U.S. Rationing Silver Eagles
By Ianthe Jeanne Dugan
rationed food during World War II and gasoline
in the 1970s. Now, it's imposing quotas on
another precious commodity: 2008 dollar coins
known as silver eagles.
The coins, each containing about an ounce of
silver, have become so popular among investors
seeking alternatives to stocks and real estate
that the U.S. Mint can't make them fast enough.
In March, the mint stopped taking orders for the
bullion coins. Late last month, it began
limiting how many coins its 13 authorized buyers
world-wide are allowed to purchase.
"This came out of nowhere," says Mark Oliari,
owner of Coins 'N Things Inc. in Bridgewater,
Mass., one of the biggest buyers of silver
eagles. With customers demanding twice as many
as they did last year, Mr. Oliari would like to
buy 500,000 a week. But the mint will sell him
only around 100,000.
The coins have a face value of $1. But the mint
sells them for the going price of silver, plus a
small premium, to a handful of wholesalers,
brokerage companies, precious-metals firms, coin
dealers and banks. The dealers mark the coins up
a bit more and sell them to the public.
Currently, the coins are fetching about $19
apiece, with some sellers seeking more than $20.
For Coins 'N Things alone, the shortage is
costing hundreds of thousands of dollars in lost
sales of silver eagles. The firm sells about $1
billion worth of precious metal every year,
including silver, gold and platinum coins. Mr.
Oliari, a 50-year-old numismatist who has been
in the business since 1973, sniffs: "You can't
print what I want to say about the mint."
The mint, a bureau of the U.S. Treasury, has
offered little explanation beyond a memo last
month to its dealers. "The unprecedented demand
for American Eagle Silver Bullion Coins
necessitates our allocating these coins on a
weekly basis until we are able to meet demand,"
the mint wrote. A spokesman declined to
'Poor Man's Gold'
The rare shortage offers a glimpse into the
growing love of a commodity known as "poor man's
gold." With more silver mined than gold
traditionally, silver has always been far
cheaper than gold and today has less than 2% of
The popular silver eagle coin
But silver is growing in popularity, and some
investors are betting that its value will surge
as inventory shrinks. Big investors are loading
up on silver eagles, which are the only American
silver coins allowed in individual retirement
plans. For small investors, they are an
accessible way to get into the metal boom.
"Unlike gold, these coins can be bought by
regular citizens," says J.R. Roland, a
Brownsville, Tenn., judge who recently began
buying the coins -- and trading them on eBay.
"In these economic hard times, silver coins are
a great way to invest."
In March, sales of silver eagles surged more
than ninefold from the previous month, to 1.85
million. This year, the mint has sold 6.8
million, representing more than twice last
year's pace. Still, numismatists are clamoring
for millions more as the price of silver soars.
It has more than doubled in the past three years
and now trades at around $17 a troy ounce, which
is slightly heavier than a traditional ounce.
Linda Wood, a 57-year-old Pittsburgh accountant,
scours eBay, coin shops and flea markets in
search of silver eagles. One by one, she has
accumulated about 300 in the past few months and
stores them in a bank safe-deposit box.
Traditional coin collectors may be impressed
with the government's written description of
silver eagles as "one of the most beautiful
coins ever minted." But Ms. Wood isn't in it for
aesthetics. She became a silver bug after she
and her husband saw the value of their
individual retirement accounts decline by $2,500
-- a "significant" chunk. "I just need bullion,"
she says. "I wouldn't care if the coins were
Amid the mint caps, shady silver-eagle hawkers
are thriving. Some coins are priced at $25 and
higher. Mr. Roland says that he had to wait a
month after ordering some on eBay recently,
because the sellers didn't even have the goods.
"I can't wait long, because you never know
what's going to happen with the price," he says.
In Manitowoc, Wis., Dan Zirk, owner of Manitowoc
Card & Coin, has sold twice as many silver
eagles as he did last year. So he has stashed
away his remaining handful of 2008 coins,
betting the price will rise. "I want $22
apiece," says Mr. Zirk. He says customers,
meanwhile, are asking for earlier years and
other forms of silver.
The government began producing silver eagles in
1986, basing its design on Adolph Weinman's 1916
"Walking Liberty" half dollar. The front
features a flag-draped Lady Liberty striding
toward the sunrise, carrying branches of laurel
and oak symbolizing civil and military glory. On
the reverse, a design by John Mercanti features
an eagle with a shield, olive branch, and talon
The coins are made at an armored facility in
West Point, N.Y., alongside the military
academy. Dealers say they heard the mint had run
out of planchets -- round metal disks ready to
be struck into coins. The disks are used for
various coins, and the companies producing the
blanks also are busy, limiting the mint's
ability to increase production. The mint won't
comment on the planchets.
Coins Divvied Up
Each Monday morning now, the mint divides its
silver coins into two pools. It divvies up the
first equally among authorized purchasers. The
second is allocated proportionately, based on
the buyer's past purchases. The mint limited
purchases once before -- in the late 1990s, when
investors loaded up on silver, wrongly
anticipating that a failure by the world's
computers to adjust to the new millennium would
cripple the economy.
Jim Hausman, head of the Gold Center in
Springfield, Ill., one of eight companies in the
U.S. authorized to buy silver eagles, estimates
that the rationing will cut his expected annual
sales of four million silver eagles in half.
And the result, he says, is almost un-American.
Increasingly, investors are taking a shine to
alternatives. The Royal Canadian Mint saw its
sales of silver Canadian maple-leaf bullion
coins rise 40% last year, to 3.5 million,
according to a spokesman.
Some investors expect the craze to end badly.
They draw comparisons to what happened to silver
in the 1970s. A rich Texas family poured
billions of dollars into silver, and prices
surged above $50 an ounce in 1980, only to
plunge again after government intervention.
"It's akin to what happened when the Hunt
brothers tried to corner the silver market,"
says Wendell Curry, who owns McAllen Gold &
Silver Exchange in McAllen, Texas. "The silver
hawks are now trying to corner silver American
eagles. And it's making it harder for mom and
pop to buy these for their grandchildren."