Why is the U.S. Mint selling silver American Eagles at a record-breaking pace?

A pair of authorized purchasers give their opinion on silver's popularity
By , Coin World
Published : 12/11/14
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The U.S. Mint has had a record-setting year in terms of silver American Eagle bullion sales, and one of its buyers says there are a few reasons why. 

Terry Hanlon, president of Dillon Gage, says the relatively low value of silver (which stood at $17.13 per ounce as of 12:08 p.m. ET on Dec. 11, according to Kitco.com), the wide reach of the Internet, and the worldwide exposure of the American Eagle coin have all contributed to the rise in U.S. Mint silver sales in recent years. 

“There’s a definite comfort level there,” Hanlon said. 

As of Dec. 10, the Mint reported sales of 43,051,000 ounces of silver. That tops the previous record, set in 2013, of 42,675,000 ounces.

INFOGRAPHIC: How are 2014 U.S. Mint bullion sales through November?

Hanlon, who said Dillon Gage has been increasing its silver purchases from the Mint by 2 percent to 3 percent annually in recent years, said he believes lack of trust in traditional currencies when combined with the aforementioned wide international reach makes for higher demand. 

“Those people overseas understand what the value of precious metals are specifically, and they understand the volatility of their currencies and how the value changes frequently,” Hanlon said.

David Hendrickson, president of SilverTowne, another authorized purchaser, agreed.

“I think people are nervous about the economy,” Hendrickson said. “They’re nervous about the future whether it be the U.S. dollar inflation, health care, just the overall economy."

Should we expect another record year in 2015? Hendrickson says yes.

“I think the silver market is going to get bigger,” he said. “I don’t see an end to it right now."

RELATED: 2014 U.S. Mint sales of American Eagle gold bullion coins fall well behind 2013 levels

The way the Mint’s bullion system is set up, authorized purchasers like Dillon Gage, SilverTowne and APMEX purchase from the Mint before selling to dealers and individuals.

Hanlon said there is “absolutely” a direct correlation between the sales of silver to authorized purchasers and the authorized purchasers’ sales to dealers and individuals. 

However, numismatist David Greenstein of Harlan J. Berk in Chicago said otherwise. 

“We haven't seen any kind of run beyond the normal on silver [American] Eagles,” Greenstein said.

Harlan J. Berk sells somewhere between 10,000 and 15,000 silver American Eagles each year, Greenstein said. The coins make up about 10 percent to 20 percent of the dealer’s silver bullion business.

In fact, Greenstein said, some buyers are turned off by the Mint’s silver because the premium passed on by the authorized purchasers—which he said typically comes in between $2.25 and $2.75 per ounce above spot value—makes up a higher proportion of the cost when silver values are down, especially when dealers like Harlan J. Berk need to tack on their own premiums to turn a profit. 

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