Silver prices plunged last week and demand for the precious metal skied. Naturally, the most popular and well-recognized silver coin in the country – the American Silver Eagle – was being snatched up as quick as the ordering process would allow.
That wasn’t a surprise.
What did come as a surprise to many was the U.S. Mint’s announcement on Tuesday that its facilities were sold out of the 2015 ASEs.
Silver spot hit a new 5-year low on Tuesday, which sparked the skyrocketing retail demand, and caused the halting of sales – ASEs are still being manufactured at the mint’s West Point facility and sales should resume in about 14 days, according to the mint’s statement.
The announcement initiated talks among silver enthusiasts that the mint had actually run out of silver (we even had questions asking if we were going to run out soon), but have no fear, the issue isn’t with silver supply, it’s more about a production/demand pile up. For comparison, think about a traffic jam where all the lanes up ahead are closed. As the cars get more packed, movement stops, but just because the cars aren’t moving doesn’t mean there isn’t more highway ahead. Just like the road, there’s more silver ASEs to come, the congestion just has to be cleared up first.
But the current issue lies with the short term output at the U.S. Mint. This sales stoppage isn’t the first time this has happened in the past 12 month – in November, the mint had to stop sales of 2014 ASEs. Just like we learned in high school, it’s all about supply and demand, but when silver prices dip and orders roll in at the rates they did earlier this week, the mint wasn’t able to keep up. This despite completing a “multi-year program to increase [silver] blanks supply to more than 50 million blanks per year” to help fulfill demand, according to the mint’s 2014 annual report.
With the level of movement in the marketplace this week, premiums rose across the board to stabilize numbers as the dip continued. Sometimes, no matter the size of the operation, it’s not feasible to keep up with the manufacturing needed to meet the required demand. And in this case, the mint decided halting sales was necessary and only authorized purchasers can place 2015 ASE orders.
When there is volatility in the market, a reaction like we’ve seen this week is possible, even over an extended period of time as output is delayed. How long it lasts typically depends on the fluctuation of prices and manufacturing capabilities to keep up with demand. Just like premiums rose, though, they can drop back to normal if there is any stabilization in spot prices.
How do I avoid increased ASE premiums and take advantage of dipping prices?
During times of increased volatility and/or supply shortages, many investors turn to Elemetal Vault and here’s why. Once you’ve funded your Elemetal Vault account, you simply buy silver for as little as $0.15 over spot. There is no tax on the silver you purchase, which is promptly allocated to your ownership and stored securely with Brink’s. When silver premiums level off, or in the case ASEs, become available, simply receive a wire or shop at Provident with your silver balances!
To learn more about Elemetal Vault and how you can open a free account today, visit ElemetalVault.com or call (844) 435-9879.
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