Could the US Mint Be Causing the COMEX Silver Decline?

June 23, 2011 By 7 Comments

So we’re all aware that the COMEX has been bleeding silver as of late, now down to an ALL-TIME LOW of 27.7 million ounces of deliverable silver.
What no one knows for sure, is where this silver is going.
Per US law, the US Mint must source its silver from DOMESTIC production.  Well, what happens when US mint silver sales outpace domestic production? Is it possible the US Mint is actually draining silver from the COMEX in a massive amount?
Lets take a look at the details of 2010-2011 US silver production vs. US mint silver eagle sales.

As can be seen in the chart, US silver production during Q1 2011 has declined by 12% from US silver production during Q1 2010!
Last year’s total silver production in the US was 38.6 million ounces. 
If you project a 12% decline silver in production for the whole year, that would result in 2011 total US silver production of 33.97 million ounces.

Now lets look at US Mint Silver Eagle sales in Q1 2011 vs Q1 2010.

2011 Silver Sales Totals (in ounces / number of coins)
Month One
( oz. / #coins )
January 6,422,000
6,422,000
February 3,240,000
3,240,000
March 2,767,000
2,767,000

So in Q1 2011, the US Mint sold 12,429,000 Silver Eagles- on pace for 49.7 million for 2011!

Lets compare this to 2010 Silver Eagle sales through March

2010 Silver Sales Totals (in ounces / number of coins)
Month One
( oz. / #coins )
January 3,592,500
3,592,500
February 2,050,000
2,050,000
March 3,381,000
3,381,000

Q1 2010 the US Mint sold only 8,993,500 silver eagles.

This means that Jan-March 2011 silver eagle sales are 38.2% greater than Jan-March 2010 silver eagle sales, while US silver production is down 12%!

Put another way, total US silver production is on pace for 33.97 million ounces of silver in 2011, while US Mint Silver Eagle sales are on pace for 49.7 million ounces in 2011!

Silver Eagle sales are on pace for 16 million (NEARLY 50%) ounces GREATER THAN ENTIRE US SILVER PRODUCTION IN 2011!!!

Where is the US Mint sourcing this silver deficit?

There are only 3 possible ways the US Mint can meet this shortfall.
1. Suspend sales.  While this has been done temporarily, this is not a legal option for the mint as US law states that they must supply silver eagles in a quantity that meets public demand.
2. Import silver.  This is not an option as US law states that US Mint silver must be from domestic sources.

Cash Settlement Silver Eagle?

3. Obtain the shortfall (16 million ounces for 2011) from COMEX inventories.

There is only one legal option for the US Mint- obtain this silver from the COMEX inventories.

If the US Mint is sourcing silver from the COMEX, good luck Blythe at getting the Mint to accept cash premiums.  I wonder what a cash silver eagle looks like.  Ok, maybe I shouldn’t be giving them any ideas.

End users who are in desperate need of physical silver will not accept ANY cash premium. They need the physical.

Could the US Mint in fact be the culprit that is causing Blythe Blood to be flowing on the COMEX floor?


Check out these similar articles:

  1. Silver Eagle US Mint Sales Highest Ever Through May
  2. COMEX Registered Silver Supplies Down to 29.6 Million Ounces
  3. 8 Billion Ounces of Paper Silver Traded Hands on the Comex Last Week
  4. COMEX Registered Silver Supplies Down 54 Million Ounces Since 2009!
  5. COMEX Silver Inventories Drop Another 578,853 Ounces
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Comments

  1. Anonymous says:
    June 23, 2011 at 11:34 AM

    Great work Doc…some amazing statistics here.

  2. Big Machine says:
    June 23, 2011 at 11:59 AM

    so what happens to US mint sales when the COMEX runs dry?

  3. Anonymous says:
    June 23, 2011 at 12:16 PM

    Is it possible that when physical gold diverges from COMEX prices there could end up being two different physical prices? If Eagles use up the entire US production, doesn't the price of US silver Have to go up whether prices in the rest of the world go up or not? How do we know if COMEX inventories are from US production?

  4. Anonymous says:
    June 23, 2011 at 1:09 PM

    The mint doesn't get all their silver from America. When the guy from the mint was testifying in front of congress he said they get it from Australlia and other places. I was pissed when I heard that.

  5. Anonymous says:
    June 23, 2011 at 1:09 PM

    Why Silver price is going down?

  6. Anonymous says:
    June 23, 2011 at 1:14 PM

    now we know why they're sourcing it from australia illegally, nowhere else to get it!

  7. Anonymous says:
    June 23, 2011 at 5:09 PM

    excellent work Doc

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