Precious Metals

Silver American Eagles remain on allocation

The United States Mint continues to offer the American Eagle silver bullion coins to its authorized purchasers on an allocation basis, the result of being unable to acquire sufficient supplies of planchets.  

For the business week starting Aug. 24, the U.S. Mint’s authorized purchasers exhausted the weekly allocation of the silver bullion coins in just two days. The Aug. 24 allocation was 812,500 coins, 601,000 of which were purchased Aug. 24 and the remaining 211,500 on Aug. 25.

Investment and collector demand is absorbing the available silver coins faster than the West Point Mint can produce them.

The production shortages have had an effect on the secondary market, resulting in shipping delays and higher premiums on the buy and sell prices.

So what is the Mint doing to meet consumer demand for the silver bullion coins?

Adam Stump, deputy director of the U.S. Mint’s Office of Corporate Communications, said by email Aug. 26 that the U.S. Mint currently has no plans to ramp up silver American Eagle output at the San Francisco Mint or Philadelphia Mint to augment the West Point Mint’s output. The silver bullion coins are being struck only at the West Point facility.

“Our Mint at West Point currently produces all gold and silver ounce bullion in addition to other numismatic products,” Stump said. “The plant operates with three shifts with employees working overtime to help meet demand.”

The problem in meeting consumer demand for the coins is not 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.

Silver sales rising

The Aug. 24 and 25 American Eagle silver bullion coin sales bring the August 2015 sales total to 4.18 million coins.

Since the coins were first offered to authorized purchasers in January, the U.S. Mint has recorded sales of 31,495,000 coins.

“The demand for American Eagle silver bullion coins has continued to increase throughout calendar year 2015 and remains on a record-setting pace,” Stump said. “This demand is a global one and all mints are trying to meet the demand for this precious metal. As of Aug. 24, we have sold 31,283,500 ounces of Silver Eagles. This compares to 27,713,000 ounces for the same period last year. It should be noted that 2014 was a record-breaking year for American Eagle silver bullion — 44,006,000 ounces being sold.” 

Long-term increases

“To add further perspective to the demand for silver bullion coins, for the first 22 years of the American Eagle Silver Bullion Coin Program, the Mint would typically sell between 3 million to 10 million ounces per year,” Stump said. “Since 2007, sales have increased nearly five-fold from 9,887,000 in 2007 to more than 44 million last year. The rapid increase in demand for all silver bullion coins has put a severe strain on all global suppliers.

“It should also be noted that over the past several years, the Mint has dramatically increased the supply of American Eagle silver bullion coins with the majority of the raw material silver blanks coming from two suppliers — Sunshine Minting and Stern Leach.”

In 2013, the U.S. Mint added a third supplier of ready-to-strike planchets — GSM Metals in Cranston, R.I. — but the firm is currently not a planchet vendor for the Mint.

The U.S. Mint implements an allocation process when demand exceeds available inventory.

Stump said the American Eagle silver bullion coins have been on allocation for 25 of 39 weeks thus far in 2015.

The American Eagle silver bullion coins are not sold directly to the public, but rather to a network of authorized purchasers, who provide a two-way market for the coins.

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. 

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