U.S. Bullion Source

[Mr. Smith Guesser]

So, I was under the impression that the gold used to produce U.S. bullion coins must come from sources in America by law.

 

However, the largest gold supplier to the U.S. government (Coins 'N Things) says they get 40% of their gold from the Canadian government.

 

Source: http://www.bloomberg.com/news/articles/2011-11-03/the-family-that-sells-gold-to-the-government

 

Coins ’N Things gets roughly 40 percent of its gold from a refinery owned by the Canadian government. “You have to know everybody, everywhere,” Mark says.

 

Are only some U.S. bullion coins required to be made with U.S. sourced bullion?

 

What government branch does the auditing to make sure the law is being followed anyway?

[Conder101]

The law does require them to use domestic gold

 

(A)In general.—

The Secretary shall acquire gold for the coins issued under this subsection by purchase of gold mined from natural deposits in the United States, or in a territory or possession of the United States, within 1 year after the month in which the ore from which it is derived was mined.

 

They have similar language for the palladium coins but with an exception if domestic palladium is not available

 

(A)In general.—

The Secretary shall acquire bullion for the palladium coins issued under this subsection by purchase of palladium mined from natural deposits in the United States, or in a territory or possession of the United States, within 1 year after the month in which the ore from which it is derived was mined. If no such palladium is available or if it is not economically feasible to obtain such palladium, the Secretary may obtain palladium for the palladium coins described in paragraph (12) of subsection (a) from other available sources.

 

 

There used to be a similar exception for the gold bullion, and one for siver bullion for the ASE as well but the exemption for gold is no longer written into the law and the section covering the sourcing of the silver bullion is gone completely

 

This is the text from the original legislation that includes the permission to use gold from another source if sufficient domestic supplies are not available

 

© Section 5116(a) of title 31, United States Code, is amended by adding at the end thereof the following:

“(3) The Secretary shall acquire gold for the coins issued under section 5112(i) of this title by purchase of gold mined from natural deposits in the United States, or in a territory or possession of the United States, within one year after the month in which the ore from which it is derived was mined. The Secretary shall pay not more than the average world price for the gold. In the absence of available supplies of such gold at the average world price, the Secretary may use gold from reserves held by the United States to mint the coins issued under section 5112(i) of this title. The Secretary shall issue such regulations as may be necessary to carry out this paragraph”.

 

So under the law as it is currently written, use of non-domestic gold bullion, or domestic bullion not mined in the previous year, would be illegal.

 

Now try to get them to obey the law.

 

I have not been able to determine when the sourcing requirements were changed.

[RWB]

The law says "mined" it does not say it has to be refined in the US. So long as the ore came from US sources it does not matter if it were refined or blanks made in Canada, Australia etc.

 

It might also be argued that as long as the ore was not in it's final refined gold state, it would remain acceptable. Thus, native gold bars from Alaska (approx 0.878 gold) could be sent to the RCM for production of 0.999 blanks.

 

As for palladium - total BS. A crude rip off of the public treasury to benefit one US producer at the expense of the citizens. An example of rotten pork for which the member of Congress proposing it should be expelled, and the majority censured for wasting money.

[Mr. Smith Guesser]

The law says "mined" it does not say it has to be refined in the US. So long as the ore came from US sources it does not matter if it were refined or blanks made in Canada, Australia etc.

 

It might also be argued that as long as the ore was not in it's final refined gold state, it would remain acceptable. Thus, native gold bars from Alaska (approx 0.878 gold) could be sent to the RCM for production of 0.999 blanks.

 

As for palladium - total BS. A crude rip off of the public treasury to benefit one US producer at the expense of the citizens. An example of rotten pork for which the member of Congress proposing it should be expelled, and the majority censured for wasting money.

 

What's the story with the U.S. palladium? What was the producer? As far as I know, there are only two significant U.S. palladium producers; Stillwater Mining and North American Palladium.

 

I was really interested in palladium back in January. I bought PALL and made a small gain, but sold way too early.

 

To add...

 

I'm unsure if there are any companies that mine ore in the U.S. and ship it to be processed somewhere else. Basically, mining is simply a rock moving operation. And the farther you have to move your rocks, the more it's going to cost.

 

Processing the material is a whole other ball of wax -- and is the more environmentally unfriendly aspect of the industry because all kinds of nasty chemicals are used to leach gold, silver, and precious metals out of the ore.

 

With the strict environmental legislation in the U.S., I actually can see some mines exporting American ore for processing. But Canada has some fairly strict environmental laws too. And I really can't imagine any Canadian falling in love with welcoming the dirty processing part of the American mining process into their country. I can imagine American ore, however, being exported to Mexico, where regulation is better for mining. In fact, under the Mexican constitution, minerals are part of the national patrimony. The exploration, exploitation, and beneficiation of the minerals have preference over any other use for the land.