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silver/gold planchet shortage coming to the US mint?

derrybderryb Posts: 36,007 ✭✭✭✭✭

Posted this elsewhere but may be of interest to the stackers as well:

Many here well remember the precious metal planchet shortage experienced by the US Mint in 2008 and how it resulted in skyrocketing after market prices for gold and silver limited mintage coins that did get released. The US Mint has already announced it is delaying the production of the 2022 Morgan and Peace silver coins until next year. In addition to already existing world-wide supply chain issues the London Bullion Market Association (LBMA) and the Commodity Exchange Inc. (COMEX), both leaders in the precious metal futures markets, have banned all Russian produced precious metal bars from entering their vaults and will possibly experience physical precious metal shortages. Included in the ban were six large Russian PM producers/fabricators who until now provided approved "ready for delivery" bars to the exchanges' vaults. To gauge the size of the Russian PM market, it exported 51.8 tons of gold in the first quarter of 2021 alone. While US Mint precious metal sources are primarily domestic, any shortage of precious metals could re-direct those metals and leave the mint with another shortage.

In the event the US Mint once again halts/reduces precious metal coin production in 2022, one should stay abreast of PM supply chain issues and be financially ready to drop the hammer on US mint PM products. It could become 2008 all over again with huge after market gains in non-bullion gold and silver eagles and gold buffalos that are purchased directly from the mint. These PM collector coins are the first to be removed in a PM shortage. Bulk bullion coins get the metal first.

Of primary concern is how the "new" pandemic in China and escalating armed conflicts will affect long term world-wide supply chain issues. Will it cause producers of all raw materials to reduce/eliminate exports in order to keep the "goods" at home? Are we going to witness a "de-globalization" when it comes to a nation"s valuable raw materials and what impact will it have on other countries who depend on them to supply those goods? I suspect the answer is even higher prices and painful shortages.

"Do you hear alarm bells ringing? Neither do I. And that’s a huge problem." - Simon Black

Comments

  • rickoricko Posts: 98,724 ✭✭✭✭✭

    I agree with your assessment of the situation, and there are several possibilities with the current geopolitical and geo-economic situations. As it stands, I do think PM's will be in for 'forced' value growth for a while. Depending on what combination of economic and political results manifest, it could be sustained, or, a return to earlier values. How is that for a concrete prediction? ;) Cheers, RickO

  • jmski52jmski52 Posts: 22,263 ✭✭✭✭✭
    edited March 20, 2022 8:24AM

    In 2008, the Mint was selling Proof Platinum Eagles at their usual outrageous premiums of over 35% when the price was around $2,100/oz - resulting in very low mintages to date - only in the hundreds. When the price dropped precipitously in a very short time as the concurrent supply shortages in South Aftrica were being resolved, the Mint stopped selling Proof Plats entirely, most likely because they had already bought metal at high prices while the market was cratering, and possibly because the supply pipeline had to be replenished anyway.

    Consequently, there was a possibility that those coins would be extremely low mintage keys, until Nov-Dec rolled around. By then, the price of platinum had cratered to about $850/oz (a decline of over 60%) as the supply shortages were resolved. At that point Mint started producing more of the Proof Plats, which destroyed the potential low mintages when more last-minute buyers jumped on the offering at greatly reduced prices. I'm assuming that the Mint simply bought more platinum off the market at the lower prices.

    During that same timeframe, gold also dropped from about $1,000/oz. to about $725/oz. during the stock market meltdown (a drop of around 40%) but the Mint never stopped selling their "collector" gold coin issues. With the gold coins the market dynamics seems to have been slightly different. As the price of gold was dropping, (and the stock market was dropping even faster) there was no collector appetite for buying Mint-priced "collector gold". Recall that towards the end of 2008, Eric Jordan was advising us to buy the burnished 1/4 "W" Gold Eagles because of the low mintage as a slam dunk speculation, which turned out to be a great call.

    That was also when the Gold Buffalos were languishing in sales because of the relative high prices in the face of a liquidity problem in collectors' budgets at the time. In other words, it was a tough pill to swallow as a speculation, but one that was eventually worthwhile after the mintages were finalized.

    My point - the main caveat in this statement:

    stay abreast of PM supply chain issues and be financially ready to drop the hammer on US mint PM products. It could become 2008 all over again with huge after market gains in non-bullion gold and silver eagles and gold buffalos that are purchased directly from the mint.

    is that in 2008, the platinum coins were selling at a huge discount from their initial offering price towards the end of the year, but the gold coins didn't take as much of a price hit and were still selling at relatively higher prices from the Mint than the platinum coins. Consequently, while Eric was recommending the 1/4 oz. Burnished 2008-W Gold Eagles, the price on them from the Mint was still high enough to give you pause before buying a bunch of them (which I did anyway).

    So, if you are buying Mint precious metals coins in hopes of low mintages, pay attention not only to the mintages, but also to the general tone of the market when you are buying them, and to the possibility that the prices could double back on you before the end of the year, causing a greater buying incentive (and a loss of collector premium) due to a "market discount" from a rapid price drop.

    Do I think it will happen this way? Nope, I don't - the reason being that gov.com is out of control on spending, handing out free money to their cronies and useful idiots, and because the money creation by the Fed is even more out of control. Secondly, if you check the Mint's sales and production figures for 2022, the mintages are already higher in most cases than they were at the end of the year in 2008 because of overall higher demand for precious metals coins.

    All things being equal, I think that the money creation question overwhelms the strategy of buying instant Mint rarities, and that any collector premiums generated by low mintages are not as likely to occur and that even if they did occur - the probable rise in precious metals prices will mitigate or degrade most of the collector premiums anyway, and that any rarity (if any) which develops this year due to low mintages will be harder to predict without inside information about an unexpected production cutoff. In other words, I think it will be more certain to play the low premium gold bullion price strategy than to play the Mint precious metal low mintage coin premium strategy this year. We shall see.

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • jmski52jmski52 Posts: 22,263 ✭✭✭✭✭

    lol, what a bunch of hot air. :)

    Q: Are You Printing Money? Bernanke: Not Literally

    I knew it would happen.
  • derrybderryb Posts: 36,007 ✭✭✭✭✭
    edited March 21, 2022 11:06AM

    Nobody here foresaw or talked about a gold/silver planchet shortage before it appeared September 2008 and were surprised when the mint suddenly stopped selling PM collector coins. Those who stocked up were lucky. There were a lot of unique gold products in 2008 (4 coin W unc. eagle set, 4 coin W unc. and proof buffalo sets) that suddenly were no longer available and never issued again in later years.

    While the 2008 shortage was due to extremely high demand for PM products in the face of the financial crisis, 2022 has its own red flags that should not be ignored. This year we should all be paying attention to the signs of a potential PM planchet shortage and those who are prepared to act do not have to depend on luck. They can see and monitor the warning signs in advance.

    "Do you hear alarm bells ringing? Neither do I. And that’s a huge problem." - Simon Black

  • cohodkcohodk Posts: 18,488 ✭✭✭✭✭
    edited March 22, 2022 12:33PM

    Do you believe a planchet shortage would result in higher spot prices, or just mint products?

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • JWPJWP Posts: 16,297 ✭✭✭✭✭
    edited March 31, 2022 6:13PM

    The USM has already blown the top off the price on mint products. They now feel that they have a legit excuse for this higher $$ and why should they decrease them now. Idiots like me that collect these over priced products are still there trying to buy more at any cost. just saying. :s

    Do you believe a planchet shortage would result in higher spot prices, or just mint prod

    @cohodk said:
    Do you believe a planchet shortage would result in higher spot prices, or just mint products?

    USN & USAF retired 1971-1993
    Successful Transactions with more than 100 Members

  • bronco2078bronco2078 Posts: 9,961 ✭✭✭✭✭

    Over on the us coin forum folks are drooling over clad quarter rolls 😆😆

  • JWPJWP Posts: 16,297 ✭✭✭✭✭

    The mint has just said that the Enrollment program has depleted the available 2022 W ASE's set to go on sale 4-14-22. I guess if you don't have an enrollment , you won't get one form the mint. Ebay already has pre-orders for $100 - $149.

    USN & USAF retired 1971-1993
    Successful Transactions with more than 100 Members

  • HalfpenceHalfpence Posts: 433 ✭✭✭✭

    Derryb called it. Got this email from Monument Metals.

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