US Mint Suspends Sale of 2009 Gold & Silver Eagles
Mary Beth at Tea Party silver
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
- Rarity
- 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
- They drive up the costs artificially and
- 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.
Things to Come for Tea Party Silver
On another note… I’ve shared with you in the past that we will be minting a new 1 Troy oz, .999 fine silver divisible bar (similar to the Stagecoach bars we now carry) … we are still in waiting mode on this, but I will give you a sneak preview of the artwork… I had hoped these would be ready for Christmas, but it doesn’t look like we’re going to make production in time. I will definitely be sending out a note when they come off the production line. Our first run will be in silver; later in the year after we get supply of gold running from the mine, we intend to produce these in 1 oz gold as well.This design is obviously inspired by our Alaska mining venture, but also takes its text from Zechariah 13:9 in Scripture.
“This third I will bring into the fire; I will refine them like silver and test them like gold. They will call on my name and I will answer them; I will say, ‘They are my people,’ and they will say, ‘The LORD is our God.’”
We felt this text brings together the concept of how adversity distills character as well as references the challenges we are all facing in these turbulent times, which many believe to be ‘last days’ scripture talks about. We also felt that it instills hope in what the future holds and a sense of direction that we need to be taking as individuals and as a country.
Large banks with huge stockpiles of Gold and Silver sitting in their vaults never earned any income from their bullion. After all, the metals intended function was to preserve wealth for the bank, not create it.Greed is a powerful force. Just “having” Gold and Silver wasn’t good enough for the major banks and they scratched their heads as to how they can bleed even more profit from their enterprises, in particular, how can they turn their Metal into money, without getting rid of their Metal!The big banks would never want to just sell their Gold and Silver reserves as it represents and backs their enterprise and is what instils faith in their organisation – but hey who says you can’t make some cash on the side, huh?
Lease to the smaller banks for say, 1 or 2 percent per year on the value of the physical metal.This way we could earn more cash, while still keeping legal ownership over all our precious metal! Brilliant!
A major windfall for both the banking cartel who started earning money for leasing their otherwise stagnate assets, and the smaller banks loved the few percentage points they made risk free. Everyone happy right?
so long as you return ANY gold bar of equal weight, that is considered as good as the original one I lent. This is the only way metals leasing can work. No-one in their right mind would lease anything and then sell it into the open market if they had to get that exact same bar of metal back at the end of the lease.
As will become evident later, this is a fake supply hitting the market, but the metals price depression is a real effect of this fake supply.
can make in the open market when they sell the bullion and invest in a 4-5% yielding asset (Government bonds, t-bills etc). When the metals lease expires, generally there is no reason to return the Metal (i.e. buy the metals back from the open market) – it makes more sense to roll the lease into another contract.
What would 500 houses being sold in that suburb do to the price of real-estate in that area? It would fall through the floor. The other houses in the area would be devalued to a large degree. This would also force other sales in the area as investors see the price of real-estate falling and get out of the market – creating a domino effect of plummeting house prices.
Yes, there is now the euro. But is that currency cocktail any better? Somebody called it the Esperanto currency, meaning the hopeful currency. Before the creation of the euro all the central banks of the world held all their monetary reserves in U.S. dollars, a currency backed by nothing. After the dollar crashed in recent years, they shifted their paper dollars into euros. How clever — they sold gold at the bottom and then they sold dollars at the bottom.
Fifth conclusion: India will get wealthier and more successful. But I wonder if a country is really successful if it has that many poor people. Most important insight: In spite of all the forecasts, India will buy more and more gold. The Indians will never change. They have lots of history and experience with paper money.
Over the past several months, the United States Mint has announced a series of actions and policy changes that make it more difficult for the average individual to buy gold. There have always been plausible or semi-plausible explanations, but the consequence of each action has been to limit or discourage gold ownership.
The United States Mint has officially announced the suspension of another slate of gold and silver products. The affected products are 2009 dated American Gold and Silver Eagle coins produced for collectors. These coins are considered collectible versions of the bullion coins.
