Wednesday, March 2, 2011

US Mint Suspends 1oz Silver Eagle Production

The US Mint is required by law to produce a sufficient quantity of silver and gold coins to meet public demand.  The following is pasted from their website:

American Eagle Silver Uncirculated Coin
Production of United States Mint American Eagle Silver Uncirculated Coins continues to be temporarily suspended because of unprecedented demand for American Eagle Silver Bullion Coins. Until recently, all available silver bullion blanks were being allocated to the American Eagle Silver Bullion Coin Program, as the United States Mint is required by Public Law 99-61 to produce these coins “in quantities sufficient to meet public demand . . . .”
Although the demand for precious metal coins remains high, the increase in supply of planchets—coupled with a lower demand for bullion orders in August and September—allowed the United States Mint to meet public demand and shift some capacity to produce numismatic versions of the American Eagle One Ounce Silver Proof Coin.
However, because of the continued demand for American Eagle Silver Bullion Coins, 2010-dated American Eagle Silver Uncirculated Coins will not be produced.
The United States Mint will resume production of American Eagle Silver Uncirculated Coins once sufficient inventories of silver bullion blanks can be acquired to meet market demand for all three American Eagle Silver Coin products.

I can imagine how a quick glance at the price chart on silver would cause a novice investor to feel that silver is "overpriced."  If possible, try to remind yourself that you want to own things that have a price chart with a line going from the bottom left to the top right, and remember that the trend is your friend.

There is nowhere near the quantity of silver available in the market needed to meet current demand.  $35/oz will look cheap when the average market participant finally stops hitting the snooze button and realizes this.

Also as a follow-up to my piece yesterday, one of the "blue chip" silver producers released earnings far exceeding analysts expectations, increased planned production and announced decreased per/oz operating costs and the stock is only up marginally.  Considering we are at another 30yr record high price today I have to assume that the herd is still staring at their Netflix and Apple stock down on the week thinking, "I'll hold on to this so I don't have to take a loss."

Maybe $40/oz will do the trick.  I think we will soon see what the number needs to be to cause some sellers to show up in the market.

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