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Silver bullion coins are scarce, but prices don’t show it

Marketwatch
|
Friday, October 23rd

Silver bullion coins are so scarce that certain countries have set limits on the amount they distribute, but prices for the metal haven’t budged much from their recent six-year low.

Silver is experiencing an “unprecedented industrywide phenomenon,” with strong demand for the physical metal prompting mints in certain countries to put silver bullion coins on allocation, according to The Silver Institute. In recent history, allocations have only been put into practice occasionally by the U.S. Mint.

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Rationing

The Royal Canadian Mint, Australia’s Perth Mint, the Austrian Mint and the British Royal Mint have all put their silver bullion coins on “allocation”—meaning that they are controlling the distribution of coins “due to bottlenecks in the manufacturing process,” according to a recent report from The Silver Institute.

The U.S. Mint has allocated around 1 million American Eagle silver bullion coins a week for the past three months, selling its maximum allocation every week, U.S. Mint spokesman Adam Stump said.

True, low prices can attract buyers, explaining the strong demand, but in July—before futures prices for silver hit a six-year low in late August—the U.S. Mint temporarily sold out of its American Eagle silver bullion coins.

It resumed sales later that month, setting limits on the number of coins available. This week, the U.S. Mint allocated 970,000 American Eagle silver bullion coins for distribution.

Data from the U.S. Mint shows that it sold roughly 14.3 million ounces of American Eagle coins in the third quarter. That’s the most in 29 years, according to Brodrick.

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