December 2, 2022

US Mint To Increase Production Of Silver Bullion Coins To Meet “Unprecedented” Demand

The United States Mint announced that it will commence production of American Eagle Silver Bullion Coins at its San Francisco Mint.  For several years now, the Eagle Silver Bullion coins had only been produced at the Mint’s West Point facility.

In a press release this week, the US Mint noted that “Demand for American Eagle Silver Bullion Coins remains at unprecedented high levels.   Adding production at the United States Mint at San Francisco provides manufacturing flexibility across the bullion and numismatic product lines to meet customer needs.”

In the face of huge demand for the silver bullion coins, the US Mint has been allocating orders among its authorized purchasers.  The high demand and limited production has lead to high premiums of up to $5 per coin for purchasers of the silver bullion coins.

The US Mint recently came in for criticism for its failure to meet demand for physical bullion coins.  In early April, during a hearing by the House Financial Services Subcommittee, Rep. Ron Paul criticized the Mint for its failure to meet public demand for silver and gold bullion coins.  Ron Paul linked the shortage of bullion coins to the “huge debasement” of the United State currency and said that it was “imperative” that the US Mint meet public demand for bullion coins.

The US Mint said that it has capacity to mint up to “several hundred thousand coins per week” at the San Francisco facility.  The Mint will use the same packaging and manufacturing process at San Francisco that it uses at West Point and the coins will not have a mint mark.

Although demand for the American Eagle Silver Bullion coins remain high, the purchase of 90% silver coins is becoming a more cost effective and popular way to invest in silver.  There is a very small premium or even a discount from bullion value on the purchase of 90% silver coins.

APMEX is currently selling a $1,000 face value bag of 90% silver coins which contain 715 ounces of pure silver for $27,541.80.  Based on today’s closing New York price for silver of $38.16 per ounce, the silver value of the bag of coins being sold by APMEX is $27,284.

Gold and Silver Eagle Shortage Becomes Surplus

For countless months, authorized purchasers of US Mint gold and bullion coins have been subject to a rationing process, which limited the number of coins they could purchase. The rationing program had been put into place after the demand for gold and silver coins exceeded the US Mint’s ability to supply them. In a few recent posts I have provided some indications that the shortage of American Silver Eagles and American Gold Eagles might be ending. There’s yet another indication that the end of the shortage and rationing is close at hand.

Throughout the rationing period, the entire supply of coins available from the US Mint had been divvied up and sold to the authorized purchasers. For the first time since rationing began, the US Mint failed to sell their total production of Gold and Silver Eagles.

Dave Harper, the editor of Numismatic News, writes:

In the prior two weeks, the 14 purchasers authorized to buy the American Eagle coins from the U.S. Mint have not taken the maximum number of coins that are available, leaving the Mint with an extra 39,000 one-ounce gold American Eagles and 185,000 extra silver American Eagles.

To my knowledge, the rationing program for Gold and Silver Eagles still remains in place despite the surplus of recent weeks. The US Mint is likely waiting to build an inventory of bullion before attempting to remove purchasing restrictions completely.

When the rationing program was instated by the US Mint, it generated a lot of attention from blogs and news sites. The rationing was cited as evidence of the overwhelming demand for physical precious metals that would eventually carry market prices higher. With the opposite situation developing, opposite predictions have emerged.

In befuddlement to both arguments, the the disconnect between physical demand and market price continues. Amidst the unraveling of the physical scarcity situation, the prices for gold and silver have risen to multi-month highs with many predicting impending breakouts, which will carry prices even higher.