average monthly sales of the American Eagle gold bullion coin were 62,750 ounces.  Gold bullion coin sales by the U.S. Mint are shown below; figures for 2013 are through April 23rd.

 

Gold Bullion U.S. Mint Sales Since 2000
Year Total Ounces Sold
2000 164,500
2001 325,000
2002 315,000
2003 484,500
2004 536,000
2005 449,000
2006 261,000
2007 198,500
2008 860,500
2009 1,435,000
2010 1,220,500
2011 1,000,000
2012 753,000
2013 476,000
TOTAL                                      8,478,500

Sales of the American Eagle silver bullion coins, which had already been selling briskly before the April silver smash-down, continue to sell at a rapid pace.  Total monthly sales as of April 23rd have reached 3,232,000 ounces, almost as much as the previous month’s total and 112.6% higher than the comparable month of 2012.

The steep correction in gold and silver prices that occurred in early April has certainly not disturbed the fundamental long term reasons for buying precious metals.  Expect the buying stampede to continue.

Silver Bullion Coin Sales Heading for Record Highs In 2013

Sales of the American Eagle silver bullion coins soared in March, continuing a trend of record breaking sales that has been in force for the past five years.

american-silver-eaglePrior to the financial crisis, sales of the one ounce American silver eagles averaged about 10 million coins per year.  The near collapse of the financial system in 2008 raised profound questions about the integrity of the financial system and the rush to precious metals was on.  Since 2008, annual sales of the American Eagle silver bullion coins have soared with average annual sales of over 31 million coins.

According to the U.S. Mint, sales of the American Eagle silver bullion coins totaled 3,356,500 ounces in March, up 32% from comparable sales of 2,542,000 ounces during March 2012.   Total sales of 14,223,000 ounces through March 31, 2013 soared by 40.3% over the comparable prior year period.

The previous record year for silver bullion coins was in 2011 when 39,868,500 coins were sold. The 2011 record may wind up looking like a low number compared to projected total sales for 2013.  Based on sales for the first three months of the year, annualized sales for 2013 could hit a record shattering 57 million ounces although even this estimate may be too low.  As the slow motion collapse of the European banking system speeds up, the looming specter of  huge losses by bank depositors could create a total loss of confidence in paper money and ignite a panic move into gold and silver.

The U.S. Mint has vastly underestimated demand for the American Eagle silver bullion coins and was recently forced to suspend sales twice as physical demand for silver soared (see U.S. Mint Sold Out).

Since 2000, investors have purchased almost a quarter billion ounces of silver bullion coins from the U.S. Mint, worth almost $7 billion based on the current price of silver.

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

2012

33,742,500

2013

14,223,000

TOTAL

            246,366,000

Total sales for 2013 are through March 31, 2013.

COMEX Price Manipulation Forces Silver Price Down Despite Demand Increase

By: Mike McGill of Liberty Gold and Silver

Let’s begin with a definition. Investopedia.com defines the Law of Supply and Demand as follows:

The effect that the availability of a particular product and the desire (or demand) for that product has on price. Generally, if there is a low supply and a high demand, the price will be high. In contrast, the greater the supply and the lower the demand, the lower the price will be.

A solid definition, agreed? The Law of Supply and Demand should be the core premise of all economic studies as it has proved itself to be historically true.

How can we explain what has happened recently with the price of silver? In about three months, silver has declined from its late-November price of about $34 per ounce to its current price of about $28.50 as of today’s close (February 28, 2013). That’s a drop of about $5.50, which equates to a decline of over 16% in about 90 days. An economist with a solid grounding in the supply and demand theory, when viewing this decline, would have to conclude one of two things. Either the supply of silver had recently rapidly expanded or the demand for the precious metal had substantially decreased over the same period. These would appear to be the only logical explanations for this situation.

However, in the alternate universe of manipulated markets, insane derivatives, massive criminal fraud in both the banking and commodities markets, central bank machinations with currency handouts, and complete dereliction of duty on the part of regulatory bodies, it seems that the basic laws of economic price discovery no longer apply.

We need to ask ourselves how is it possible for the price of silver to undergo a substantial drop in price while simultaneously experiencing extremely tight supplies and burgeoning demand. In order to make a professional inquiry regarding this conundrum, we will dispel all the blather from the CNBC crowd that precious metals are in a bubble (they are NOT; both gold and silver remain firmly in a ten year upward channel of growth) and adopt an attitude like Dragnet’s Sergeant Friday, “Just the facts, ma’am, just the facts.”

Here are those facts:

In 2012, silver sales soared. The US Mint reported that the sale of American Silver Eagle bullion coins topped off at the third highest annual total in the twenty-seven year history of the series. Just past mid-December, the US Mint told its distributors that it had “sold all remaining inventories of 2012 American Eagle Bullion Coins,” adding that “no additional coins will be struck.” Until the sell-out, Silver Eagles were on pace to eclipse the second best annual sales in history. Even more amazing was the ratio of sales of Silver versus Gold Eagles – over fifty to one. In total dollars, the sale of Silver Eagles almost matched that of Gold Eagles – nearly 98%.

In January of this year, the sale of Silver Eagles was tremendous. So strong was the demand that the US Mint notified all its distributors shortly past mid-month that it had halted all new orders because it had run out of bullion supply. Despite two production shutdowns in January, the US Mint sold a record breaking 7.13 million Silver Eagles in ONLY TEN BUSINESS DAYS, shattering the previous monthly record set in 2011. Currently, the US Mint is on allocation rationing to its distributors – and we’re into this year only eight weeks!

Another instance of extreme silver shortage that has seen little to no reporting is the near total annihilation in the availability of “junk silver” (pre-1965 US silver coins). As of the beginning of this week, almost none could be found anywhere in the country except in extremely tiny amounts. Nearly every wholesaler and retailer in the nation was completely sold out. Waiting time for orders is at least a month with six weeks being quoted as a reliable delivery date.

Just a week ago, it was reported that Apple will be delaying its new 21.5 iMacs because of a shortage of silver in China. Silver is used extensively in iMacs. The production delays are already three months and counting.

On the demand side of this equation, wholesale premiums over the silver spot price have risen as much as six-fold in the past two months. Retail mark-ups for these coins have never been greater since the 1980 high when silver topped $50.

What is one to conclude with this incredible contradiction of drum-tight silver supply and record breaking demand weighed against a silver price decline of nearly 16% in the last three months? It is difficult not to conclude that there has been market intervention and/or price manipulation occurring.

As we’ve reported several times over the last few years, the spot price of precious metals is set almost entirely by the bid-ask trading action in the world’s commodity pits, principally the COMEX in New York and the London Bullion Market Association. These exchanges have been notorious for allowing massive naked short selling by large investment banks such as JPMorgan Chase and Goldman Sachs without these firms having to post either the normally required margin deposits or having adequate silver on deposit with these exchanges to satisfy delivery requirements for those traders who might wish to take physical delivery of the silver upon contract expiration. Both of these activities are violations of the rules of the futures exchanges involved as well as federal requirements that are supposed to be enforced in the US by the Commodities Futures Trading Commission (CFTC). The CFTC itself has been repeatedly accused by the Gold Anti-Trust Action Committee (GATA) and many others of being derelict, if not outright complicit, in allowing these trading violations to continue. Link is here.

What we’re seeing is a big disconnect between silver’s paper price and its actual physical availability. It is not inconceivable that what is occurring is similar to what happened to markets in the old Soviet Union. The communist ruled markets quoted cheap prices for products that were chronically in short supply. The real market, the “black market,” was where you could purchase real goods with fair price discovery. When this dichotomy completely broke down, so did the Soviet Union. It is not difficult to foresee that a breakdown and growing distrust of the paper silver markets could well cause a price explosion in physical silver.

We have been warning for years that paper markets in general and precious metals markets specifically, should be viewed with suspicion, as they all contain counter party risk, which cannot be honored. The only sure way to fully protect oneself is to own physical coins and bullion. Do it today while the “paper price” is still low.

Gold and Silver Bullion Coin Sales Soar In February

Sales of both the American Eagle gold and silver bullion coins soared in February compared to the previous year.

According to the U.S. Mint, sales of the American Eagle gold bullion coin totaled 80,500 ounces in February, up 283% from comparable sales of 21,000 ounces during February 2012.  During January, the Mint sold 150,000 ounces of the gold bullion coins compared to 127,000 ounces during January 2012.  January gold bullion sales were the six largest on record and the most since July 2010 when the Mint sold 151,500 ounces.

Total 2013 sales of the American Eagle gold bullion coin through February are up 56% over the comparable period for last year.  Year to date, the U.S. Mint has sold 230,500 ounces of gold bullion coins compared to a total of 148,000 ounces during the first two months of 2012.

The American Eagle gold bullion coin is available in one ounce, one-half ounce, one quarter ounce and one-tenth ounce versions.   The vast majority of gold bullion coins are purchased as one ounce coins as can be seen from the February sales breakdown listed below.

FEB 2013 GOLD BULLION SALES
OUNCES # COINS
ONE 68,000 68,000
HALF 2,500 5,000
QUARTER 3,000 12,000
TENTH 7,000 70,000
80,500 155,000

Sales of the American Eagle silver bullion coin also remained robust after last month’s record shattering sales total.  During January, the U.S. Mint sold 7,498,000 silver bullion coins as public demand for physical silver coin soared.  The huge demand for the American Eagle silver coins forced the U.S. Mint to suspend sales twice as they sought to ramp up production to meet demand.  Ever since the financial crisis and the subsequent open ended money printing operations by the Federal Reserve, demand for physical silver has continued strong.   Prior to 2008, total annual sales of the silver bullion coins averaged only around 9.5 million coins.  During 2012, the U.S. Mint sold 33,742,500 silver bullion coins.

During February, the U.S. Mint reported that 3,368,500 American Eagle silver bullion coins were sold, an increase of 126% over sales of 1,490,000 ounces during February 2012.  Year to date sales of the silver bullion coins through February total 10,866,500, up by 43% over the comparable two month period during 2012 when 7,597,000 silver bullion coins were sold.

Long term investors are taking advantage of temporary price weakness in precious metals to add to positions (see APMEX Reports Sales Spike).   Virtually every major central bank in the world is now engaged in open ended money printing operations and blatant attempts to competitively devalue their currencies.  The public is not stupid and continued demand for physical gold and silver proves that gold and silver are becoming the default store of value.

Both the American Eagle gold and silver bullion coins are sold to the Mint’s network of authorized purchasers who buy the coins in bulk based on the market value of the precious metals and a markup by the Mint.  The public is not allowed to purchase bullion coins directly from the Mint but are allowed to buy numismatic versions of the coins.  The gold and silver bullion coins are sold by the authorized purchasers to the public, other bullion dealers and coin dealers.  The rationale for the Mint’s use of authorized purchasers is that this method makes the coins widely available to the public with reasonable transaction costs.