Gold and Silver Eagle Bullion Allocation Programs End

Yesterday, the US Mint announced the end of the long standing allocation programs for Gold and Silver American Eagle bullion coins. This should have implications for coin collectors who have been eagerly awaiting the collectible proof and uncirculated versions of the coins.

The news comes via a brief memorandum sent to authorized purchasers of US Mint bullion coins, which stated, "Effective immediately, the United States is lifting the allocation process. You may place your orders under the standard ordering procedures."

Gold and Silver Eagle Bullion Coin Shortage and Rationing

The US Mint sells gold and silver bullion coins through a network of authorized purchasers. Last year, heavy demand and a tight supply of precious metals blanks had forced the US Mint to temporarily suspend sales of bullion coins and eventually instate allocation programs. These programs limited the number of gold and silver bullion coins that authorized purchasers could order.

The US Mint would divide weekly bullion coin production into two pools. The first pool would be divided equally amongst authorized purchasers, and the second would be divided based on past sales performance. The silver allocation program had been in place since April 2008, and the gold allocation program had been in place since August 2008.

In recent months there had been signs that the heavy demand and tight supply, which necessitated the allocation programs, were easing. After reaching extreme levels during the shortage, premiums for bullion coins charged by precious metals dealers were finally dropping. At the height of the Silver Eagle shortage, bullion coins carried premiums as high as $4.50 per coin. Since last month, these premiums have declined back to their historical norms around $2.00 per coin.

Another sign had been a recent decline in monthly sales levels for the US Mint's gold and silver bullion coins. For 2009, sales had recorded month to month increases before peaking and finally declining. Sales of Silver Eagle bullion coins had risen to a peak of 3,132,000 ounces in March, before receding in April, and falling further in May to 1,904,500 ounces. Sales of Gold Eagle bullion coins had reached a peak of 147,500 ounces in April, before dropping to 65,000 in May. Notably, even the reduced sales figures from last month remain far above year over year and historical sales comparisons.

Gold and Silver Eagle Collector Coins on the Horizon?

The end of the allocation program should be welcome news for coin collectors. Because of the high demand for gold and silver bullion coins, the US Mint had suspended production of the collector versions of the coins. By law, the US Mint is required to provide bullion coins "in quantities sufficient to meet public demand." Because they were unable to meet full demand, they had been diverting their entire supply of blanks to the production of bullion coins in lieu of producing any collector coins.

At the time of this post, there still has not been any indication of when production of collector coins will begin, and when the coins will eventually go on sale for collectors. However, recent developments suggest that a window of opportunity has opened for the US Mint to produce the collector coins. The end of the allocation program can be interpreted to mean that the US Mint is reasonably confident that their supply of incoming precious metals blanks is sufficient to satisfy full bullion coin demand with a reasonable cushion. Presumably, some of these extra blanks can now be used to produce collector coins.

The collector versions of American Gold and Silver Eagles expected to be produced this year are the following:

2009 American Gold Eagle One Ounce Proof
2009 American Gold Eagle One-Half Ounce Proof
2009 American Gold Eagle One-Quarter Ounce Proof
2009 American Gold Eagle One-Tenth Ounce Proof
2009 American Gold Eagle Proof Four Coin Set
2009 American Gold Eagle One Ounce Uncirculated
2009 American Silver Eagle One Ounce Proof
2009 American Silver Eagle One Ounce Uncirculated

Note that this product line up is slightly reduced from last year. The fractional versions of the 2009-W Uncirculated Gold Eagles were previously announced as discontinued.

Even though the collector versions of Gold and Silver Eagles are now closer to becoming reality, there still has not been any additional news on the American Platinum Eagle coins and American Buffalo Gold Coins. For 2009 to date, the US Mint has not produced or sold any bullion or collector coins from these two programs.