San Francisco 2011 Silver Eagles

In response to the continuing high demand for silver bullion coins, the United States Mint recently began production of the American Silver Eagle bullion coins at the San Francisco Mint. In a press release issued yesterday, they indicated that they would begin taking orders for the coins struck at the San Francisco facility effective May 31, 2011.

As some background, the US Mint produced Silver Eagle bullion coins at the San Francisco Mint from 1986 to 1998. For the years 1999 and 2000, the bullion coin were produced at both the Philadelphia and West Point Mint. From 2001 until just recently, production has taken place exclusively at the West Point Mint. For the entire duration, the bullion coins have not carried a mint mark.

The Proof Silver Eagles have also been struck at various facilities, but have always carried the proper identifying mint mark. From 1986 to 1992, proof coins were minted at San Francisco with the "S" mint mark. From 1993 to 2000, proof coins were minted at Philadelphia with the "P" mint mark. (This is with the exception of the specially issued 1995-W Proof Silver Eagle.) From 2001 to present, proof coins were minted at the West Point Mint with the "W" mint mark. (The reverse proof issued in 2006 was minted at Philadelphia with the "P" mint mark).

The positive aspect of the expanded Silver Eagle bullion coin production is that there should be more bullion coins available to meet public demand. Since the 2011-dated Silver Eagles were first made available to authorized purchasers on January 3, orders have been subject to an allocation program. The available supplies have been rationed amongst authorized purchasers, limiting the number of bullion coins that could be ordered.

At a House Subcommittee hearing held in April, Terrence Hanlon, the President of Dillon Gage Metals Division, had estimated that the US Mint losses about a third of potential bullion sales because they cannot meet demand. This is likely one of the drivers of the high premiums for Silver Eagle bullion coins, which have been as high as $5 per coin over spot, even when purchasing in large quantity. Purchases in smaller quantities result in even higher premiums.

In this light, increasing production is certainly a positive step.

A possible unintended consequence of the increased production might be the creation of 2011 San Francisco Silver Eagles. In the US Mint's press release, they indicated that coins would be produced using the same manufacturing process and packaging used at West Point and no mint marks would be used. This would result in no visible difference between the coins from each facility.

As discussed in this Coin Update article, in the past sealed Silver Eagle Monster Boxes have carried stickers and plastic strapping denoting the production facility. If these identifying packaging elements continue to be used, sealed boxes could attributed to one facility or the other. Even if these packaging elements are modified, identification through other means may be possible.

An earlier article from CoinWorld mentioned the possibility of authorized purchasers picking up coins directly from the San Francisco Mint. Shipping documentation might also provide substantiation for the origin of the coins. The authorized purchasers or coin dealers could then send the sealed monster boxes off to third party grading companies, which could encapsulate individual coins, noting their origin.

The coins could then be marketed as something special and sold at a premium, even though it is not really justified. If the expected production of "up to several hundred thousand coins" per week takes place, the resulting mintage would be into the millions, possibly surpassing some of the lower mintage years for the bullion series. And, of course, outside of the box or holder, these coins will be no different than the tens of millions of coins struck at the West Point Mint.

Hopefully, this is something that the US Mint has considered and will take steps necessary to avoid the situation.