The companies that buy bullion directly from the U.S. Mint may now
order as many American Eagle silver bullion coins as they want after
the Mint ended its weekly ordering restrictions on July 18.
The companies, known as the Mint's authorized purchasers, have not
been able to order as many coins as they want for well over a year, as
the Mint has allocated only a certain number of coins for sale each
week due to record-setting demand, and at the time the allocations
began, a shortage of the slabs of silver that the coins are made from,
known as planchets.
Mint officials have said in recent weeks that that there has not
been a shortage of silver planchets.
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The following notice was sent to the authorized purchasers the
morning of July 18:
“We are pleased to announce after 28 weeks of allocation in 2016,
effective Monday, July 18, 2016, we have lifted allocation of American
Eagle Silver Bullion Coins. Authorized Purchasers may purchase as many
American Eagle Silver Bullion Coins they desire. The United States
Mint will continue to monitor its American Eagle Silver Bullion Coin
demand and adjust its bullion coin production accordingly.”
How did the
The weekly allocations limited the number of coins
each authorized purchaser could buy based on their previous buying history.
Until recently, the Mint's allocations have sold out after only a
couple of days. In recent weeks, however, as the price of silver has gone up to the $20
per ounce level, the allocations have not sold out and the Mint was carrying over
inventory from week to week.
For most of 2016, the overall weekly allocation has been 1 million
total coins made available for all the authorized purchasers, with the
exception of the first allocation of 4 million coins Jan. 11, which
sold out in four days.
Any coins that remained unsold from any given week were carried over
and added to the subsequent week's allocation. Over the past two
months, coins have remained unsold from each weekly allocation. As a
result, the weekly allocation announced July 11 was 3,649,500 coins,
and orders were placed for only 175,000 coins that day.
One week later, the allocation system is no more.
What is an authorized purchaser?
The authorized purchasers are the only people or companies who are
allowed to buy bullion directly from the Mint — it does not offer the
American Eagle silver bullion coins directly to the public. The coins
are offered to several authorized purchasers who then provide a
two-way market in the bullion issues.
These firms buy the coins at the closing London spot price of the
metal on a given day plus a premium of $2 per coin.
The coins are then resold to other dealers, collectors and investors
at a markup per coin.
Read more about how the bullion market works.
Is this a sign of
The price of silver has risen significantly this summer, which could
lead to a decline in demand, as buyers might fret about buying at a
peak price and then having their silver coins lose value if prices dip
back below $20.
But it also could just be a sign of decreased demand among the first
ring of bullion buyers, the Mint's authorized purchasers.
Gobbling up all of the weekly allocations over the last year so as
not to be caught without sufficient supply to meet anticipated demand,
some authorized purchasers and other major distributors are now be in
a position where they have stockpiles of unsold silver and don't need to
buy as much from the Mint in the near future.
Terry Hanlon, president of Dillon Gage Metals Division, said last
week that "most APs are ordering less because they have inventory
that they don't need right away."
Josh Wagoner, general manager of the The Gold Center in Springfield,
Ill., said that with the spot price of silver rising, his firm has
witnessed increasing selling, not buying, by investors. With the
rising prices, some larger secondary market buyers and distributors
have also reduced their buying, so as not to be caught with a lot of
inventory at the top of the market
What does this mean
for 2016 sales compared to the record-setting 2015 sales?
The U.S. Mint recorded sales of 26,945,500 American Eagle silver
bullion coins from Jan. 1 through the opening of business July 18.
In 2015, a record-setting year for American Eagle silver bullion
coin sales, the Mint sold 27,315,000 coins through July 31.
So 2016 sales may well be ahead of 2015 sales at the end of the
month. However, 2015 had a strong August, when 4,935,000 coins were sold.
So we'll see if the spiking price of silver and existing authorized
purchaser stockpiles start to show up in the sales numbers and put
2016 behind 2015.