Precious Metals

Mint may expand bullion strikings for American Eagles

A dramatic rise in American Eagle silver bullion coin demand is pushing the U.S. Mint to look at producing additional coins at facilities beyond the West Point Mint.

Images courtesy of the United States Mint

As investment demand rises for American Eagle silver bullion coins, U.S. Mint officials are considering adding production of the 2020 silver bullion coins at the San Francisco and Philadelphia Mints, to augment West Point Mint output.

That prospect was broached by bureau officials July 23 during a conference call to address purchasing projections with the 12 purchasers worldwide who are authorized to buy U.S. Mint-struck bullion coins.

The Philadelphia Mint already produced an emergency run of 240,000 American Eagles silver bullion coins, between April 8 and April 20, when the West Point Mint was shuttered for COVID-19 pandemic safety measures.

The San Francisco Mint, too, was closed from March 18 until May 4 because of COVID-19 executive orders by California Gov. Gavin Newsom.

Nine of the 12 authorized purchasers are in the United States, two are in Germany and one is located in Japan.

Terry Hanlon, president of one of the firms, Dillon Gage Metals, in Texas, lauded the Mint for taking the initiative to address future bullion coin needs and better plan production and distribution.

The authorized purchasers are already dealing with sharp reductions in allocations because of previous production restrictions.

In the July 23 conference call, U.S. Mint officials looked at adding American Eagle silver bullion coin production at two of the three facilities beyond the West Point Mint.

Ryan Valadez, head of sales and trading worldwide for Dillon Gage, said the U.S. Mint is hoping to at least double its output, roughly 400,000 American Eagle silver bullion coins every two weeks, to 400,000 every week.

Tom Power, president of the U.S. Mint’s primary vendor for American Eagle silver planchets, Sunshine Minting Inc. in Coeur D’Alene, Idaho, said the firm has no problem supplying the Mint with sufficient silver planchets.

Power noted that in recent years, Sunshine has provided the U.S. Mint with a higher number of planchets, while also supplying planchets to other government mints and private mints.

Sunshine also provides the U.S. Mint with the 5-ounce .999 fine silver planchets for the bullion and Uncirculated 3-inch America the Beautiful quarter dollars.

U.S. Mint spokesman Michael White told Coin World July 29 that the United States Mint has produced and sold almost 1 million more ounces of bullion during the 2020 Fiscal Year, through June, than in the same period of FY 2019 — FY 2019 through June: 15,233,000 ounces; FY 2020 through June: 16,172,000 ounces.

The federal fiscal year begins on Oct. 1.

“Specifically, the Mint has shipped 604,000 more ounces of silver bullion, 318,000 more ounces of gold bullion and 17,000 more ounces of platinum bullion this year compared to the same time last year,” according to White. “The Mint facility at West Point has been at full production staffing since July 13, and is producing bullion at levels attained prior to taking measures to reduce the risk of employee exposure to COVID-19.

“Additionally, the Mint facility at San Francisco has been at full production staffing since July 13, and is producing 2020 numismatic products.”

Hanlon says the U.S. Mint is taking the steps to be prepared for the long-term.

Every dealer on each step of the ladder in the bullion chain is having to make serious decisions to plan for future acquisitions and sales, balancing inventory and cash flow, Hanlon said.

During these challenging phases, the U.S. Mint has taken more initiative to meet demand than other sovereign mints, Hanlon said. In some instances, split shipments are being instituted.

“The U.S. Mint’s allocations are so low that no one is even closely meeting the public’s demand,” Hanlon said.

There is not much selling into the market, of either silver products or gold, despite rising prices, Hanlon said.

Because of the increasing demand for the American Eagle 1-ounce .9167 fine $50 gold bullion coins, Fuljenz and Valadez both indicate they think it’s likely that mintage of the half-ounce, quarter-ounce and even tenth-ounce gold American Eagles will be limited.

The authorized purchasers, unless under allocation restrictions, are required to place minimum orders with the U.S. Mint for 1,000 American Eagle silver bullion $1 coins.

The Mint charges the spot price of silver on the London market on the specific day, plus a premium of $2.35 per coin.

The authorized purchasers then resell the coins, at a markup, to collectors, investors and secondary market dealers.

Mike Fuljenz, president of Universal Coin and Bullion, a secondary market American Eagle distributor in Texas, said that recently the premiums from authorized purchasers to distributors have risen sharply, weekly. He said July 29 that, the week before, the premium from the authorized purchasers was $4.75 per coin, and within a week, had climbed to $6.50 per coin.

Fuljenz said he’s had to stockpile silver American Eagles to meet projections, through advertisements to purchase the product.

The spot price per troy ounce of silver climbed from a closing price June 29 at $17.91, to $24.34 on July 29.

For gold American Eagles, authorized purchasers pay the Mint the closing spot price of the metal on a given day, plus a respective premium of 3 percent, 5 percent, 7 percent or 9 percent, for the 1-ounce, half-ounce, quarter-ounce and tenth ounce gold coins.

The April 2020 production at the Philadelphia Mint of American Eagle silver bullion coins is not the first time for the U.S. Mint to redirect silver bullion coin production beyond West Point.

Nearly 17 million American Eagle silver bullion coins were struck dated 2014 through 2017 at the Philadelphia and San Francisco Mints, augmenting the West Point Mint’s output of nearly 108 million coins in that time period.

Details of that production were obtained by Coin World through a Freedom of Information Act request after U.S. Mint officials initially balked at releasing the information.

The West Point Mint remains the primary facility for bullion coin production, but the other two Mints are brought into service for ancillary production of the American Eagle silver bullion coins when demand requires.

When the American Eagle silver bullion coin production was introduced in 1986, output was solely at the West Point facility. Between 1990 and 2000, American Eagle silver bullion coins were struck at both the West Point and San Francisco Mints.

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