The United States Mint has the production capacity to strike
between 50 million and 60 million American Eagle silver bullion coins
annually to meet demand, but ongoing inability to secure sufficient
planchets stifles full use of that capacity.
Deputy U.S. Mint Director Richard A. Peterson told Coin
World April 18 that the bureau is struggling with a lack of
success in its efforts to find additional planchet suppliers.
Currently, the Mint secures finished planchets from Sunshine Mint in
Couer d’Alene, Idaho; Vennerbeck Stern-Leach in Lincoln, R.I.; and GSM
Metals in Cranston, R.I.
The Mint increased production of the silver bullion coins by 20
percent in January 2013 to meet projected demand, but the increase
over January 2012 levels, when 6,107,000 coins were sold, was
insufficient, Peterson said.
Quick depletion of its 2013 American Eagle silver bullion coin
inventory within the first two weeks of sales forced suspension of
sales to the Mint’s 13 authorized purchasers for a week while
inventory was slowly replenished, Peterson said. Initial sales began
When sales resumed in late January, the authorized purchasers were
placed on an allocation system that restricts the number of coins any
one purchaser may secure. Total orders are limited to the number of
coins available in any given week.
Demand reached a record high in January with 7,498,000 American
Eagle silver bullion coins sold to authorized purchasers.
The flourishing secondary market for American Eagle silver bullion
coins further rose in lockstep with a drop in the spot price of silver
April 12 to its lowest level in two years. That slide continued into
the week beginning April 15. The London PM spot price closed at $27.40
April 12, and fell to $23.54 on April 15. The London PM fix was $23.51
on April 18.
Peterson said the West Point and San Francisco Mints combined are
striking an average of 800,000 American Eagle silver bullion coins
weekly. The San Francisco Mint is executing roughly 15 to 20 percent
of the overall production.
Peterson said the distribution of production fluctuates depending
on other demands at the West Point Mint. More production can be
diverted to the San Francisco facility on weeks that the West Point
Mint is producing coins for other programs, Peterson said.
Peterson said shipments of some American Eagle silver bullion
coins struck at the San Francisco Mint are loaded onto trucks
containing numismatic products from the same facility that are bound
for the U.S. Mint’s contracted order fulfillment center, Pitney-Bowes
Government Solutions, in Plainfield, Ind.
After unloading the numismatic product in Indiana, a truck with
the silver American Eagles still on board continues to the West Point
Mint for final unloading. The Mint takes this step at no additional
shipping cost or premium to the authorized purchaser, Peterson said.
Authorized purchasers pay the spot price of the metal per ounce on
a given day plus a $2 premium per coin. An authorized purchaser must
pick up the coins at either the West Point or San Francisco Mint and
deliver them to its own facilities at its own expense. By delivering
some of the San Francisco Mint coins to the West Point Mint, the U.S.
Mint helps authorized purchasers east of the Mississippi River to keep
their shipping costs down.
Jim Hausman, owner of The Gold Center, an authorized purchaser in
Springfield, Ill., said April 17 that two weeks before, the wholesale
premium for silver American Eagles was around $2.25, but that premium
had nearly doubled in the weeks since.
Whatever coins he is able to secure sell out quickly, regardless
of the premium, Hausman said.
“There’s no cheap silver out there,” he said.
Dave Cooper with Upstate Coin and & Gold Center, Fayetteville,
N.Y., said the wholesale market premium per silver American Eagle for
500-coin boxes was roughly $3 on April 10. When the firm offered
20,000 coins wholesale the morning of April 18, the premium had
climbed to $4.90. The entire offering sold in five minutes, Cooper said.
“Retailers are willing to pay $4 to $5 over spot and selling them
for $6 to $8 over spot,” Cooper said. “And investors and collectors
are happy to buy them at those levels.”
The drop in the spot price has raised the premiums on $1,000 face
value bags of 90 percent silver coins by 20 to 25 percent, Cooper
said, to between $4.50 and $5 per ounce. Each 90 percent silver bag
contains 715 ounces of silver.
A spokesman for Dillon Gage, an authorized purchaser in Addison,
Texas, said April 18 that demand for American Eagle silver bullion
coins has been outstripping production for months, with the firm on
allocation from the Mint for the past three months. The spokesman said
at the time of Coin World’s telephone call that the wholesale
premium was $5 per coin “for eventual delivery” since a specific date
could not be guaranteed. The premium at the time an order is placed is
locked in for the future delivery, with no adjustments made should the
future premium go up or down, the spokesman said. ■