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phideaux | 03-09-2009 08:17 AM
Gold coin shortage likely to become chronic Gold coin shortage likely to become chronic By Michael Kosares Centennial Precious Metals, Denver http://www.usagold.com Sunday, March 8, 2009 Is the U.S. Mint's production problem long-term or short-term? What will be the effect on gold coin prices? In 1999, at the height of the Y2K crisis and under the strain of record gold demand, the U.S. Mint produced 2,055,000 1-ounce gold American eagles. In 2008, with the world embroiled in an unprecedented economic crisis and once again under the strain of record gold demand, the U.S. Mint produced only 710,000 1-ounce American eagles and 189,500 1-ounce American gold buffaloes -- just under half its 1999 production. The Mint's ability to keep up with demand in the ramp-up to Y2K played a key role in suppressing premiums on bullion gold coins. The Mint's inability to keep up with demand in 2008 drove premiums to the double digits at one point and helped add 2 percent to the baseline cost of gold coin acquisitions in 2009. When the American eagle shortages first cropped up in August 2008, the Mint blamed the problem on its vendors, saying they were "not able to supply enough 1-ounce gold bullion blanks to meet the unprecedented demand we are experiencing." The Mint promptly thereafter suspended all sales of the popular 1-ounce coins. To determine the extent of the Mint's production problems, I talked with an industry friend of many years who also happens to be one of the mint's authorized purchasers of gold bullion coins. He made two important points that hold long-term implications for gold buyers. First, all the 1-ounce gold blanks purchased by the Mint now come from one refiner in the western United States. Second, Mint officials have made attempts to line up other blank manufacturers both within the United States and abroad, but those overtures have been rebuffed. Refiners globally are running at capacity and simply cannot take on anything else. My friend's prognosis was not a good one -- the problem appears chronic and unlikely, under the circumstances, to resolve itself any time soon. Unlike the Y2K event, which resolved itself as soon as New Year's Day 2000 came and went, the current strong demand is the result of a secular gold bull market deepened by the worldwide economic crisis. As such this is a whole new ball game for the gold market. Typically, in past bull markets the principal market driver was supply and demand for the metal itself. In the current bull market, it looks like there will be an additional driver to the price paid by those acquiring gold -- the premiums added to the price because of the combination of burgeoning demand and the diminishing supply of gold coins. The role played by gold premiums -- the add-on paid over the melt value of a gold coin -- is little understood and frequently overlooked by gold investors. Usually, premiums remain relatively constant and cover the costs of minting and marketing the coins. When coin supply and demand get out of kilter, rising premiums are the mechanism that restores balance. The bad news is that rising premiums can add significantly to acquisition costs for gold consumers. The good news is that rising premiums can add to the profits for those who already own gold coins and for those who were farsighted enough to buy early in the process. A historical precedent can be found in the gold market of the late 1960s. At that time gold was pegged at $35. As the dollar crisis of the late 1960s and early 1970s unfolded, investors globally began moving into gold coins like the U.S. $20 gold piece, the British sovereign, the German 20 mark, Swiss 20 franc, et al. Though the gold price itself was fixed, premiums on gold coins were not. The demand drove premiums on these coins to unimaginable levels -- in some case four to five times melt value. We got a whiff of that sort of thing when contemporary gold coins briefly reached premiums of 12 to 15 percent at the height of the gold rush in 2008. (Pre-1933 gold coins went to premiums in excess of 20 percent.) Once the market settled down, though, a base premium 2 percentage points above normal remained. If the mints are indeed boxed in by the blanks problem, and it appears they are, there will be no easy way to keep those base premiums in check over the long run. It appears that the bullion gold coin shortage has become a chronic problem and something gold owners and accumulators will need to keep an eye on in the months to come. ---- Michael Kosares is proprietor of Centennial Precious Metals in Denver and a gold market analyst.

HistoryStudent | 03-09-2009 11:24 AM
Re: Gold coin shortage likely to become chronic FEAR bubble is going to really grow now - it might expand IF the MARKETS fall 90% from top like they did in 1929 to bottom. Then the GOLD people will not sell as easliy - especiallly as BO (Bad Order) Barack Obama administration PRINTS money to fight the fall. That will also make the PREMIUMS explode according to the demand and supply - FOR THE FIRST TIME since the PTB took over. The power to print has a lot of extra manipulation powers attached to it. :signs14::signs14:

esoteric | 03-10-2009 12:31 AM
Re: Gold coin shortage likely to become chronic this does not mean we are short of gold, just that we have really crap government run refiners who couldn't run a vending machine for their life. plus the coin market is tiny, no big deal.

keehah | 03-13-2009 04:00 PM
Re: Gold coin shortage likely to become chronic Reuters, Fri Mar 13: World mints report soaring demand for gold coins Quote:
The Royal Canadian Mint, which produces Maple Leaf bullion coins, said it quadrupled its production capacity late last year as demand for gold and silver bullion products leapt... The United States Mint said sales of its one-ounce American Eagle gold bullion coins rocketed to 710,000 ounces in 2008, from 140,000 ounces a year before. "The demand for gold and silver has been unprecedented," a spokesman for the Mint told Reuters. The chairman of the French Mint, Christophe Beaux, said sales roughly doubled last year in value terms and are expected to rise by another 50 percent this year... In South Africa -- the world's second-largest gold producer -- Natanya van Niekerk, deputy general manager for numismatics at the South African Mint Company, said she had seen a big increase in demand for gold. "I think we will see this same trend in this and the next quarter," she said. "Gold surely has been resilient in these times.".. Michael O'Kane, head bullion trader at the New Zealand Mint, said ..The mint was averaging "a month's transactions in a day," he said, adding he saw demand continuing to rise.

AgAuGal | 03-13-2009 05:17 PM
Re: Gold coin shortage likely to become chronic http://catalog.usmint.gov/webapp/wcs...category=10191 American Eagle Gold Uncirculated Coins Production of United States Mint American Eagle Gold Proof and Uncirculated Coins has been temporarily suspended because of unprecedented demand for American Eagle Gold Bullion Coins. Currently, all available 22-karat gold blanks are being allocated to the American Eagle Gold Bullion Coin Program, as the United States Mint is required by Public Law 99-185 to produce these coins “in quantities sufficient to meet public demand . . . .” The United States Mint will resume the American Eagle Gold Proof and Uncirculated Coin Programs once sufficient inventories of gold bullion blanks can be acquired to meet market demand for all three American Eagle Gold Coin products. Additionally, as a result of the recent numismatic product portfolio analysis, fractional sizes of American Eagle Gold Uncirculated Coins will no longer be produced.

HistoryStudent | 03-13-2009 05:45 PM
Re: Gold coin shortage likely to become chronic Quote:
Originally Posted by esoteric (Post 1616664) this does not mean we are short of gold, just that we have really crap government run refiners who couldn't run a vending machine for their life. plus the coin market is tiny, no big deal.
A historical precedent can be found in the gold market of the late 1960s. At that time gold was pegged at $35. As the dollar crisis of the late 1960s and early 1970s unfolded, investors globally began moving into gold coins like the U.S. $20 gold piece, the British sovereign, the German 20 mark, Swiss 20 franc, et al. Though the gold price itself was fixed, premiums on gold coins were not. The demand drove premiums on these coins to unimaginable levels -- in some case four to five times melt value. Dropping 90% of the precious metals FROM SALES TO THE AMERICAN PUBLIC coins has me a little concerned about the availability of the PMs to the US govt. however. :111::111::111::signs14: Wonder why the RATION of one UHR Eagle is happening?

HistoryStudent | 03-13-2009 05:48 PM
Re: Gold coin shortage likely to become chronic Quote:
Originally Posted by AgAuGal (Post 1624022) http://catalog.usmint.gov/webapp/wcs...category=10191 American Eagle Gold Uncirculated Coins Production of United States Mint American Eagle Gold Proof and Uncirculated Coins has been temporarily suspended because of unprecedented demand for American Eagle Gold Bullion Coins. Currently, all available 22-karat gold blanks are being allocated to the American Eagle Gold Bullion Coin Program, as the United States Mint is required by Public Law 99-185 to produce these coins �in quantities sufficient to meet public demand . . . .� The United States Mint will resume the American Eagle Gold Proof and Uncirculated Coin Programs once sufficient inventories of gold bullion blanks can be acquired to meet market demand for all three American Eagle Gold Coin products. Additionally, as a result of the recent numismatic product portfolio analysis, fractional sizes of American Eagle Gold Uncirculated Coins will no longer be produced.
About the time it took the Federal Reserve to screw up the entire system - from 1913 to 2010 - 97 years. So in 97 years ONE can buy PROOFS again! :signs14::111::111:

lhslancers | 03-13-2009 07:04 PM
Re: Gold coin shortage likely to become chronic The federal government will have plenty of Gold in deep storage when they natonalize the mines. This might be a good reason to avoid the miners. Just sayin'.:favorites8:

Gcubed | 03-13-2009 07:19 PM
Re: Gold coin shortage likely to become chronic Quote:
Originally Posted by lhslancers (Post 1624231) The federal government will have plenty of Gold in deep storage when they natonalize the mines. This might be a good reason to avoid the miners. Just sayin'.:favorites8:
Yup, "strategic" metals. National security and all that rot. :wink:

HistoryStudent | 03-13-2009 07:39 PM
Re: Gold coin shortage likely to become chronic Quote:
Originally Posted by lhslancers (Post 1624231) The federal government will have plenty of Gold in deep storage when they natonalize the mines. This might be a good reason to avoid the miners. Just sayin'.:favorites8:
That is the SUPER DUPER SOCIALIST WILD CARD out there and look who is in the majotity and in office - good call! :4_1_72::111::signs14::yes:

AGRO | 03-13-2009 07:43 PM
Re: Gold coin shortage likely to become chronic The fact that they can't solve this problem is pathetic. IMO on, second thought I'm sure it is benefiting them somehow...

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