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Impending Eagles Shortages?
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(November 8, 2009) As gold prices cross the $1100 mark, and make new record highs, demand for both gold and silver bullion are strong. However, the US Mint has already struck its last 2009 silver Eagle, and possibly, the last gold Eagle that it will release this year.
This year the Mint has already sold 24,000,000 silver Eagles, a record number, and more than a million gold 1-ounce Eagles. In order to do those numbers, the Mint produced exactly zero platinum Eagles, and for the first time since the American Eagles program began in 1986, skipped production of specially-packaged collectors’ versions of proof Eagles entirely.

The lack of proof Eagles has hacked off tens of thousands of numismatists who had faithfully built their sets of these premium- priced coins over the decades, but the Mint’s announcement that there will be no 2009-dated Eagle proofs seems to be final.

And now we’re coming to that time of year in which Eagle bullion coin buyers may start to fell a little pain themselves.

Normally, the US Mint halts production of current year bullion Eagles in the last few weeks of the calendar year, usually around Thanksgiving or the first week in December. This allows production to begin on Eagles bearing next year’s date, coins that are not released until the first week of January.

This year, the halt to current-year Eagles production has come a little early.

The US Mint, while currently busy striking 2010-dated Eagles, will continue to release 2009-dated 1-ounce bullion silver Eagles only as long as they have product ‘on the shelf.’ Further production of 1-ounce gold Eagles dated 2009 may or may not happen in the next couple of weeks, but our guess is that there’s not much chance after that.

Since the Mint doesn’t make their current supply figures public, there’s really no way to tell what will happen over the final eight weeks of 2009. As of this writing, silver and gold Eagles are not in shortage, and premiums have yet to increase. But that situation could quickly change.

Demand for gold Eagles has been strong all through this bull market year in gold. To meet this demand for the USA’s most popular bullion product, the Mint this year has struck and sold over a million 1- ounce gold coins, compared to only 147,500 for the entire year 2007.

Of course, there are other gold bullion choices out there for US buyers. Private refiners, such as Pamp Suisse and Credit Suisse, have seen their US business increase tremendously, especially over the past twelve months. Although the Middle East and Asia, where gold is a familiar forms of wealth, have long absorbed the lion’s share of gold that is refined worldwide, Marwan Shakarchi, the chairman of MKS Finance, Pamp’s parent company, was quoted in an article “Inside the Global Gold Frenzy” in the New York Times on 11/8/09, that “The US and Europe are our emerging markets.

As for gold and silver Eagles, if precious metals continue to build momentum and draw new buyers, demand will continue to build and there may be supply shortages. Or, a substantial price correction could bring in a new crop of bargain-hunting gold buyers, who might then find that the Mint is out of product until 2010, and premiums on the floating supply could rise.

The last real shortages of gold bullion that the US market experienced occurred during the period from October 2008 through February of 2009, when our recent economic unpleasantness made itself known. At that time, bullion mints and refineries the world over were overwhelmed with the increased demand for gold bullion. Demand in the US increased by several hundred percent, and European demand, according to figures from the World Gold Council, increased some 1100% in the fourth quarter of 2008.

This calendar year, worldwide production of tradable forms of gold bullion coins and bars has been stepped up to meet demand. So, even if it does happen that US Eagles go into shortage before the year is out, the mints of Canada, Australia, South Africa, Austria, and private refiners such as Pamp Suisse, do not take such a delivery holiday (the Australians have already released 2010-dated products, as has the Royal Canadian Mint), so we expect that quite a range of bullion coins and bars likely will be freely available through the season.

And, on the positive side for fans of US Mint products, the Mint has announced plans to finally release some 2009-dated fractional gold gold Eagles in half-, quarter-, and tenth ounce sizes, probably by the first week in December. As soon as we have a firm commitment on their release, we will post them for sale on our gold Eagles page.

(Our working title for this piece was “Seasonal Trends in US Mint Bullion Coin Production and Release, 1986-2008.” That seemed a little dry, so we went with a more sensational title for Internet publication.)

-Richard Smith, November 8, 2009

 

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