July 5, 2022

US Mint Gold and Silver Bullion Coin Sales By Month

Through the end of April, the United States Mint has now sold 466,000 ounces of gold and 16,375,000 ounces of silver through its bullion coin programs. In both cases the figures are far ahead of the numbers from the comparable year ago period, despite the higher market price per ounce for the bullion.

Last year through the end of April, US Mint gold bullion sales were 388,000 troy ounces, while the price of gold ranged from a low of $1,058.00 to a high of $1,179.25 per ounce. Silver bullion sales during this period were 11,531,000 with the market price ranging from a low of $15.14 to a high of $18.84 per ounce.

US Mint Gold and Silver Bullion Sales (in ounces)

January February March April Total
American Gold Eagle 133,500 92,500 73,500 108,000 407,500
American Gold Buffalo 38,000 20,500 58,500
Total Gold in ounces 133,500 92,500 111,500 128,500 466,000
American Silver Eagle 6,422,000 3,240,000 2,767,000 2,819,000 15,248,000
ATB Silver 1,127,000 1,127,000
Total Silver in ounces 6,422,000 3,240,000 2,767,000 3,946,000 16,375,000

During the latest month of April 2011, the US Mint recorded sales of 128,500 troy ounces of gold bullion, comprised of 108,000 ounces worth of American Gold Eagles and 20,500 ounces worth of American Gold Buffaloes.

Meanwhile, silver bullion sales for the latest month reached 3,946,000 ounces, the second highest level of the year. For three months running, the pace of sales for the American Silver Eagles had remained approximately the same base level, despite indications of higher demand. The restrained sales are presumably the impact of the US Mint’s allocation program, which rations the available number of bullion coins amongst the authorized purchasers.

The boost in silver bullion sales seen in April was due to the release of the 2011-dated America the Beautiful Silver Bullion Coins. These coins each contain five troy ounces of silver and have a diameter of 3 inches. Sales began on April 25, 2011, and authorized purchasers immediately purchased coins accounting for 1,127,000 troy ounces of silver.

Silver Institute Details Silver Demand and Supply Fundamentals

According to the  just released World Silver Survey published by the Silver Institute, global investment and fabrication demand were the primary factors that pushed silver prices higher in 2010.  Of major note among the many statistics released by the Institute, is the fact that despite rising prices and increased demand, mine production of silver rose by only 2.5% during 2010.

The Silver Institute survey showed increased demand during 2010 despite a 38% average increase in the price of silver to $20.19.   The increase in silver prices during 2010 was the largest price gain since 1980.

Silver investment, one of the largest categories of silver demand, rose by 40% during 2010 to 279.3 million ounces, almost double the amount for 2009.

The amount of silver held by silver ETFs rose to 582.6 million ounces during 2010, an increase of 114.9 million ounces over 2009.  The largest increase in silver holdings was by the iShares Silver Trust (SLV) which accounted for 40% of the total increase.

Demand for physical silver reached new milestones in 2010.  Silver used in coin and medal production rose by 28% to 101.3 million ounces.  Sales of  U.S. Silver Eagles reached 34.6 million, far ahead of the previous record of 29 million reached in 2009.   Sales of bullion coins by mints in Australia and Canada also hit new highs.  Investors also purchased 55.6 million ounces of silver in the form of bullion bars during 2010.

Silver fabrication demand hit a ten year high of 878.8 million ounces, an increase of almost 13% over 2010.  Industrial applications increased by almost 21% to 487.4 million ounces.  Jewelry increased by 5%, showing the biggest increase in demand since 2003.  Photography was the only category that experienced a decline with usage falling by 6.6 million ounces.

The Silver Institute notes that demand for silver in industrial application is particularly strong in electronics and thermal applications.  New industrial applications using silver are expected to account for an additional 40 million ounces of demand by 2015.    Silver’s unique chemical properties are constantly leading to new industrial demand, one example being the development of products using silver as an antibacterial agent.

The increased demand for silver has encouraged new mine exploration and production.  Nonetheless, despite efforts by mining companies, silver production increased by a very modest 2.5% during 2010 to 753.9 million ounces.  The largest silver producer in 2010 was Mexico, followed by Peru, China, Australia and Chile.

Silver from above ground stocks increased to 142.9 million ounces due to a 14% higher scrap supply, net producer hedging and a significant increase in sales from government stocks to 44.8 million ounces.  The primary seller of government silver stocks was Russia.

Silver has had a recent pullback after extraordinary gains over the previous two years.   Some experts see a buying opportunity.   Michael Haynes, CEO of AMPEX, one of the country’s largest precious metals dealers, commented on the silver pullback in an interview with CNBC.  According to Mr. Haynes “The Middle America, the individual investor across the world is just now beginning to take hold of this concept and they’re not day traders. They’re not looking to buy today and sell this afternoon, sell next week. They have a long time frame; 3 to 5 years. So they’re purchasing this asset, not because they want to make money today, but they are looking at it almost like an insurance policy or a hedge against the rest of their portfolio.”

APMEX CEO Says No Bullion Shortage

Despite recent volatility, gold and silver prices continue to push to new highs.  After a brief pullback on earlier this week, silver rebounded strong and once again approaches the $50 level. Gold, which has lagged the price gains in silver, recently rose to a fresh all time high and remains solidly above the $1,500 level.

The rapid rise in silver prices has resulted in the Chicago Mercantile Exchange increasing the margin requirements on silver futures for the third time.  The press provided numerous accounts of traders taking huge positions in bearish silver puts.  Silver also faces the psychologically important barrier of $50 per ounce.   During the last great silver bull move of the early 1980’s silver rapidly collapsed from the $50 range and subdued for decades.

Despite the calls for a major correction by silver bears, the metal remains near all time highs and there have been numerous press reports of a physical shortage of silver based on intense investor demand.

Indications of a supply/demand imbalance in the bullion markets can be seen in many areas.   The US Mint has been rationing Silver Eagle bullion coins to its authorized purchasers and earlier this year the Royal Canadian Mint admitted that it was having major problems in sourcing adequate supplies of silver due to high demand.  The spot price of physical silver is trading above the price of futures contracts (known as backwardation) and this is an indication of huge physical demand.  In addition, earlier this week, APMEX, a major precious metals dealer, offered to buy bullion at a generous premium from its customers and cited “incredible demand” for gold and silver bullion products.

Although APMEX says there is no supply/demand imbalance, they recently increased their buy price for some US Mint bullion products. In particular, they are offering $3 over spot silver for one ounce American Silver Eagles. This is higher than the company’s cost of acquisition directly from the United States Mint, which sells the coins at $2 over spot to authorized purchasers.

In order to get a better assessment of the precious metal markets and supply/demand situation in bullion products, Gold and Silver Blog interviewed Michael Haynes, the CEO of American Precious Metals Exchange (APMEX).

When asked about the high prices APMEX is offering for Silver Eagles, Haynes said, “APMEX had not made a general offer to the customer base in quite some time and it seemed logical to remind the customers that APMEX has a need to buy. With respect to prices on Silver Eagles, you rightly describe that APMEX is offering more than the Mint sell price and you also rightly observe that the Mint is allocating product. As previously discussed, APMEX supplements its buying needs from the secondary market. Therefore, APMEX is buying at the bid offered to the customers and as mentioned above, APMEX would rather buy from its customers than a commercial dealer”.

Thus, despite the challenges experienced in other sectors of the market, from APMEX’s perspective they are able to obtain adequate supplies to meet customer demand.   Michael Haynes noted that APMEX is “currently able to buy the products needed to maintain adequate inventories for customers”.

Michael Haynes also provided insights into current customer buying trends.  According to Mr. Haynes, “average order sizes are increasing slightly, but that may be attributed to higher prices of the underlying product.  Recently, the purchases have shifted slightly toward silver”.  There has been no dramatic changes in customer buying patterns related to product size or premium according to Mr. Haynes.

Addressing  the appreciation in precious metals prices, Mr. Haynes noted that “APMEX sales seem to rise in either a rising market or a declining market.  The customers that purchase under those different scenarios are different, in that new customers tend to purchase on increases and mature customers tend to purchase on pullbacks”.

APMEX has apparently met the challenges of meeting surging customer demand for physical bullion products and, in addition, maintains a liquid market for those investors who chose to sell.  Mr. Haynes calls APMEX “one of the great business stories of the internet age”. APMEX was founded by Scott Thomas who has built the company into one of the largest dealers in coins and precious metals based on “a great passion to satisfy customers”.   Mr. Haynes stated that one of his goals is to “reach more of the population with the opportunity to own precious metals”.

Physical Silver Shortage Worsens Due To Mint Rationing and Surging Investment Demand

The inability of the US Mint to meet public demand for gold and silver bullion products was discussed at a recent House Financial Services Subcommittee hearing.  Testimony by industry experts revealed that the US Mint was losing an estimated one-third of potential bullion sales because they cannot meet demand.

For the past several weeks the US Mint sales figures for Silver Eagle bullion coins have been essentially flat. The US Mint sells its bullion products in bulk to authorized purchasers (AP’s).  The AP’s resell the bullion coins to dealers who then sell the products to the public.  The US Mint has been rationing the 2011 Silver Eagle bullion coins to AP’s, leaving one to conclude that the flat sales of Silver Eagles have been the result of Mint production constraints or supply shortages, rather than flat or reduced market demand.

On past occasions, the US Mint has cited the lack of adequate supplies of silver planchets as the cause for the continuing rationing of silver bullion coin sales. Earlier this year, the Royal Canadian Mint admitted that they were having significant problems in sourcing silver since huge demand was outpacing silver supply.

Combine rationing and surging demand and the obvious result is a severe shortage of  physical gold and silver bullion products.  Confirming this situation, American Precious Metals Exchange (APMEX), announced yesterday that they were seeking to purchase US Mint bullion products from their customers in order to meet “recent incredible demand for gold and silver bullion products”.

APMEX, one of the country’s largest precious metals dealers, offered to purchase American Gold Eagles and American Silver Eagles at generous premiums over spot prices in order to secure inventory.  Despite the increase in the price of gold and silver, public demand obviously remains incredibly strong.

The American public has been provided with plenty of evidence that out of control deficit spending and money printing policies by the Federal Reserve are destroying the value of the paper dollar and they are acting accordingly (see Why There Is No Upside Limit To Gold and Silver Prices).  A loss of confidence in paper money is fueling the rise in gold and silver prices as people seek to protect their wealth.  Any pullbacks in precious metal prices should be viewed as another major buying opportunity.

Demand For Silver Jewelry Soars As Silver Hits New Highs

Demand for silver jewelry hit new records in 2010 according to The Silver Institute. A survey of 340 retail jewelers conducted in February by Nielsen/National Jeweler shows that 87% of retail jewelers experienced sales increases. The retail jewelers surveyed operate 4,000 stores.

The survey reveals that of the jewelers reporting sales increases, 52% saw sales increases of between 11% and 25%. Sales increased by more than 25% at 28% of the jewelers surveyed.

Sales of gold and platinum jewelry saw increases in sales of 4%, far below the sales increase in silver jewelry. As the price of both gold and silver continue to surge, many smaller investors naturally gravitate to less expensive silver.

The fact that silver jewelry sales increased substantially despite the huge jump in silver prices last year indicates that the general public is recognizing the need to diversify their wealth into an asset that has held its value over the millenniums.  Paper currencies have come and gone over the centuries, leaving paper wealth holders impoverished while gold and silver have always been a store of permanent value.

As the economy hit the wall during 2008 and 2009, silver jewelry sales declined from previous record levels to under 160 million ounces.  A ten year high in silver jewelry demand was reached during 2003 at 179.2 million ounces.  The four other years of the past decade during which silver jewelry sales exceeded 170 million ounces were 2000, 2001, 2004 and 2005.

The silver institute has not yet released their World Silver Supply and Demand statistics for 2010, but based on the survey cited, it appears that silver jewelry demand for 2010 may have exceeded the previous demand record of 179.2 million ounces during 2003.  Assuming that total silver jewelry demand increased by 15% over 2009, total 2010 demand could have exceeded 180 million ounces – a very bullish indicator as silver continues to increase in price.

How Much Gold and Silver Will the Treasury Secretary Determine is Sufficient to Meet Public Demand?

A bill, which seeks to provide greater Congressional oversight for circulating coin compositions, may have implications for the quantity of United States Mint gold and silver bullion coins that are available to precious metals investors.

The bill H.R. 6162 Coin Modernization, Oversight, and Continuity Act of 2010 primarily establishes rules for the Secretary of the Treasury to provide biennial reports to specified committees on the costs related to circulating coins, and make recommendations for new metallic materials or procedures. A final section of the bill deals with “meeting the demand for gold and silver numismatic items”, although the implications seem to extend to bullion coins.

Following the cancellation of the 2009 Proof Silver Eagles, the United States Mint sought greater flexibility to produce numismatic versions of the coin. The Director of the United States Mint requested such authority be granted to the Secretary of the Treasury at a hearing of the Subcommittee on Domestic Monetary Policy and Technology on July 20, 2010. The chairman of the subcommittee Melvin Watt was the one who introduced the bill H.R. 6162.

The following is Sec. 4 of the bill:

Subsections (e) and (i) of section 5112 of title 31, United States Code are each amended by striking ‘quantities’ and inserting ‘qualities and quantities that the Secretary determines are’.

Here’s how the law authorizing American Silver Eagles currently reads (emphasis added):

(e) Notwithstanding any other provision of law, the Secretary shall mint and issue, in quantities sufficient to meet public demand, coins which— (1) are 40.6 millimeters in diameter and weigh 31.103 grams; (2) contain .999 fine silver; (3) have a design— (A) symbolic of Liberty on the obverse side; and (B) of an eagle on the reverse side…

And here’s now the law would read if the bill H.R. 6162 is enacted (emphasis added):

(e) Notwithstanding any other provision of law, the Secretary shall mint and issue, in quantities and qualities that the Secretary determines are sufficient to meet public demand, coins which— (1) are 40.6 millimeters in diameter and weigh 31.103 grams; (2) contain .999 fine silver; (3) have a design— (A) symbolic of Liberty on the obverse side; and (B) of an eagle on the reverse side…

A similar change occurs for subsection (i), which deals with American Gold Eagles.

The inclusion of the word “qualities” was necessary to accomplish the presumed goal of the legislation to allow the issuance of numismatic versions of the coins, but what about the added phrase “that the Secretary determines are sufficient”?

Is the amount of gold and silver bullion coins that the Secretary determines are sufficient to meet public demand different that than amount which will actually meet public demand?

Even under the strict existing standard, there have been extended periods of time when full public demand was clearly not being met. The sale of Gold and Silver Eagle bullion coins have been completely suspended for brief periods, and rationed for considerably longer periods. Most recently, Gold Eagles were subject to rationing from December 2009 until March 2010, and Silver Eagles were rationed from December 2009 until September 2010.

What will happen if the standard becomes less strict and more indefinite?

US Mint Bullion Programs at the Treasury Secretary’s Discretion

Besides the American Gold and Silver Eagles, no other US Mint bullion programs carry the requirement to be produced in quantities sufficient to meet public demand. The language varies, but each program is effectively left to the discretion of the Secretary of the Treasury.

The 24 karat American Gold Buffalo coins, carry the requirements, “Not later than 6 months after the date of enactment of the Presidential $1 Coin Act of 2005, the Secretary shall commence striking and issuing for sale such number of $50 gold bullion and proof coins as the Secretary may determine to be appropriate, in such quantities, as the Secretary, in the Secretary’s discretion, may prescribe.”

The subsection dealing with American Platinum Eagles reads: “The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.”

And, the recently issued 5 ounce America the Beautiful Silver bullion coins: “The Secretary shall strike and make available for sale such number of bullion coins as the Secretary determines to be appropriate that are exact duplicates of the quarter dollars issued under subsection (t)”

Granted that there is no public demand requirement, but how is the Treasury Secretary doing with these other gold and silver bullion programs?

Inventories of the American Gold Buffalo bullion coins were completely depleted by the end of September 2010. At that point, the US Mint indicated that no further inventory of 2010-dated bullion coins would be made available.

The American Platinum Eagle has not been available in bullion format for more than two years. After final inventories were exhausted in late 2008, the US Mint indicated that the 2009 release would be delayed. The 2009-dated bullion coins were eventually canceled. The US Mint has not provided any information on 2010-dated bullion coins, and none have been issued to date.

The America the Beautiful Silver Bullion Coins went on sale to authorized purchasers today. The supply was so limited that the US Mint urged primary distributors to keep prices reasonable. Market forces took precedence and the bullion coins have been selling for double the silver value, or more.

Conclusion

So what is the difference between “quantities sufficient to meet public demand” and “quantities that the Secretary determines are sufficient to meet public demand”?

In practice, we shall see if this represents a different standard, but at this point the change in wording makes me uncomfortable.  I want the supply of gold and silver bullion coins to be determined by demand in the marketplace, not determined by unspecified criteria established by the Secretary of the Treasury.

As the bill has already been passed in the House and Senate, and only requires the President’s signature to become law, it seems too late to do anything other than brace for the possible repercussions.

Perth Mint Forecasts Jump in Silver Coin Sales

The Perth Mint is operated by Gold Corporation, which is wholly owned by the Government of Western Australia. The Perth Mint currently refines all of the gold mined in Australia, as well as gold from surrounding countries, and scrap gold from Asia. In addition, they refine substantial quantities of silver.

The latter has been favored by Sales and Marketing Director Ron Currie, who stated, “There seems to be more upside with silver than gold right now.”

The State of Silver

Currie’s statements come as the Perth Mint provided their outlook for silver coin sales to increase by more than 50% for the year. The Perth Mint sells investment gold and silver coins and bars to customers throughout the world. They recently launched a website which allows Australian customers to purchase bullion products at live prices.

Other world mints have also recently provided forecasts for higher silver bullion sales. The Royal Canadian Mint, which offers silver bullion coins like the Silver Maple Leaf, forecast an increase in silver coin sales of more than 50% for the year. For 2009, silver coin sales had reached 10,300,000 ounces.

Sales of the United States Mint’s American Silver Eagle bullion coin recently moved into record territory for the year to date. The latest figures available from their website show sales of more than 32,500,000 ounces for the current year.

Silver or Gold?

The recent move towards silver investment, comes as the price of silver has been outperforming gold. For the year to date, silver has risen by about 57%, while gold has gained about 25%.

This recent divergence has resulted in a decline in the gold/silver ratio. This ratio measures the  number of ounces of silver it takes to purchase an ounce of gold. The ratio had spiked to more than 80 in late 2008, and was above 70 as recently as February of this year. Currently, the ratio stands at about 51 ounces of silver to 1 ounce of gold.

During the era when gold and silver were used in circulating U.S. coins, the ratio was officially set at 15 to 16. Within the earth’s crust, gold and silver naturally occur at a ratio of about 17.

Silver Investment Demand

In a previous post, I reviewed the amount of silver bullion sold by the United States Mint during 2008. With this post, I will take a longer term look at silver demand, which highlights the absolute explosion in demand which has occurred in recent years.

The supporting data for the charts included with this post comes from a new section of Gold and Silver Blog which collects the US Mint Silver Bullion Sales data since the inception of the program in 1986. You can visit the page to find the monthly sales figures for any date from 1986 to present. The section also calculates the approximate silver bullion value of each period’s sales based on the average monthly price of silver.

Silver Bullion Sales in Ounces

Here’s a chart summarizing the total ounces of silver bullion sold by the US Mint each year since 1986. (Click on the chart for a larger version.)

During 2008, the US Mint sold 19,583,500 ounces of silver through its bullion program. As explored previously, this marks an all time high for the program. It represents an increase of more than 98% from the prior year, and an increase of 92% from the previous all time high reached in 2002.

One important thing to note when considering the magnitude of the increase for 2008 is that the number of ounces sold could have been much greater. The US Mint suspended silver bullion sales during February before resuming sales on a rationed basis. When the rationing first began, one dealer claimed that he could have sold 500,000 ounces of silver per week, but was only allocated 100,000 ounces.

2008 Silver Bullion Sales in Dollars

Here’s a second chart which illustrates the explosion in demand for silver in even more dramatic fashion. The chart shows the approximate dollar value of silver bullion sold by the US Mint each year. As mentioned, this was calculated based on monthly silver bullion sales and the average monthly price of silver. (Click on the chart for a larger version.)

Silver Bullion Sales Value Chart

During 2008, The US Mint recorded silver bullion sales of approximately $286,451,715. This marks an all time high and an increase of 114% from the prior year, which was also the prior all time high.

The magnitude of the increase is more pronounced when compared to silver bullion sales from earlier years of the program. Throughout the majority of the 1990’s, the US Mint was selling less than $30 million worth of silver each year. The year for the lowest value of silver bullion sold was 1996 with $17,434,050. During 2008, the US Mint recorded monthly sales exceeding this level for ten out of twelve months.

Silver Bullion Sales and the Price of Silver

But what about the price of silver amidst this explosion in demand?

Here’s a third chart which plots the value of US Mint silver bullion sales from the last chart, together with the average annual price of silver for each year. (Click on the chart for a larger version.)

Silver bullion sales increased from a low of $17,434,050 to last year’s high of $286,451,715 representing an increase of 1,543%. The average annual price of silver increased from a low of $3.95 per ounce to last year’s high of $14.99 representing an increase of 203%. While this is a respectable gain, it pales in comparison to the increase in demand.

Everyone has been waiting for the disconnect between the demand for silver and the price of silver to resolve itself. Will it finally happen in 2009?
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