Guest Post: "What's Ahead for the American Silver Eagle"

107
Thu, Dec 19, 2013 - 10:46pm

The good folks at Gainesville Coins offered to write up a guest post for us regarding Silver Eagle demand in 2013 and 2014. I said, "knock yourself out", so they did. The result is this excellent summary.

What's Ahead for the ASE?
By Steven Cochran, Gainesville Coins | Thursday, December 19, 2013

Sales of the American Silver Eagle bullion coin hit a new all-time record in 2013, at nearly 42.7 million coins, and it wasn't all due to the precious metals take-downs in April and June. With the Fed giving Bernanke a going-away present of at least a token taper in the December meeting, what will Silver Eagle sales look like in 2014?

The U.S. Mint isn't taking any chances this time, halting 2013 Silver Eagle production a week early, and pushing back the 2014 release date a week, to January 13th. Last year, the Mint had boosted stock on-hand for the 2013 release by 20% over previous year's sales of 6.1 million coins, thinking that this would give them plenty of extra stock. They didn't count on the fiscal cliff/debt ceiling/sequester charades in Washington, though, and completely ran out of 2013 ASEs in eight days, selling 7.48 million coins. Keep in mind, that this was when silver was $30/oz.

The Mint had to ration Silver Eagles through the first half of 2013, due to production bottlenecks, even with the West Point Mint working 24/7. This year, in addition to giving themselves more lead time, they are rationing (allocating) them from Day 1. Is this extra measure of caution well-founded? If pre-orders are any indication, rationing supply among the major distributors is a good idea. Pre-orders of 2014 Silver Eagles are already a best-selling item, more than a month before release.

To protect itself against silver blank shortages again this year, the Mint now has three suppliers. In addition to Sunshine Minting of Coeur d'Alene, Idaho, two Rhode Island companies also supply precious metal blanks: Vennerbeck Stern-Leach of Lincoln, and GSM Metals of Cranston.

It's been noted that 2013 Silver Eagle sales, at 42.7 million oz, was more than domestic U.S. silver production, at 33.7 million ounces. Global silver stocks have been at a surplus for the last few years, and should continue, even with the closure of the Kennecott open-pit mine due to a landslide. (The mine, also known as the Bingham Canyon copper mine, produces over 3 million oz of silver at peak production, and is scheduled to return to full production in 2016.) The U.S. imported over 170 million oz. of silver in 2012, so domestic production covers less than 20% of demand.

The concern over Silver Eagle mintage numbers compared to domestic silver production may be due to confusion regarding the law on bullion sourcing for the American Eagle Program. Only Gold Eagles are required to use bullion (gold) from U.S. mines, which has been mined in the last 12 months.

The Treasury has been allowed to buy silver on the open market since 2002, when U.S. strategic stockpiles of silver were depleted (Support of American Eagle Silver Bullion Program Act of 2002.)

Even with tapering, the Fed is still conjuring $75 billion a month of liquidity into the system, and more people are starting to think about what that will mean for them personally when that money finally hits the broader economy.

At the current spot prices, we expect more people to enter the market in 2014. The American Silver Eagle is the most popular investment-grade silver coin in the world, and as U.S. legal tender, is exempt from sales tax. With current government fiscal policy, we don't see demand for the ASE falling anytime soon.

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  107 Comments

Hammer
Dec 20, 2013 - 4:22am

I'm so sorry. It's Friday. If

I'm so sorry. It's Friday. If any of you good people out there are batshit crazy with what's going on, blow the froth off of one and have a kick back. Tis Christmas

Captain Kirk deals with a strange alien culture

and for the Brits and all you

slade - merry christmas everybody
Video unavailable
silver2013
Dec 20, 2013 - 5:39am

Will silver hit 17.5 next

Will silver hit 17.5 next week?

Belmaniac
Dec 20, 2013 - 6:12am

Hi this is my first post to

Hi this is my first post to this forum so please bear with me if I'm off base a little.

Gainsville Coins said "Global silver stocks have been at a surplus for the last few years, and should continue, even with the closure of the Kennecott open-pit mine due to a landslide. (The mine, also known as the Bingham Canyon copper mine, produces over 3 million oz of silver at peak production, and is scheduled to return to full production in 2016.)"

Eric Sprott and many others have, after intensive investigation, assured us that this is not the case, that global demand exceeds supply and that the only reason that prices are low is because of market intervention.

So, which is it? They can't both be right, or can they? Have I missed something here?

Boswell
Dec 20, 2013 - 6:14am

Eagles are nice...

But the premiums are a large % at these prices. I've been getting mostly generic rounds lately to get my DCA down a little, but they will be the first to go if I need to sell anything. The "nice" coins will be harder to part with.

("Lucky" 13?)

Hammer
Dec 20, 2013 - 6:29am

Oh you can bet your sweet

Oh you can bet your sweet tooshie on it......capitulation here we come.......

Meryl Streep - 'The great capitulation', Mother courage
koan
Dec 20, 2013 - 6:36am

Will silver hit 117.5 next week?

Same answer - who knows!

Gold Dog
Dec 20, 2013 - 7:25am

Off Topic. I want to ride in the wagon for a while!

We have sold our companies and I will be out of work 1/1/2014.

Should I file for unemployment insurance so that I have some "pin money" to shoot craps with?

Most of my friends are outraged that I would collect because a) They say it is contrary to everything I stand for, and, b) Because I don't need the money.

I say screw them all, I have paid into the system so much for so long I just want to get a tad back. I think I might even qualify for food stamps for the first month of next year and am contemplating buying some prime rib to cook on the grill.

Fire away!

Welfare Queen,

Dog

57Goldtop
Dec 20, 2013 - 8:13am

Dog, run with this

Get on the dole, food stamps and all.

Start a blog, from an anonymous wealthy retiree who has nothing else to do since his legs won't let him bicycle as much as he'd like.

Call it, "Throw the Dog a bone".

Talk every day about how hard it is to thrive on social assistance, then post a photo of yourself, silhouette style to remain anonymous, lighting a cigar with a $100frn on your boat out on the lake.

Ask for donations, and show how they go towards people doing something more noble than lighting cigars with rapidly depreciating shytepaper. Or cleaning up a public park, or sumsuch.

(Merry Christmas!)

Stack'em High
Dec 20, 2013 - 8:41am

Gold Dog...

If your going to eat on my dime, I insist that your standing rib roast is in fact graded Prime... preferably Prime +

Gold Dog
Dec 20, 2013 - 8:43am

Guys

I am easily satisfied....the best will do nicely!

Off to the Skunkworks.

WQ,

D

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