Silver Eagle Supply and Demand
Record gas prices and
climbing food costs combined with the eroding
the value of the dollar, have pushed the
American Silver Eagle $1 bullion coin to more
Demandfor the Silver Eagle, which is one ounce
of 99 percent-pure silver, has become such a
popular option for investors that the U.S. Mint
can’t keep up with Demandand has limited sales.
The mint has already sold about 7.6 million of
the ASE coins in the first quarter of 2008
alone. Typically the annual mintage is between 8
million and 9 million coins per year.
“I think the 2008 Silver Eagles aren’t going to
be scarce, they’re just going to be expensive
because everyone wants one,” said one bullion
Despite the large number of silver coins in the
market, the mint, a bureau of the U.S. Treasury,
sent a memo to dealers last month stating that
it would limit allocations to distributors.
The letter said: “The unprecedented Demandfor
American Eagle Silver Bullion Coins necessitates
our allocating these coins on a weekly basis
until we are able to meet demand.”
Silver closed Wednesday down 45 cents to $17.38
per ounce on the New York Mercantile Exchange.
But prices have doubled in three years and a
case of 500 coins now sells for close to
The mint has authorized only 13 buyers worldwide
who can directly purchase the coins. The mint
charges the going price of silver, plus a small
premium, to this select number of brokerage
companies, wholesalers, precious-metals firms,
coin dealers and banks. One of those buyers,
Coins ‘N Things Inc. in Bridgewater, Mass., said
it has seen Demanddouble compared to last year.
However, some distributors have complained that
they’re losing serious money because of the
mint’s rationing of the silver coins.
Mark Oliari, Coins ‘N Things Inc. owner, last
week told the Wall Street Journal that the mint
would sell him only 100,000 coins per week
despite having Demandfrom customers for about
500,000 coins per week.
Part of the Demandhere in the US is due to a
rush by investors who are allowed to add the
coins to Individual Retirement Accounts, however
ultimately, Demandhas outstripped supply all
over the world for silver. Mints in Australia
and Canada have also had to limit supplies of
each country’s silver bullion products.
Expect to see continued upward pressure on
prices so long as supplies get smaller and
bullion buyers appetites grow larger.