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US Mint Suspends Silver Eagle Sales Due to High Demand

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Investors are gobbling up American Silver Eagle coins. Sales were so brisk last week that the US Mint temporarily suspended orders when its inventory ran out.

February sales this year have already doubled 2018 levels. As of Feb. 26. the mint had sold 2,157,500 Silver Eagles this month. That compares with 942,500 coins in February 2018. This represents a whopping 118% year-on-year sales increase.

January sales were also brisk.  The mint sold 4,017,400 ounces of American Silver Eagles last month compared with 3,235,000 ounces in January 2018. On the year, 2019 sales are running about 45% higher than in the first two months of last year.

According to SRSrocco, authorized purchases of Silver Eagles jumped by 775,000 oz this past Thursday, prompting the temporary sales suspension. The mint issued the following statement on Feb. 21.

This is to inform you that we have temporarily sold out of our inventories of 2019-dated American Eagle Silver Bullion Coins. In addition, all remaining 2018-dated inventories have been sold too. The West Point Mint is busy producing additional 2019-dated American Eagle Silver Bullion Coins. We hope to be able to re-launch the 2019-dated coins in a few weeks.”

The mint has suspended sales before, but this is more common in the fourth quarter as inventories decrease and the mint winds down production for the year.

SRSrocco indicated strong Silver Eagle sales will likely continue in the near future.

I believe demand for Silver Eagles will remain strong this year, but it will take another financial and economic crisis to push the annual purchases back up to the 35-40+ million range.  And, I believe we may likely see that type of demand in the next few years as the global financial system starts to unwind due to the massive amount of unsustainable debt.”

Sales for American Gold Eagle Coins have also been strong. So far,  sales for January and February of this year are at 77,500 ounces. This compares to 64,000 ounces through the first two months of 2018 – a 21.1% increase. Year-over-year sales in February are up 109.1%.

The silver-gold ratio remains historically high. At the time of this report, it was running at 83.55-1. As we’ve been reporting for the last year, this is essentially silver on sale. The ratio hit a quarter-century high last November, peaking at 86-1.

Historically, the silver-gold ratio has been much lower. Geologists estimate that there are approximately 19 ounces of silver for every ounce of gold in the earth’s crust, with a ratio of approximately 11.2 ounces of silver to each ounce of gold that has ever been mined.

In 1792, the gold/silver price ratio was fixed by law in the United States at 15:1. France mandated a ratio of 15.5:1 in 1803. Faced with the challenges of a bi-metallic monetary system with fixed exchange rates and the aftermath of a worldwide financial crisis, the US Congress passed the Coinage Act of 1873. Following the lead of other Western nations, including England, Portugal, Canada, and Germany, this act formally demonetized silver and established a gold standard for the United States.

With silver playing a smaller role as a monetary metal, the silver-gold ratio gradually spread. The modern average over the last century is around 40:1.

Silver is much more volatile than gold due to its industrial role, but at its core, it is still a monetary metal and it tends to track relatively consistently with gold over time. In a recent It’s Your Dime interview, Silver Institute executive director Michael DiRienzo said he expects that ratio will eventually return closer to historical levels.

Silver has hit an all-time high of $49 per ounce twice – in January 1980 and then again in April 2011. If you adjust that $49 high for inflation, you’re looking at a price of around $150 per ounce. In other words, silver has a long way to run up. As one analyst put it, “With the long-term downside potential of silver very low versus its current valuation, the risk/reward is one of the best investments on the planet.”

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