Rationing ends for silver Eagle

Rationing ended June 2 for supplies of 2014 silver American Eagle bullion coins sold by the U.S. Mint to its network of buyers called Authorized Purchasers.

Since the financial crisis of 2008, demand from these purchasers has often exceeded the ability of the Mint to provide the popular silver bullion product.

The situation was so bad in 2009 that the Mint angered collectors by not making proof examples to use the blanks for regular bullion coins.

Even as production quadrupled from 9,028,036 in 2007 to 42,675,000 in 2013, demand frequently exceeded even this growing supply.

The Mint’s solution was to allocate supplies among its buyers according to a formula based on prior purchases.

The effect in the marketplace was less a shortage of coins and more an enlargement in the premium average buyers had to pay to sellers to acquire one-ounce of silver in American Eagle form at the retail level.

These premiums, which currently range from 13 percent to over 20 percent, depending on quantity purchased, were far higher when the shortage in Eagle supply was most acute.

The Mint’s choke point in making supply available was not its ability to strike the bullion coins in West Point and San Francisco, but in the ability of its blank suppliers to provide a sufficient quantity of blanks.

The Mint sold 22,056,500 of the 2014 one-ounce silver bullion coins during the rationing period and it can reimpose rationing if demand again outstrips available supply.