Gold Eagle Bullion Sales Suspended by US Mint

Friday news broke that the US Mint had suspended sales of American Gold Eagle bullion coins. Until further notice, they are not accepting new orders from precious metals dealers. The news was first reported on the APMEX Blog and later more broadly circulated through a daily dispatch from GATA.

For clarification, the suspension is related to the American Gold Eagle bullion coins sold by the US Mint to a network of authorized dealers. The bullion coins are sold to the dealers at a set premium above the market price of gold. In turn, the authorized dealers sell the coins to other dealers or individuals.

The so-called "collectible versions" of the American Gold Eagle coins remain on sale at the US Mint's website. This includes the 2008-W Uncirculated Gold Eagle and 2008-W Proof Gold Eagle. These coins are sold at fixed prices which are set when the coins first go on sale. The fixed pricing can be adjusted for changes in precious metals values. However, in recent history the Mint has only adjusted pricing upwards when the price of gold has risen. They have not yet adjusted prices downwards in response to a decline in the price of gold. Currently, the one ounce proof gold coin sells for $1,199.95 and the one ounce uncirculated gold coin sells for $1,119.95. This compares to a spot price of gold of $786.00 per ounce.

Why did the Mint stop selling American Gold Eagle bullion coins?

A similar situation arose earlier this year when the US Mint suspended sales of American Silver Eagle bullion coins. The suspension was brief, but followed by resumed sales on a rationed basis. According to a Wall Street Journal story one dealer who wanted to buy 500,000 coins per week was limited to 100,000. The US Mint responded to criticisms with several statements citing the "exponential" demand for Silver Eagles.

The Silver Eagle shortage began April 2008 following a sharp rise in the price of silver to over $20 per ounce. The current Gold Eagle suspension follows a sharp decline in the price of gold from a recent high of $986 per ounce to the current price of $786 per ounce. So why are Silver Eagles suspended when prices rise and Gold Eagles suspended when prices fall?

GATA, who has long argued that world governments are using the futures markets to artificially suppress the price of gold, said the following:

"The suspension is overwhelming evidence that the futures contract price of gold on the commodities exchanges is substantially below the physical market price and that, indeed, the commodities exchanges are being used as GATA long has maintained -- as part of a massive scheme of manipulation of the precious metals, currency, and bond markets."

If this were true, at some point the physical market for gold bullion would start to diverge from the paper market. Physical gold would start to change hands premiums to the "market prices." Is this happening already? Is US Mint unable to locate refiners willing to sell gold at "market" prices? Has the recent decline in gold prices led to "exponential" demand for Gold Eagles?

As yet, the Mint has not offered a public explanation of the suspension or an estimated time frame for resumption of sales.