April 19, 2024

US Mint Begins 2011 Gold Buffalo Coin Sales

Earlier this week the United States Mint began sales of the 2011 American Gold Buffalo coins to their network of authorized purchasers. So far, sales are off to somewhat of a tepid start compared to the high initial demand experienced in recent years.

The American Gold Buffalo is a one ounce 24 karat gold coin that has been issued since 2006. Featuring the classic Buffalo Nickel design created by James Earle Fraser, it has enjoyed popularity with both bullion investors and collectors. The US Mint has offered a bullion version of the coin, which is sold to authorized purchasers based on the market price of gold plus a premium, and various collector versions, which are sold to directly by the Mint at higher premiums.

The bullion versions of the coin have not been available since late September, when inventories of the 2010-dated coins became depleted. Prior to the start of sales for the 2011-dated coins on March 14, 2011, the US Mint indicated that they would have a sufficient quantity of the coins to meet public demand. As such, their allocation program, which serves to ration available supplies, would not be necessary. The authorized purchasers were allowed to order unrestricted quantities of the coins, under the typical procedures.

Through March 16, 2011, the US Mint has recorded sales of 21,500 of the one ounce gold bullion coins.

This represents a slower start than the prior two years. In 2009, figures available for the first three days of sales indicated 71,500 coins sold. Last year, opening day sales figures had reached 48,500 coins.

Silver Eagle Sales Slower as US Mint Rations Supplies

Sales of the United States Mint’s American Silver Eagle bullion coins were slower in the latest week. However, the slow down seems to be the result of the allocation program currently in place, as opposed to a reduction in demand. Sales for Gold Eagle bullion coins dropped to the lowest weekly total for the year to date.

For the weekly period ending March 9, the US Mint recorded sales of 668,500 of the one ounce Silver Eagles. This compares to 1,509,000 coins sold in the previous week.

Since the start of sales for the 2011-dated coins, the US Mint has carried out sales under their standard allocation program. Rather than accepting unrestricted orders, available supplies of silver bullion coins are rationed amongst the authorized purchasers. As such, sales figures reflect the number of coins that the US Mint is able to produce and make available, as opposed to the level of demand from the market.

There has been anecdotal evidence from bullion dealers indicating demand in excess of the available supplies. This reduced availability has caused premium levels for Silver Eagles to expand at the retail level.

Other world mints have indicated that they have been encountering problems obtaining the silver needed to produce coins and other bullion products. The US Mint has not provided any specific explanations.

US Mint Bullion Coin Program Sales 3/9/2011 (ounces)

Prior Week Month to Date Year to Date
American Silver Eagle 668,500 668,500 10,330,500
American Gold Eagle 12,500 18,500 232,000
America the Beautiful Silver 0 0 0
American Platinum Eagle 0 0 0
American Gold Buffalo 0 0 0

Sales of the bullion Gold Eagles were only 12,500 in the latest week compared to a previous weekly total of 37,000 coins. The demand for physical gold has not been as intense as the demand for silver. Since the start of sales for the 2011-dated coins on January 3, 2011, the US Mint has not used the allocation program.

US Mint Silver Eagle Bullion Coin Sales Jump

The pace of United States Mint gold and silver bullion coin sales picked up in the prior week. The US Mint currently has available one ounce American Silver Eagles in allocated quantities and unrestricted quantities of American Gold Eagles.

The latest available statistics show an increase of 1,509,500 ounces of silver bullion sales. In the previous two weeks, the US Mint had sold 908,000 and 833,500. Although sales show a big increase, it could be higher if not for the US Mint’s allocation program. Authorized purchasers are currently limited in the number of coins that they can order, which means sales are not an indication of the full demand for silver bullion.

American Gold Eagle sales increased by 37,000 ounces since the last report. This compares to sales of 28,000 and 31,500 in the prior two weekly periods. The increased demand comes as the price of gold recently reached a new all time high above $1,440 per ounce. For the past several years the rising price of gold has been accompanied by strong demand for physical gold.

US Mint Bullion Coin Program Sales 3/2/2011 (ounces)

Prior Week Month to Date Year to Date
American Silver Eagle 1,509,500 0 9,662,000
American Gold Eagle 37,000 6,000 232,000
America the Beautiful Silver 0 0 0
American Platinum Eagle 0 0 0
American Gold Buffalo 0 0 0

Year to date US Mint bullion coin sales have now reached 9,662,000 ounces of silver and 232,000 ounces of gold. Both figures represent an increase from the average pace of sales experienced in the prior year.

During 2010, the average monthly sales level for Silver Eagles was 2,888,541 ounces, while the average monthly sales of Gold Eagles was 101,708 ounces.

US Mint Gold and Silver Eagle Bullion Coin Sales

Sales of the United States Mint’s gold and silver bullion coins remained on a relatively steady pace with recent weeks. Sales of 908,000 ounces worth of American Silver Eagle coins were recorded, along with 28,000 ounces worth of American Gold Eagles.

In the previous week, the Mint had recorded bullion sales of 833,500 ounces of silver and 31,500 ounces of gold.

The US Mint utilizes a network of authorized purchasers (AP’s) to distribute bullion products to the public. This small group of private sector businesses are allowed to purchase bullion coins from the Mint in bulk quantities, and in turn resell them to the public. The price charged to the APs is based on the market price of the metal plus a mark up.

The mark up for Silver Eagles is currently $2.00 per coin. The mark up for Gold Eagles varies based on the size of the coin. The premium levels are 3%, 5%, 7%, and 9%, for one ounce, one-half ounce, one-quarter ounce, and one-tenth ounce sized coins, respectively.

US Mint Bullion Coin Program Sales 2/23/2011 (ounces)

Prior Week Month to Date Year to Date
American Silver Eagle 908,000 2,638,500 8,152,500
American Gold Eagle 28,000 83,500 189,000
America the Beautiful Silver 0 0 0
American Platinum Eagle 0 0 0
American Gold Buffalo 0 0 0

For the year to date, the US Mint has sold 8,152,500 ounces of silver bullion and 189,000 ounces of gold bullion. All sales have taken place for the American Eagle coins. Later in the year, 24 karat Gold Buffalo bullion coins and 5 ounce America the Beautiful Silver Coins are expected to be made available.

Pace of US Mint Gold and Silver Bullion Sales Ahead of Last Year

In the past week, the United States Mint sold 833,500 ounces of silver bullion and 31,500 ounces of gold bullion. Available products included the American Silver Eagle in one ounce size and the American Gold Eagle in one ounce or three fractional sizes.

For the year to date, the US Mint has now sold 8,152,500 ounces of silver, which is running well ahead of the pace of sales from the previous year. During 2010, the US Mint had sold 5,642,500 ounces through the end of February. Annual sales eventually reached a record 34,662,500 ounces from Silver Eagles, with an additional 875,000 ounces from the America the Beautiful Silver Bullion Coins.

Gold bullion sales for the year to date are now 189,000. Once again, this is running ahead of last year’s pace when the Mint sold 169,000 ounces through the end of February. By year end, sales had reached 1,220,500 ounces worth of Gold Eagles, plus 209,000 ounces from the 24 karat Gold Buffalo coins.

US Mint Bullion Coin Program Sales 2/16/2011 (ounces)

Prior Week Month to Date Year to Date
American Silver Eagle 833,500 1,730,500 8,152,500
American Gold Eagle 31,500 55,500 189,000
America the Beautiful Silver 0 0 0
American Platinum Eagle 0 0 0
American Gold Buffalo 0 0 0

This month the US Mint began sales of the fractional weight 2011-dated American Gold Eagles. Throughout January, only the one ounce size was available bearing this year’s date.

Fractional Gold Eagle sales for the month so far include 100,000 of the one-tenth ounce size coins, 16,000 of the one-quarter ounce coins, and 5,000 of the one-half ounce coins. In recent years, the one ounce size coins have accounted for the bulk of bullion sales.

Weekly US Mint Gold and Silver Bullion Coin Sales

After the furious pace of sales experienced during January for the United States Mint’s American Silver Eagle and American Gold Eagle bullion coins, the current month is progressing at a more measured pace. For the week ending February 9, 2011, the US Mint recorded sales of 847,000 ounces worth of silver and 18,000 ounces worth of gold.

The US Mint offers several bullion coin options in order to provide investors with a convenient and cost effective method for physical precious metals investment. The programs include 22 karat gold coins in one ounce, one-half ounce, one-quarter ounce, and one-tenth ounce sizes; 24 karat gold coins in one ounce size; .999 fine silver coins in one ounce and five ounce sizes; and platinum coins in one ounce, one-half ounce, one-quarter ounce, and one-tenth ounce size.

For the year to date, the US Mint has only offered the one ounce Silver Eagle and 22 karat Gold Eagle bullion coins. The Gold Eagles are available in one ounce size bearing the 2011 date, with some remaining amounts of the fractional weight coins bearing the 2010 date. The remaining bullion coin options have not yet been released.

US Mint Bullion Coin Program Sales 2/9/2011 (ounces)

Prior Week Month to Date Year to Date
American Silver Eagle 847,000 897,000 7,319,000
American Gold Eagle 18,000 24,000 139,500
America the Beautiful Silver 0 0 0
American Platinum Eagle 0 0 0
American Gold Buffalo 0 0 0

Last year, the US Mint recorded sales of 34,662,500 ounces worth of American Silver Eagles and 1,220,500 ounces worth of American Gold Eagles. The amount of silver bullion sold represented an all time record.

US Mint Silver Bullion Sales Set Monthly Record

The pace of sales for the United States Mint’s American Gold Eagle and American Silver Eagle bullion coins jumped in the past week. This propelled silver bullion sales far into record territory for the month of January.

In the prior week ending February 2, 2011, the US Mint sold 1,748,000 ounces worth of Silver Eagles and 56,500 ounces of Gold Eagles. These are sizable increases from the prior week, when the pace of sales had slowed considerably.

Currently, the US Mint offers only these two options for precious metals investors. The American Gold Buffalo, struck in 24 karat gold, has been unavailable for several months. The American Platinum Eagle remains on indefinite hiatus since late 2008. The recently introduced America the Beautiful Silver Bullion Coins are now in production for the 2011 designs, following the rapid sell out of the previous year’s coins.

US Mint Bullion Coin Program Sales 2/2/2011 (ounces)

Prior Week Month to Date Year to Date
American Silver Eagle 1,748,000 50,000 6,472,000
American Gold Eagle 56,500 6,000 139,500
America the Beautiful Silver 0 0 0
American Platinum Eagle 0 0 0
American Gold Buffalo 0 0 0

For the month of January 2011, Silver Eagle bullion coin sales reached 6,422,000, representing the highest monthly sales total in the history of the program. The previous monthly record of 4,260,000 ounces was set in November 2010, at the time breaking the long standing record of 3,696,000 ounces from December 1986.

To put this monthly sales total into perspective, there were ten separate years of the program where annual sales did not reach this level. If the pace of sales continues for the rest of 2011, more than 77 million ounces of silver would be sold. This amount exceeds the total annual domestic silver mining production of the United States.

United States Mint Bullion Program Net Margin Remains at 1.9%

Amidst increased demand for physical gold and silver investment products, the United States Mint achieved record revenue from the sale of bullion coins during their 2010 fiscal year. Annual sales totaled $2.86 billion, which yielded net income of $55.2 million for the segment.

The US Mint produces gold, silver, and platinum bullion coins which are distributed through a network of authorized purchasers. The various programs were authorized by Congress, and the weight, content, and purity of each bullion coin is guaranteed by the U.S. government.

During the fiscal year ending September 30, 2010, the US Mint issued one ounce American Silver Eagles; one ounce, half ounce, quarter ounce, and tenth ounce American Gold Eagles; and one ounce American Gold Buffalo coins. The American Platinum Eagle, which is typically produced in four different bullion weights, was not produced or issued during the year.

Because the purpose of the US Mint’s bullion coin programs is to provide investors with a convenient and cost effective method for investing in precious metals, the programs are managed to a nominal net margin. The bullion coins are sold to authorized purchasers based on the current market price of the metal plus a fixed or percentage mark up to cover minting, distribution, and marketing costs, as well as a net margin targeted at or below 2%. For the past three years, the net margin has remained steady at 1.9%.

The US Mint utilizes a hedging program to avoid the risk related to fluctuations in silver costs. Silver is purchased in large quantities on the open market and then an interest in that silver is sold to a trading partner. The US Mint maintains physical custody and title to the silver. As finished silver bullion coins are sold to authorized purchasers, the trading partner’s interest is repurchased. Transaction fees related to the hedging program were $170,000 for the 2010 fiscal year.

Monthly American Silver Eagle Sales Already in Record Territory

Gold and silver bullion coin sales at the United States Mint are showing exceptional strength. In the past week, authorized purchasers ordered 1,181,000 ounces worth of American Silver Eagles and 32,000 ounces worth of American Gold Eagles.

For the Silver Eagle bullion coins, total sales for the month have now risen to 4,588,000 ounces. With the month not even two-third complete, this total already represents a new record high for monthly silver bullion sales. The previous monthly sales record of 4,260,000 ounces was set in November 2010.

On January 3, the US Mint had begun sales of the 2011 Silver Eagle. Strong initial sales are typical when newly dated coins are available, however the strength has persisted, suggesting other factors are at play. Some new investors may making purchases following silver’s stellar performance during 2010. Existing investors may be adding to positions after silver experienced a brief 7% decline.

US Mint Mint Bullion Coin Program Sales 1/19/2011 (ounces)

Prior Week Year to Date
American Silver Eagle 1,181,000 4,588,000
American Gold Eagle 32,000 75,500
American Platinum Eagle 0 0
American Gold Buffalo 0 0

For the year to date, the US Mint has now sold 75,500 ounces worth of Gold Eagle bullion coins. This is comprised of 73,000 one ounce coins, 1,000 one-half ounce coins, 2,000 one-quarter ounce coins, and 15,000 one-tenth ounce coins. Sales of the 2011-dated one ounce coins began on January 3. Sales of the fractional weight coins are remaining 2010-dated coins.

The month to date total for gold bullion sales now approaches the full month sales level for the year ago period, when 85,000 ounces were sold.

US Mint Added New Silver Blank Supplier in 2010

For much of the past three years, the United States Mint has struggled to keep up with the boom in demand for physical precious metals. Although they have been required to mint and issue American Gold and Silver Eagle bullion coins in quantities sufficient to meet public demand, they have often fallen short of this mandate, resorting to sales suspensions and rationing programs.

The US Mint’s 2010 Annual Report details some of the specific steps they have taken to increase the quantity of precious metals blanks that they are able to acquire:

  • The US Mint worked with their existing precious metals blanks fabricators to revise delivery schedules to fit production levels. Level loading materials allowed these fabricators to increase productivity and increase output.
  • A new silver blank fabricator began delivering blanks late in the fiscal year. The US Mint also continues to pursue additional suppliers. The reliance on a small number of foreign suppliers was previous noted as the “heart of the problem” in the US Mint’s struggle to manufacture sufficient gold and silver bullion coins.
  • Productivity and efficiency enhancements were implemented at the West Point Mint. Coin encapsulation and packaging processes were automated, employees were trained to handle more areas of responsibility, and coordination with suppliers allowed continuous assaying, inspection, and coin production to take place.

The US Mint cited the results of their efforts during the year:

  • The average monthly supply of all gold and silver blanks from vendors increased from 2.6 million ounces to 4.1 million ounces.
  • Output at the West Point Mint increased from 175 ounces per labor hour to 215 ounces per labor hour.
  • By August 2010, the US Mint had sufficiently expanded supply to remove order limits and fully satisfy demand for silver bullion coins by August 2010.
  • Popular numismatic products like the 2010 Proof Gold Eagles and 2010 Proof Silver Eagles were launched in October and November 2010. These offerings had been canceled in the previous year.