US Mint Suspends Sale of 2009 Gold & Silver Eagles
Mary Beth at SilverAndGold Shop.com
November 29, 2009
If, like me, you have been watching the spot price of gold and silver lately you would be seeing that your investments in silver have been growing. One of the first things I do every morning is check the spot prices… Naturally, this is something I need to keep on top of throughout the day so that TPS can keep our pricing structure current… but as a fellow silver investor and co-owner now of a gold mining operation, I have a vested interest in watching what is going on.
In the last week we've seen gold almost reach the $1200 mark… and silver came close to $19. The first thing that this triggers in my mind is the question: "Okay… What's happening out there?" This, then prompts me to go digging for articles, research, commentary by the experts to tell me what has impacted the pricing spikes or drops (as the case may be). Much of what I discover in this process I bring to the TP Newsletter to keep YOU informed …
One of the things that happened this week is that the US Mint has suspended the sale of gold and silver American Eagles. Several people have called me to ask about this. But, before I go further though let me pontificate a little about the issue of numismatic values compared to investment values of precious metals, because this will have a bearing on understanding the rest of this article.
Numismatics, according to Wikipedia, is "is the study or collection of currency, including coins, tokens, paper money, and related objects." So when we speak of 'numismatic value' we aren't necessarily only talking about precious metals.
Numismatic values are driven by many factors besides the metal content itself. The following is a list of some of those factors:
- Year of production
- Design quality
- Condition of the coin/currency at the time of valuation (circulated, uncirculated, scratches, dents, dings, corrosion etc.)
- Minting errors
- Socio-political events
- Quality - proof or burnished
Any or all of these factors can drive up the cost /value of a coin/currency from a collector's vantage point. Contrast this from an investor's vantage point. An investor is looking to purchase a commodity of value at the lowest possible cost with the highest possible value to hold until it increases in value, or is able to be leveraged in some way to his/her advantage. In the case of precious metals as one such commodity, the numismatic issues listed above are of little consequence because
1) They drive up the costs artificially and
2) The value of the metal itself as a commodity is what is important.
Having said that, however, the investor market still holds room for personal preference as to design features and other meanings specific to investor preferences.
So let's move on to discussing what's going on with the US Mint. Keep in mind that the Gold and Silver Eagles are Legal Tender (howbeit greatly undervalued with a face value of $1 for silver and $50 for gold).
1. As a government institution, the US Mint production of silver and gold products is dependent upon the annual allocation by the Treasury of precious metals purchased under their annual budget. This is a fixed, finite, amount (contrary to private mints or commercial entities that just purchase more when they run out).
In the last 2 years, 2008, & 2009, the US Treasury allocated LESS silver / gold than in previous years to their Silver Eagles program. This has several implications:
- Silver/Gold Eagles for these years will be rarer than in previous years.
- With current investment demand being higher due to the economic climate, there will be shortages.
- The US Mint sales currently top 25,000,000 for 2009.
- Because of the shortages, the short-term pricing will carry a higher premium (over spot). This is basic market economics.
2. In 2008, the US Mint also had to suspend sales of the gold & silver American Eagles. I had just begun investing in them in the fall of 2008… and I ran into this very issue myself last year. (Remember, the Treasury had cut back supply of metals in 2008 as well.)
3. Just because the US Mint has suspended sales does NOT mean that you cannot obtain these coins elsewhere from sellers who have had the foresight to stock up or vendors who are resellers for the US mint. But, bear in mind the following:
- Buyers will pay a higher premium
- Buyers will find they may have to wait extended periods of time for delivery after paying for their coins.
The US Mint may produce a few more of the 2009 Eagles yet before the close of the year. On the other hand, they may just be trying to regulate the rate at which they deplete the remaining supply. Since we are approaching the end of 2009, this isn't too alarming because 2010 is just around the corner; new allocations for the next year will be in place and they will begin minting the 2010 Silver and Gold American Eagles and the cycle begins again.
I do have a source of limited supply for circulated Silver American Eagles from time to time. These will have scratches or small dings, and perhaps need cleaning up if you want to get them in pristine shape… But the premiums are lower and they're still Eagles if you're a real American Eagles fan… If you're interested, drop me a note and I'll watch for the next stock available in these…
I do still have sources for obtaining Eagles after our current inventory is depleted; however, I, too, will be subject to these higher premiums; so if and when that time comes, I may need to decide not to carry them due to the price point we will have to charge for them. After all, my mindset is more of an investor than collector… and I will want to keep as much of the commodity on hand as possible and not waste precious resources on artificially inflated premiums. Having said that, if you still want Eagles, drop me a note or call, and I'll be happy to see what I can do… generally speaking, however, know that there will probably be minimum order volumes imposed upon me by my vendors…generally, those are 500 or more coins.