In August, demand for bullion had slacked a bit from the frenetic pace set over the past two years. But buyers returned with a vengeance during September, and inventories of the most popular products show the strain.
Premiums are back on the rise, and delivery delays have returned for many items, with silver inventories being the hardest hit. Money Metals’ weaker competitors are especially struggling.
As buyers turn away from higher-priced silver coins (particularly the problematic Silver Eagle, one-ounce silver rounds and bars of various sizes are now experiencing supply issues.
The major constraint, once again, is in the capacity of mints and refiners to produce retail bullion products. While demand for 1,000 oz silver bars also appears strong, premiums for those large bars are steady.
If 1,000 oz bar premiums rise, it will signal a true silver shortage. For now, though, the shortage is in the fabrication capacity of mints and refiners who convert large bars into smaller products.
The pressure on premiums has been driven, at least in part, by the U.S. Mint. Despite its obligation to produce coins in quantities "sufficient to meet public demand," the Mint has done nothing to increase supply.
Demand spiked for bullion products two and a half years ago. Private mints and refiners have been steadily growing capacity, but the U.S. Mint is manufacturing excuses instead.
Congressman Alex Mooney (R-WV) sent a terse letter to Mint Director Ventris Gibson over a month ago. Ms. Gibson replied last week. She blamed issues on COVID and on the vendors who supply blanks.
The U.S. Mint’s response letter was predictably long on excuses and short on solutions. The top U.S. Mint bureaucrat says she hopes to add some new vendors who can produce blanks rather than gearing up to produce blanks in-house.
There was no mention of plans to increase inventories during periods when demand is slowed dramatically. If the Mint has plans to add any people, equipment, or in-house capacity, Gibson didn’t discuss that either.
Until and unless the U.S. Mint gets its act together, it remains wise to avoid the extraordinarily high premiums that come with American Eagles – and even consider selling the Silver Eagles to Money Metals for $9.50 over spot to redeploy the funds into more ounces in other forms.
Rounds and bars offer much better value than many other silver coins.