While June 2016 sales by the United States Mint of American Eagle
silver bullion coins were lower than June 2015 sales of the bullion
coin, sales during the first six months of calendar year 2016 are 20
percent higher than the same period in 2015.
However, sales have gradually slowed in the past several weeks, and
the spot price of silver has recently topped the $20-per-troy-ounce level.
2016 sales of American Eagle silver bullion coins through June 30
reached 26,250,500 coins compared with 21,726,000 over the same period
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January 2016's sales of 5,954,500 coins are the fourth highest
January sales in the nearly 30-year history of the bullion coin
program. January 2015 sales reached 5.53 million coins.
May 2016 sales totaled 4,498,500, but sales slid sharply to 2,837,500 coins in June.
Conversely in 2015, sales jumped from May sales of 2,023,500 coins to
June sales of 4.84 million coins.
Until recently, the U.S. Mint was allocating about 1 million coins
weekly to authorized purchasers. As sales have slowed, the weekly
allocation has increased as more unsold coins are carried over. The
weekly allocation for July 5 was 2,839,500. Authorized buyers
purchased 250,000 of those coins.
WHY DOES THE U.S. MINT
ALLOCATE ONLY A CERTAIN AMOUNT OF COINS?
For the last year or so, the Mint has been making available to its
authorized bullion purchasers a weekly allocation of American Eagle
silver bullion coins because it has been unable to acquire sufficient
supplies of planchets as demand skyrocketed to record levels in 2014, 2015 and
The allocation restricts the pool of available American Eagle silver
bullion coins weekly, with distribution based on previous ordering
patterns by the individual authorized purchasers.
The problem in meeting consumer demand for the coins has not been
the result of lack of production capacity at the West Point Mint, but
instead derives from the inability of planchet suppliers to meet the
demands of mints worldwide.
The recent trend of allocations not selling out each week might be a
sign that the end is near for the allocation system and that a more
open, buy-as-many-as-you-want system could return.
WHO ARE AUTHORIZED PURCHASERS?
As you can read about in this post from our Precious Metals Basics
series, the bullion coin market operates in a tier system
structured something like a pyramid, with the issuing authority at the
top. The issuing government produces and then distributes the coins in
large quantity through a narrow system of large distributors.
Distributors in turn sell to wholesalers, who sell to a network of
retailers, who then sell to the public.
The most important function of the distribution system is in
providing a buy-back market. Bullion coins are investments;
investments must have a degree of liquidity.
Governments sell coins into the pipeline but will not buy them back.
Selling the bullion coins through a network of private dealers enables
a ready two-way market.
The authorized purchasers buy the coins from the U.S. Mint based on
the closing London PM spot price of the metal per troy ounce on a
given day plus a $2 premium per coin. The coins are then distributed
for a small premium to other dealers, collectors and investors.
How are other U.S.
Mint bullion products doing?
Gold American Eagles
American Eagle gold bullion coin sales are nearly double what they
were for the first six months of 2015.
For the first six months of 2016, the U.S. Mint has recorded sales
of 501,000 ounces of American Eagle gold bullion coins compared with
273,000 ounces during the same period in 2015. Leading sales are the
1-ounce $50 coins, with 406,000 sold through June 30 compared with
198,500 for the first six months of 2015.
The Mint recorded sales of 34,200 of the initial authorization of
120,000 of the 2016 Harpers Ferry National Historical Park 5-ounce
silver bullion quarter dollars. Should bullion demand exceed 120,000
coins, additional bullion coins could be minted, reducing the current
maximum balance of 30,000 Uncirculated 2016-P coins. The combined
authorized mintage will not exceed 150,000 coins.
American Buffalo gold $50 coins
American Buffalo gold $50 bullion coin sales are running 16.6
percent higher than in 2015.
Through June 30, the U.S. Mint reports sales of 112,500 of the 2016
American Buffalo 1-ounce gold $50 bullion coins. This compares to
95,500 coins sold during the first six months of 2015.