Mountain of silver continues to grow at U.S. Mint

The U.S. Mint's ready-to-ship inventory of silver American Eagle bullion coins is growing as weekly orders from authorized purchasers have slipped.

Coin for Coin World photography provided by SilverTowne.

Is there a way for the U.S. Mint, its authorized purchasers and the subsequent secondary market for silver American Eagle bullion coins to confidently forecast the public’s demand for the 1-ounce .999 fine silver dollars?

In a nutshell, probably not.

Less than a year ago, the Mint, like many other government mints around the world, were in the unenviable position of being unable to immediate provide buyers with all of the bullion coins they wanted because of competition for planchets on which to strike the coins.

The U.S. Mint put its authorized purchasers on a strict weekly allocation until it could rectify the planchet supplier shortfall. That problem has apparently been rectified, as Mint officials announce they no longer have planchet supply obstacles.

Now, the Mint is faced with the reverse scenario. The Mint is sitting on a stockpile of millions of unsold coins that are being carried over each week and added to the scheduled weekly allocation of 1 million coins, a weekly allocation that has been in effect for most of 2016. The Mint has no plans to adjust that allocation to allow for the growing unsold inventory to be absorbed instead of continuing to grow.

One big question is: Has the silver bubble burst, or are there antsy investors sitting on the sidelines waiting for some unknown market development to trigger them jumping back into the game?” The current situation could be temporary, a simple market correction.

Some of the authorized buyers – those major dealers approved to buy the bullion coins from the Mint and offer a two-way market – have been building emergency inventories of their own so they are not caught without inventory for immediate delivery should demand surge again.

Right now, the spot price of silver is at its highest level in two years, climbing over the $20 an ounce mark.

Despite some investors waiting for a sign that its okay to get back into the silver market to buy and not dump holdings for quick profit, the U.S. Mint’s overall 2016 cumulative sales still remain at a record pace and poised to eclipse the record sales set for the series in 2015.

Let’s see if the market will surge once again enough for the Mint to reduce its silver American Eagle bullion coin inventory.