Earlier this week, we covered the US Mint Silver Bullion Coin sellout.
Today, the US Mint communicated that it has also temporarily sold out of the 2018 American Gold Buffalo Coins via the following email message.
Date: Fri, 7 Sep 2018 14:04:18 +0000
Subject: 2018 American Buffalo Gold Bullion Coins Temporarily Sold Out
This is to inform you that we have temporarily sold out of the 2018 American Buffalo Gold Bullion Coins. We are in the process of making additional coins and will have additional 2018 American Buffalo Gold Bullion Coins available to sell shortly.
Please let me know if you have any additional questions.
Branch Chief, Bullion Directorate
United States Mint
Will the US Mint sell out of the more highly purchased American Gold Eagle Coins next?
If recent trends are any indication, perhaps so.
But with only limited information provided, most bullion industry onlookers are left to speculate on what is happening with these recent bullion coin sellouts at the US Mint.
What is going on with the US Mint’s Bullion Coin Program?
More than likely these ‘temporary’ bullion coin sellouts are the result of a few factors at play.
The largest factor most likely being the US Mint not having adequate fine bullion planchets on hand to strike bullion coins in required volumes now demanded.
As precious metal spot prices fell throughout this summer 2018, physical bullion buying demand has steadily increased.
Now that gold and silver spot price points are perceived good value by many active bullion buyers, it appears the US Mint has been caught flat footed.
This industry has seen similar US Mint sellout and coin rationing scenarios. Episodes include the fall of 2008, early 2013, middle 2015, and likely a few others which I can’t recall off the tips of my typing fingers.
Most often the US Mint’s bullion coin supply demand equilibrium breaks because investor demand can come in like a tidal wave (e.g. fall 2008). Then the US Mint gets caught not having either adequate coin planchet supplies and or stamped bullion coin inventories to match increased demand levels.
The US Mint basically just calls timeout, often with ambiguous language which often leaves industry players and onlookers wondering what is going on.
Which vendors are supplying the US Mint with gold coin planchets?
-Sunshine Minting Inc.
— James Henry Anderson (@jameshenryand) October 17, 2017
You can bet your bottom Federal Reserve notes, that silver and gold planchet provider, Sunshine Minting Inc., is currently working around the clock, cranking out silver and gold planchets for the US Mint.
These recent US Mint coin sellouts could span mere weeks, maybe months, how about even extending into 2019.
Industry rumors can get silly.
If precious metal spot prices move sideways or even up in the weeks and months to come, all US Mint bullion coin sellouts will likely subside. And thus we will move into the 2019 coin issuances with the standard holiday breaks, products supplies, and price points.
But… if precious metal spot prices fall further down in the weeks and months to come, and we get any major issues in financial markets now being almost fall and all; well this recent bullion supply issue could fester.
It will then flow further into competing bullion product categories, and likely become a much larger shortage story than it is now.
We shall soon see.
Remember that in the big bullion picture context… total US Mint bullion sales figures are tiny. Even when considered all time, they only amount to perhaps double digit billions of US dollars.
In a world of multiple $100s of trillions in currencies, stocks, bonds, and capital flows. Our small physical bullion industry awaits being overwhelmed by the perfect financial storm.
US Mint Gold Coin Sales 1986 – 2018
Let’s start with a few up to date US Mint coin sales charts and begin with total US Mint gold coin sales from the US Mint American Bullion Coin program start in 1986, all the way to today.
You can find up to date US Mint bullion sales data at the bottom of the page. Simply eyeballing it, you will find for about every one ounce 24k Gold Buffalo coin that has been sold this past decade, just over 4 one ounce 22k Gold Eagle coins have been sold.
Note also that this chart below, counts both the less highly sold 24k Gold Buffalo coin, and the more often sold 22k Gold Eagle coin together.
Glancing at the chart above there are 3 stand out periods of high US Mint gold bullion coin demand.
At the launch of the program in 1986, we see a likely combination of majority coin collectors and even long term gold bulls buying.
Then around the dot-com bubble and Y2K year 2000 scare, we see a high volume of gold coin buyers getting their gold bullion at historically low price points. (e.g. Gold Prices 1997, 1998, 1999). The sheer amount of 1/10th oz gold coin sales volumes in 1999 likely means many buyers back then thought they were going to potentially use their smaller gold coins in commerce as computer programs were about to theoretically not function.
^ Indeed many Y2K ‘kooks’ got their gold & silver ahead of time, at great price points ^
The came 2008.
Which began a consistent surge in US Mint gold bullion coin buying beginning with the 2008 Financial Crisis running through 2016. There remains trillions of reasons as to why this was so.
Since then, record volumes of secondary gold bullion coins have been sold back into western physical gold bullion markets producing various ramifications.
Recent Drops in Precious Metal Spot Prices: Spikes Demand
With this latest drop in precious metal spot prices over this summer 2018, most of that secondary or sold back US Mint gold coin supply has been sold off to bargain bullion buyers.
The ones who care less about the year of the bullion coin strike or mintage figures, and much more about getting their bullion coins at the lowest price points possible.
Of course, all secondary US Mint gold coin product sales are unaccounted for in the US Mint gold coin chart above and the US Mint’s reported sales data. As secondary bullion coin sales are often done private investor or even hedge fund to bullion dealer, that all goes under the financial press’ radar.
Bullion Coin Demand Rebound?
Know that over the last month especially, physical bullion supplies are indeed tightening as bullion coin buying demand has certainly picked up.
I have written about the myriad reasons as to why investor bullion buying is not going away anytime soon.
In fact, until we have monetary and large structural financial reforms, this trend will most likely not end.
US Mint Gold Coin Price Premiums Over Spot
These last few years of secondary US Mint gold and silver coins coming back into the bullion market caused price premiums for both old and new US Mint coins to fall to their lowest levels in years.
You can see that statement reflected in the following US Mint gold coin price premium charts below. During 2008 there was limited supply of gold coins to go around, premiums spiked to some 10% above the then gold spot price at the time.
Finally notice the recent rebound in both US Mint Gold Buffalo coin and Gold Eagle coin premiums at the final ends of each respective chart.
This reflects the spike and rebound in bullion buying demand which as mentioned, really took off last month, in early August 2018.
The Biggest Bullion Shortage, now or later?
As said, this may or may not become the beginnings of the biggest bullion shortage myself and many others expect to visit this tiny industry, some time sooner, rather than much later.
Fall 2008 was a legit bullion shortage, the other episodes, not so much. This current situation, is probably just another scare given the probabilities of a perfect storm all at once occurring. Yet the arrogance to think that after 2008 has passed, we won’t see another or worse situation ahead is damn foolery.
I still expect there will more than likely come days and perhaps many months during which mere precious metal spot prices and their even larger, many silly derivatives, will wish they were indeed the real things.
Knowing that critical difference alone, could make bullion buyers a mint.
About the Author
James Anderson has both worked and invested in the physical investment grade bullion markets prior to the 2008 global financial crisis.