July 24, 2024

2010 Proof Silver Eagles at Risk of Cancellation

One of the consequences of the record pace of United States Mint silver bullion coins might be the cancellation of the popular Proof American Silver Eagle for the second year running.

The Proof Silver Eagles have been issued each year from 1986 to 2008. During this period, the coins have sold between 372,168 and 1,092,477 coins per year and had firmly established itself as one of the United States Mint’s most popular products.

2009 Proof Silver Eagle (not issued)

The offering was abruptly canceled for 2009 to the dismay of many collectors. The US Mint explained that it was legally required to produce the bullion version of the American Silver Eagle in quantities sufficient to meet public demand. They were not under any legal requirement to produce the collectible proof or uncirculated versions of the coins. Because demand for silver bullion coins apparently outweighed production, the US Mint sourced all incoming blank supplies towards the production of bullion coins.

The announcement of last year’s cancellation came by way of a press release issued October 6, 2009, which highlighted the two collectible precious metals offerings that would be available in 2009, before enumerating the long list of products which were canceled. As if in validation of the high demand for US Mint bullion Silver Eagles, in late November the US Mint was forced to temporarily suspended sales of bullion coins after inventories were depleted.

During 2010 to date, Silver Eagle bullion coin sales are running at a higher pace than the prior year. An average of 3,028,083 ounces have been sold per month this year, compared to an average of 2,397,208 ounces per month last year. Demand shows no signs of abating, as investors continue to buy every silver bullion coin the US Mint can produce.

The US Mint recently unveiled a numismatic product release schedule for the remainder of 2010. The 2010 Proof Silver Eagle and most other precious metal products were conspicuously listed as “TBD.” The Mint is still preserving some hope that these coins may be issued, but the situation looks rather bleak.

Why can’t the United States Mint produce bullion coins in sufficient numbers along with the traditionally issued collectible precious metals products? Is it the result of the onerous requirement that precious metals must be sourced from newly mined domestic sources? Is there a lack of manufacturing capacity? Or is it a case of managerial incompetence?

The same excuse of blaming “unprecedented demand from investors” is getting a bit old after two years.

US Mint Silver Bullion Sales on Record Pace, Gold Sales on Pace for Fourth Highest

Through June 30, 2010, the United States Mint has sold 18,168,500 ounces of silver bullion and 833,500 ounces of gold bullion. If the current pace is maintained for the rest of the year, US Mint silver bullion sales will break another record and gold will be within the top four annual sales totals.

The United States Mint currently offers the one ounce American Silver Eagle. This has been the US Mint’s only silver bullion coin option since its debut in 1986. Annual sales totals have ranged from a low of 3,466,000 ounces sold in 1996 to a high of 28,766,500 ounces sold in 2009.

This year’s mid-year total sales of 18,168,500 suggests that a new record high for annual sales will be extremely likely. Monthly sales figures have been relatively steady with four months above the 3 million level. It should be noted that this is not necessarily indicative of steady demand, as sales of the coins are currently subject to an allocation program, which rations the available supply amongst the US Mint’s authorized purchasers.

Later this year, the US Mint will be releasing a new series of America the Beautiful Silver Bullion Coins. These coins will contain 5 ounces of silver and feature designs which are duplicates of the current quarter program. It’s still uncertain just how many of these new silver bullion coins the US Mint will produce and whether this will have a meaningful impact on overall silver bullion sales.

On the gold bullion side, the US Mint current offers the American Gold Eagle and the American Gold Buffalo. The first is a 22 karat gold coin available in one ounce, one-half ounce, one-quarter ounce, and one-tenth ounce sizes. The latter is a 24 karat gold coin available in one ounce size only.

The mid-year gold bullion sales total of 833,500 ounces is made up of the following:

  • 618,500 American Gold Eagle 1 oz
  • 31,000 American Gold Eagle 1/2 oz
  • 44,000 American Gold Eagle 1/4 oz.
  • 280,000 American Gold Eagle 1/10 oz.
  • 160,500 American Gold Buffalo 1 oz.

According to the latest information I have read, the one ounce bullion coins are not subject to allocation, however the fractional weight gold bullion coins are subject to allocation. These coins available to authorized purchasers starting on June 10, 2010.

The highest annual US Mint gold bullion sales was achieved in 1999 when 2,055,500 ounces were sold. This is followed by 1998 at 1,839,500 ounces, 1986 at 1,787,750 ounces, and 2009 with 1,625,500 ounces. The lowest annual gold bullion sales total occurred in 2002 when only 164,500 ounces of gold were sold for the entire year. The US Mint actually sold more gold bullion than this last month when 185,000 ounces were sold.

US Mint Adjusts First Spouse Gold Coin Maximum Mintages

The United States Mint recently lowered the maximum mintages for their First Spouse Gold Coins. This series of gold coins features the spouses of each President with the coins struck in one-half ounce of 24 karat gold.

For the first three years of the series, each coin carried a maximum mintage of 40,000 coins. For 2010, three of the coins will have the maximum set at 15,000, and the Mary Todd Lincoln Coin, which is expected to be more popular, has the mintage set at 20,000.

The lowered maximum levels is somewhat of an admission that the popularity of the series has fizzled. After the first three coins of the series sold out in one day, buyers moved on as secondary market prices for the sold out coins peaked and declined. Recent issues have been selling less than 10,000 coins per issue.

Under law, the First Spouse Gold Coins are actually bullion coins. However, since the beginning of the series, the US Mint has sold them in the same way that they sell numismatic products. (Other bullion coins are distributed through the US Mint’s network of authorized dealers at small mark ups to the spot price of gold. Numismatic products are sold directly by the US Mint at much higher premiums.)

The First Spouse Gold Coins are currently priced at $729.00 for the proof versions and $716.00 for the uncirculated versions. The price of the uncirculated coins represents a premium of about $162.00 above gold value or 14.6%. These amounts fluctuate with the price of gold and adjustments to the prices of the coins.

Some of the prior releases have held onto these premiums (or have risen in price). The low mintages have added to numismatic premium to the coins which some collectors are willing to pay for.