U.S. Mint Actions Discourage Gold Ownership 56 comments
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Over the past several months, the United States Mint has announced a series of actions and policy changes that make it more difficult for the average individual to buy gold. There have always been plausible or semi-plausible explanations, but the consequence of each action has been to limit or discourage gold ownership.
The recent actions of the United States Mint in relation to gold are presented below. I have also included the US Mint’s explanation for each situation, taken from official memorandums or press releases.
August 2008: The US Mint suspends sales of Gold Eagle bullion coins. Sales resume two weeks later on a rationed basis.
On August 14, 2008, the US Mint announced that they were suspending sales of American Gold Eagle bullion coins. The suspension was in place until August 25, 2008, when sales resumed under an allocation program. The program divides available gold coins into two pools. The first pool is divided equally among all authorized bullion purchasers. The second pool is allocated based on past sales performance.
When gold coin rationing (termed “allocation”) was introduced, it was presented as a temporary measure. More than four months later, gold coin rationing continues. There has been no indication when authorized bullion purchasers will be able to order unrestricted quantities of gold bullion coins.
US Mint explanation:
The unprecedented demand for American Eagle gold one-ounce bullion coins necessitates our allocating these coins among the authorized purchasers on a weekly basis until we are able to meet demand.
September 2008: The US Mint suspends sales of Gold Buffalo bullion coins. Sales resume more than one month later, but only to clear remaining inventory.
On September 25, 2008, the US Mint announced the sales suspension of 24 karat American Gold Buffalo bullion coins. Sales did not resume until November 2, 2008 when the US Mint was able to offer only its remaining limited inventory on an allocated basis.
US Mint explanation:
Demand has exceeded supply for American Buffalo 24-Karat Gold One-Ounce Bullion Coins, and our inventories have been depleted. We are, therefore, temporarily suspending sales of these coins.
October 6, 2008: The US Mint announces that production will be halted for all but one gold bullion coin option.
Production was immediately halted for one-half ounce and one-quarter ounce American Gold Eagle bullion coins. Production of one tenth-ounce gold bullion coins was halted following depletion of the remaining blank supplies. Production of one ounce Gold Buffalo bullion coins was also halted following depletion of the remaining blank supplies.
These coins represent the US Mint’s only fractional gold bullion coin offerings and the US Mint’s only 24 karat gold bullion offering. The production halt seemed to be a temporary measure that would impact 2008 dated coins. The production halt has continued into 2009. There has been no indication when production will resume.
US Mint explanation:
The United States Mint has worked diligently to attempt to meet demand, however, blank supplies are very limited and it is necessary for the United States Mint to focus remaining bullion production primarily on American Eagle Gold One Ounce and Silver One Ounce Coins.
November 10, 2008: The US Mint announces the discontinuation of numerous gold and platinum numismatic products.
The discontinuation of 22 different gold and platinum numismatic products was included as a broader measure to refocus the US Mint’s line of products for coin collectors. Discontinued gold coin products included fractional uncirculated Gold Buffalo coins, one ounce uncirculated Gold Buffalo coins, fractional proof Gold Buffalo coins, and fractional uncirculated Gold Eagle coins.
Although the US Mint has constantly referred to the “unprecedented demand” for gold, they deemed their gold numismatic products to be “unpopular.” Following the discontinuation announcement, sales of the 2008-dated versions of the discontinued coins surged and all numismatic Gold Buffalo and platinum coin offerings sold out in less than a month.
US Mint explanation:
We are responding to the collector community which has spoken loudly and clearly. Customers have told us there are just too many products. We agree, and it’s time the United States Mint trims down and concentrates on the products our customers love most.
November 24, 2008: The US Mint announces the delayed release of all but one 2009 gold bullion coin option.
This delayed release served to prolong the previously announced production halts for fractional gold bullion coins and the 24 karat Gold Buffalo bullion coins. As noted previously, the production halt continues with no indication of when it might end.
The single 2009 gold bullion offering from the US Mint continues to be subject to rationing. As noted previously, there has been no indication of when the rationing will end.
US Mint statement:
The quantities of blanks that we have been able to acquire from our suppliers continue to be very limited, while demand for bullion coins remains high. As a result, it is necessary for the United States Mint to delay the launch of other bullion coins until later in 2009. We will continue to monitor the situation and keep you informed as additional information becomes available.
January 6, 2009: The US Mint establishes a new pricing policy for gold and platinum numismatic products.
The new US Mint pricing policy adjusts the prices for gold and platinum numismatic products as often as weekly based on the average London AM Fix gold price. The prices for coins are based on a published table which seems to impute higher premiums than the old pricing system.
In the past, prices were established at the start of sales and remained fixed unless there was a significant move in the price of the underlying precious metal. At times gold numismatic products could be purchased for premiums as low as 10%. Under the new policy, prices are adjusted weekly to preserve permanently high premiums. Current premiums run 30% or more depending on the product.
US Mint explanation:
Transparency, agility, and customer service are the catalysts for our new pricing method. The volatile precious metals market prompted our customers to suggest that we re-vamp our process, and we listened.
Conclusion?
The series of incremental changes outlined above has resulted in the following situation:
- Production was halted for all of the US Mint’s fractional gold bullion and 24 karat gold bullion offerings several months ago. There has been no indication when production might resume.
- The only 2009 gold bullion coin available from the US Mint is the one ounce American Gold Eagle. Sales of this single bullion coin offering remain subject to rationing.
- The US Mint’s gold numismatic offerings for 2009 have been significantly reduced from the prior year. The remaining product offerings will be priced at prohibitively high premiums under a newly established pricing policy.
Whether or not it was the US Mint’s intention, every significant action they have taken since August has either limited gold availability, eliminated gold product options, or increased the cost of acquiring gold. Has it all just been a consequence of surging global demand for gold, supply chain mismanagement, and bad timing for policy decisions? Or is there something else going on here?
Thank you to APMEX for confirming the status of the US Mint’s 2009 gold bullion coins for this post.
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This article has 56 comments:
Even though the law clearly states they are supposed to make gold available to their citizens, they create ridiculous excuses to keep from distributing OUR gold.
Maybe their future intentions are to confiscate the rest of OUR gold from us and make it illegal to own gold again? Or maybe they just dont have enough gold to satisfy the demand as they say?
Surely they would not lie to us!
We find it particularly interesting to note that the price of gold has severely decorrelated from USD weakness during this past week. This might be *the* trigger that will cause the second gold rally - not in dollar terms, this time, but in other currency bases.
StudioPhi,
Mendrisio,
Switzerland
To the best of my knowledge, US gold inventory has not changed for at least 3 decades.
Where does the Mint get its Gold?
Do you know?
Deep inflation or hyperinflation, they all mean destruction, which implies gold will be in no man's land.
On Jan 23 05:03 AM MisterPhi wrote:
> Just returning from a rapid visit to a small branch of Raiffeisenbank
> here in Switzerland. Gold demand still continues at very high rates,
> to the point that the bank's HQ has now decided to allow the sale
> of small bars that carry only the assayer's brand and not the bank's
> seal, in order to reduce turnaround time.
> We find it particularly interesting to note that the price of gold
> has severely decorrelated from USD weakness during this past week.
> This might be *the* trigger that will cause the second gold rally
> - not in dollar terms, this time, but in other currency bases.<br/>Studi...
>
> Mendrisio,
> Switzerland
Just a thought. ;-))
In their defense, US law does require the mint to use gold mined in the US for its coins. Given the high demand for gold coins and the large premiums, any new blanks which become available are probably being purchased by private concerns at prices above what the Mint is allowed to pay, leaving the Mint with a much smaller working supply of blanks.
Congress has managed to hamper their ability to run their minting business well via good intentions and unintended consequences.
As for the US Mint's inventory, technically the Mint owns all the gold in the US inventory (ie. they own the gold in Fort Knox), but the reported long term inventory isn't used for minting coins. The blanks for minting coins are purchased every year, the long term inventory just sits there (though some believe it might not be any more).
The Mint's excuse for high demand is stretching the truth a little. Sales of gold coins in the past few years has been below levels that have been sold in the past. This year's volume has been higher than the past few years, but far below prior spikes in sales. See 1998 and 1999 in data below:
American Eagle Gold Coins Sold
from US Mint website:
www.usmint.gov/mint_pr...
2008 = 860,500 oz
2007= 198,500 oz
2006 = 261,000 oz
2005 = 449,000 oz
2004 = 536,000 oz
2003 = 484,500 oz
2002 = 315,000 oz
2001 = 325,000 oz
2000 = 164,500 oz
1999 = 2,055,500 oz
1998 = 1,839,500 oz
1997 = 771,250 oz
1996 = 275,000 oz
In the last 4 years or so the largets gold producing miners with future sales at set prices to buyers such as the US Mint, bought back those futures (many times at a loss) in the belief that the gold price would go much higher.
Now, the US Mint and others do not have in place those gold contracts for delivery at set prices in future dates, well those future dates are happening now and they have contracts maturing and bringing delivery.
I guess they upset the way the US Mint did business and now they cannot figure out how to budget their purchases for gold without futures contracts with the gold producers.
They should place future contracts on the COMEX and get their delivery from them. That would solve more than one problem, if you know what I mean.
Welcome to the Gold-Dollar Bifurcation.
Just in time for the Obama administration.
Competition for the dollar.
This ought to cause the Fed to holler!
Welcome to the Gold-Dollar Bifurcation.
A new trend is in formation.
Shiny beats empty, and the financial systems goin' down.
If you got gold or silver, you're goin to town!
Welcome to the Gold-Dollar Bifurcation.
Derivatives implosion lead to dollar's deprecation.
Markets down, and bonds collapse.
The world's current financial system will lapse and pass.
As to the volumes- it is not as easy as turning a knob to double production.
On Jan 23 10:04 AM Smarty_Pants wrote:
> In their defense, US law does require the mint to use gold mined
> in the US for its coins. Given the high demand for gold coins and
> the large premiums, any new blanks which become available are probably being purchased by private concerns at prices above what the Mint is allowed to pay, leaving the Mint with a much smaller working supply of blanks.
>
> 2008 = 860,500 oz
> 2007= 198,500 oz
> 2006 = 261,000 oz
> 2005 = 449,000 oz
> 2004 = 536,000 oz
> 2003 = 484,500 oz
> 2002 = 315,000 oz
> 2001 = 325,000 oz
> 2000 = 164,500 oz
> 1999 = 2,055,500 oz
> 1998 = 1,839,500 oz
> 1997 = 771,250 oz
> 1996 = 275,000 oz
Somebody at the Mint probably forgot to pay their suppliers for a couple of months. When a janitor finally noticed that coin stockpiles had dropped to zero, he told his boss who then launched an all-hands investigation with his three-person crew of night watchmen. The investigation has not been completed because the appropriate forms have not been filled out in triplicate with appropriate signatures.
See how easy it is to figure out? Government work is awesome. ;-)
If it does'nt exist then they can mark it at any price, what difference does it make.
1. Place a rediculus dollar denomination on the gold/silver coins as to keep Gresham's law in force.
2. Deviate from the metal to dollar ratio, for example. 1 ounce is $50, so 1/2 ounce is $25 and 1/10 ounce is $5 but 1/4 ounce is $10??? not $12.50?
3. Now all produced coins are declared to be numismatic, wasn't just the plain gold and silver eagles to sell for metal value plus mintage and distribution cost?
I applaud the author bring this to public view..."Has it all just been a consequence of surging global demand for gold, supply chain mismanagement, and bad timing for policy decisions? Or is there something else going on here?"
For hundreds of years before the advent of England's 'Gold Standard' and de-monetization of silver, a day's labor from an average worker was paid with 1.1 ounces of silver. That translated, in turn, to two ounces of gold per month. A rough equivalence to that, universally existed far into antiquity as well.
Putting that into current paper dollar perspective, an ounce of silver has a labor/purchasing equivalence to about 150 notes. When PMs reach that level, they'll become directly competitive against government stamp-money.
On Jan 24 02:23 PM xb74 wrote:
> What difference does the US Mint's action make when you can by gold
> coins on the internet through a dealer from any country? There is
> no US monoply on gold coins.
Even the most successful experiment with it under the iron fisted rule of the Chinese Emperors (for strictly internal use), failed and forced China to import silver for about three centuries in two huge waves.
If governments (in their selfish desire to maintain excessive control over their constituents) withhold gold and silver from public hands, the implosion of the paper money scheme will be made all the worse for lack of real, broadly acceptable, money.
In a near totally non-productive society like the US (and most of Europe), that will result in dramatically wild fluctuations in exchange ratios between precious metals, foodstuffs and finished goods. The repurcussions on societies will be profound, to say the least.
Looking very carefully at world commerce, it isn't difficult to see that governments have all reverted back to Mercantilism so as to preserve their centralized control over their societies (true Free Market Capitalism renders government to a socially inferior, administrative functionality). While that shift has been masked by Mercantilism's resemblence to Capitalism, it necessitated restoration of Mercantilism's central feature ... the State Treasury.
It's a long explanation, but succintly, fiat paper money reserves equity title to the issuer. Everything acquired with it becomes merely a collateral holding until extinguished with payment of gold or silver to the issuer. Put simply ... governments hold equity title to everything in their jurisdictions
The point being ... that gold and silver have a long way to go in proper valuation and the current 'premiums' are illusury. They can vaporize as soon as the paper money system goes into hyperinflationary phase (which is just now starting to form up).
On Jan 24 05:46 PM xb74 wrote:
> My point was gold is gold, A Canadian Maple and a American Buffalo
> are both 1 oz. gold is a storage for fiat money, normaly you cant
> buy anything with gold coins so why pay the premium the mints are
> charging for Buffalos, go to Bullion Direct or any other site and
> buy Maples or Krugerrands or bars . When you sell to get spending
> money your sale is based on the spot price.
aprioritrader.blogspot...
Impressive. Smarty_Pants demonstrates that it is still possible to discuss gold in the light of reasonable explanations, not the most commonly used "magic metal" or "conspiracy" based explanations. Boy. . .It's like it actually might be another commodity instead of the fetish many seem to believe it is.
Bravo!
On Jan 23 10:04 AM Smarty_Pants wrote:
> Maybe the reason they stopped concerning themselves with producing . . .
> 2008 = 860,500 oz
> 2007= 198,500 oz
> 2006 = 261,000 oz
> 2005 = 449,000 oz
> 2004 = 536,000 oz
> 2003 = 484,500 oz
> 2002 = 315,000 oz
> 2001 = 325,000 oz
> 2000 = 164,500 oz
> 1999 = 2,055,500 oz
> 1998 = 1,839,500 oz
> 1997 = 771,250 oz
> 1996 = 275,000 oz
On Jan 24 07:06 PM Pat Fields wrote:
> The problem with viewing precious metals as a commodity good to be
> exchanged for paper currency, is that the paper currency is inherently
> inflationary and so always doomed to eventual default.
>
> Even the most successful experiment with it under the iron fisted
> rule of the Chinese Emperors (for strictly internal use), failed
> and forced China to import silver for about three centuries in two
> huge waves.
>
> If governments (in their selfish desire to maintain excessive control
> over their constituents) withhold gold and silver from public hands,
> the implosion of the paper money scheme will be made all the worse
> for lack of real, broadly acceptable, money.
>
> In a near totally non-productive society like the US (and most of
> Europe), that will result in dramatically wild fluctuations in exchange
> ratios between precious metals, foodstuffs and finished goods. The
> repurcussions on societies will be profound, to say the least. <br/>
>
> Looking very carefully at world commerce, it isn't difficult to see
> that governments have all reverted back to Mercantilism so as to
> preserve their centralized control over their societies (true Free
> Market Capitalism renders government to a socially inferior, administrative
> functionality). While that shift has been masked by Mercantilism's
> resemblence to Capitalism, it necessitated restoration of Mercantilism's
> central feature ... the State Treasury.
>
> It's a long explanation, but succintly, fiat paper money reserves
> equity title to the issuer. Everything acquired with it becomes merely
> a collateral holding until extinguished with payment of gold or silver
> to the issuer. Put simply ... governments hold equity title to everything
> in their jurisdictions
>
> The point being ... that gold and silver have a long way to go in
> proper valuation and the current 'premiums' are illusury. They can
> vaporize as soon as the paper money system goes into hyperinflationary
> phase (which is just now starting to form up).
>
> On Jan 24 05:46 PM xb74 wrote:
On Jan 23 02:08 PM know nothing wrote:
> 2008 was a year for the coin collector,any of the buffalo's or proofs
> you can get your hands on you should buy and hold. Think of all the
> history making headlines in 08! Failing banks,bailouts,stock market
> crash! First Black President to boot. Then to discontinue production
> of fractionals and limitimg production of all coins. What a investment
> opportunity of a life time! Will 09 follow suite? Looks like we might
> be off to a good start?
At the time I thought that it was sold to help finance our deficit spending.
Now I wonder. Does anyone know about where it went?
On Jan 25 11:15 AM athena wrote:
> I was in South Africa in 2000 and read in their leading paper a little
> article about our Fort Knox. They said that there was very little
> gold there if any.
> At the time I thought that it was sold to help finance our deficit
> spending.
> Now I wonder. Does anyone know about where it went?
On Jan 25 08:32 AM twin wrote:
> Pat Fields: thanks for your comments. HAd a quick questions, if as
> you state "that gold and silver have a long way to go in proper valuation
> and the current 'premiums' are illusury" , what then be the next
> best place to park your money other than USD and Gold? thanks
On Jan 24 05:20 AM toofan wrote:
> Why is the gold in Fort Knox valued at $42 - Isn't the government
> following their own accounting rules of marking inventory to market
> prices. For 3 decade the neither the value nor the quantity has changed
> - which begs the question - Is it really there?
>
> If it does'nt exist then they can mark it at any price, what difference
> does it make.
If you don't think it will happen, think again. They already took away some of our constitutional rights and now they are stealing us blind and we are just sitting here and doing nothing about it, so no weeping and gnashing of teeth when that day finally comes.
When that all happens then you'll really see how the government can create "money" virtually out of thin air. BTW, the government I'm talking about will be the World Government, not the US Government.
They've done it once before and will do it again. We're simply waiting for a stroke of a pen!
On Jan 23 05:07 AM paultaut wrote:
> Where does the Mint get its Gold?
>
> Do you know?
'09 Presidential Dollar....<$0.03
'76 Eisenhower Dollar..... $3.84
'35 Peace Dollar..............$9...
Gold is not about Mad Max end of the world fantasies. Gold is about imposing discipline on bank lending, sovereign borrowing, and national consumption.
FYI: The Mint is scaling back to avoid getting caught with gold inventory purchased at higher prices, plain and simple.
Most likely, by scaling back, pent up demand will be happy to agree to a new "pre-pay" system, whereby all buyers must pay-in-advance before the coins are sturck or blanks purchased.
The Mint is under no obligation to saddle itself with expensive gold simply to create numismatic collectibles.
As a collector, I agree, the mint had too many products. I stopped buying any of them.
For 10 oz and more, I heartily recommend tulving.com (no I'm not affiliated.)
For smaller sizes, it is all over ebay.
Pretty ineffective conspiracy. Or should I say that conspiracy theorizing really isn't what it used to be.
You just don't hear that kind of reasoning from stamp collectors!
What law are many of the posters referencing that requires them to create these collector coins?
Finally, if we truly have a fiat currency, isn't minting gold coins an archaic government function? Shouldn't we leave this function to the private market? What's next, are they going to start selling baseball cards, art knives, beanie babies, and collector figurines?
You need about $91000 to buy 100oz gold,and account with dealer. Gold can be shipped to your business address.
"(e) Notwithstanding any other provision of law, the Secretary shall mint and issue, in quantities sufficient to meet public demand, coins which--
(1) are 40.6 millimeters in diameter and weigh 31.103 grams;
(2) contain .999 fine silver;
(3) have a design--
(A) symbolic of Liberty on the obverse side; and
(B) of an eagle on the reverse side;
(f) Silver Coins.--
(1) Sale price.--The Secretary shall sell the coins minted under subsection (e) to the public at a price equal to the market value of the bullion at the time of sale, plus the cost of minting, marketing, and distributing such coins (including labor, materials, dies, use of machinery, and promotional and overhead expenses).
(2) Bulk sales.--The Secretary shall make bulk sales of the coins minted under subsection (e) at a reasonable discount.
(3) Numismatic items.--For purposes of section 5132(a)(1) of this title, all coins minted under subsection (e) shall be considered to be numismatic items.
(h) The coins issued under this title shall be legal tender as provided in section 5103 of this title.
"(i)(1) Notwithstanding section 5111(a)(1) of this title, the
Secretary shall mint and issue the gold coins described in paragraphs (7), (8), (9), and (10) of subsection (a) of this section, in quantities sufficient to meet public demand, and such gold coins shall--
(A) have a design determined by the Secretary, except that the fifty dollar gold coin shall have--
(i) on the obverse side, a design symbolic of Liberty; and
(ii) on the reverse side, a design representing a family of eagles, with the male carrying an olive branch and flying above a nest containing a female eagle and hatchlings;
(B) have inscriptions of the denomination, the weight of the fine gold content, the year of minting or issuance, and the words ``Liberty'', ``In God We Trust'', ``United States of America'', and ``E Pluribus Unum''; and
(C) have reeded edges.
(2)(A) The Secretary shall sell the coins minted under this subsection to the public at a price equal to the market value of the bullion at the time of sale, plus the cost of minting, marketing, and distributing such coins (including labor, materials, dies, use of
machinery, and promotional and overhead expenses).
(B) The Secretary shall make bulk sales of the coins minted under this subsection at a reasonable discount.
(3) For purposes of section 5132(a)(1) of this title, all coins minted under this subsection shall be considered to be numismatic items.
On Jan 27 03:31 PM Chris B wrote:
> Why should the government be in the business of manufacturing collector
> coins, at a loss of hundreds of millions of taxpayer dollars no doubt?
>
>
> What law are many of the posters referencing that requires them to
> create these collector coins?
>
> Finally, if we truly have a fiat currency, isn't minting gold coins
> an archaic government function? Shouldn't we leave this function
> to the private market? What's next, are they going to start selling
> baseball cards, art knives, beanie babies, and collector figurines?
I bet they love that one to.
On Jan 28 09:03 AM SW Richmond wrote:
> Interesting dichotomy above, numismatic items that are legal tender.
> The tax people just love that one.
gov't has lots of gold, and lot's of dollar denominated debt.
strong dollar means controlling price of gold.
Since when do customers make dmeands like that? I will remember the next time I go tomake a purchase I will remember to make the same arguments with the seller. SCREW ME, I DEMAND IT!
someone else will. I own several different types of gold bullion coins, which are just as viable an investment as a US minted
coin. I started my gold investment 2 years ago by picking up several Krugerrands. I now own gold canadian maple leaf's and some
Chinese Panda bullion coins. If you look on Ebay you'll see that Panda's go for more money than American Eagles.
I also think that buying gold bullion coins is probably the best way to invest in gold. Buy gold coins from different countries
and at some point some of those counties may run low on their supply of coins and your investment will go up. There's nothing
wrong with buying gold coins from different countries. Take a look at the following article which shows varius gold bullion coins
available from many countries....
www.goldnewswire.net/g...