US Mint historical questions 1 1

[GoldFinger1969]

9 hours ago, RWB said:

Reference to "a shortage" of most things are deceptive. They are usually temporary, localized, and causative.

The whole "shortage" thing was weird....if there was a shortage the price should have skyrocketed to bring supply and demand into equilibrium, like lumber going from $400 to $1,700 and now back to $950.

Silver was weird in that the price never moved up that much but the main vehicle -- ASEs -- saw their premium shoot up bigtime.  I don't track ASE premiums but you would think any deviation above/below the historical premium norm should fade over time.  Large premiums/discounts should be temporary.

Only if the government was setting the price and didn't want silver prices higher would they use higher premiums to achieve the same effect.

My understanding is that with silver at about $26/oz. that ASEs should sell for about $32 from your LCS and are instead closer to $36 or more.   Maybe it's come down ?

[Woods020]

7 hours ago, GoldFinger1969 said:

The whole "shortage" thing was weird....if there was a shortage the price should have skyrocketed to bring supply and demand into equilibrium, like lumber going from $400 to $1,700 and now back to $950.

Silver was weird in that the price never moved up that much but the main vehicle -- ASEs -- saw their premium shoot up bigtime.  I don't track ASE premiums but you would think any deviation above/below the historical premium norm should fade over time.  Large premiums/discounts should be temporary.

Only if the government was setting the price and didn't want silver prices higher would they use higher premiums to achieve the same effect.

My understanding is that with silver at about $26/oz. that ASEs should sell for about $32 from your LCS and are instead closer to $36 or more.   Maybe it's come down ?

ASEs a few weeks ago Were selling more like $40/$42. But it isn’t the government per se setting the premium. It’s the retail market. And it was a self fulfilling prophecy. Concern over the economy, then coupled with a change office, led many to want to invest in PMs for fear of a financial crisis. The more they bought up silver rounds and ASEs, the lower the readily available supply. Naturally if a dealer only has 10 left and demand is very large they start upping the premium. 
 

Conversely the dealers couldn’t restock fast enough. First the covid related impacts slowed the ability to replenish. Whether it be shutdowns or logistics it was hard to get stock. Second they depend also on periodic buybacks of private investors, most of which are already in favor of PMs to some degree since they have bought already. These private investors see an increasing market and have concerns over the economy so they don’t want to sell. They want to buy more. 

 

[Alex in PA.]

18 hours ago, RWB said:

Reference to "a shortage" of most things are deceptive.

In the Mint's one of the last E-Mails they said something about "Bots" as the cause of it's problems.  Silver, bots, the Internet, software and the excuses go on.  Why doesn't the Mint use that Captcha stuff to get rid of those pesky bots?

(Courtesy of our friends ATS):

 

[GoldFinger1969]

2 hours ago, Woods020 said:

ASEs a few weeks ago Were selling more like $40/$42. But it isn’t the government per se setting the premium. It’s the retail market. And it was a self fulfilling prophecy. Concern over the economy, then coupled with a change office, led many to want to invest in PMs for fear of a financial crisis. The more they bought up silver rounds and ASEs, the lower the readily available supply. Naturally if a dealer only has 10 left and demand is very large they start upping the premium.  Conversely the dealers couldn’t restock fast enough. First the covid related impacts slowed the ability to replenish. Whether it be shutdowns or logistics it was hard to get stock. Second they depend also on periodic buybacks of private investors, most of which are already in favor of PMs to some degree since they have bought already. These private investors see an increasing market and have concerns over the economy so they don’t want to sell. They want to buy more. 

If Silver is at $26 and the retail price should be $32 or so....and instead it's closer to $40.....then lots of dealers/collectors should be selling silver ASEs and other silver to take advantage of the higher price and the Mint should also be producing/selling lots of ASEs in the mid-to-high $30's when they should be getting high-$20's/low$30's......and all this should reduce that premium.

Not sure why it hasn't though your explanation does offer some valid reasons. 

[Woods020]

24 minutes ago, GoldFinger1969 said:

If Silver is at $26 and the retail price should be $32 or so....and instead it's closer to $40.....then lots of dealers/collectors should be selling silver ASEs and other silver to take advantage of the higher price and the Mint should also be producing/selling lots of ASEs in the mid-to-high $30's when they should be getting high-$20's/low$30's......and all this should reduce that premium.

Not sure why it hasn't though your explanation does offer some valid reasons. 

Given your line of work I’m sure you can speak volumes about irrational behavior. People are/were convinced the economy is on the brink of collapse and buy when it’s time to sell. 

[RWB]

For silver, gold and platinum bullion pieces, the U.S. Mint is a monopoly manufacturer both in law and commerce. The same metal can be bought in similar form from other sources, but they will never have the associated legal tender or "cachet" of the Mint's product.

However, once the contract buyers get their hands on product, it is they who set a wholesale price, and the hobby retailers then set their selling price. Everybody takes a cut much as in other manufactured products. The U.S. Mint has no control once the contract buyers take delivery. (NOTE: Contract buyers get discounts on bullion products based on volume and consistency.)

[Alex in PA.]

2 hours ago, GoldFinger1969 said:

Not sure why it hasn't though

In my case it's just laziness that prevents me from digging out those pounds of silver (bars, rounds, ASEs) and driving 40 miles to sell them for  $26.00 or less so some Dealer can turn around and sell it for $42.00 an ounce.  The Silver, along with the Gold, will sit there until I, me, my gets a reasonable price for it.  Dealers aren't anywhere near Spot and they carp when we say "No deal".

[GoldFinger1969]

6 hours ago, Woods020 said:

Given your line of work I’m sure you can speak volumes about irrational behavior. People are/were convinced the economy is on the brink of collapse and buy when it’s time to sell. 

That attitude might have made sense in March/April 2020 with the pandemic raging and financial markets hyper-volatile....it sure doesn't now with stock markets at or near record levels.

[GoldFinger1969]

4 hours ago, Alex in PA. said:

In my case it's just laziness that prevents me from digging out those pounds of silver (bars, rounds, ASEs) and driving 40 miles to sell them for  $26.00 or less so some Dealer can turn around and sell it for $42.00 an ounce.  The Silver, along with the Gold, will sit there until I, me, my gets a reasonable price for it.  Dealers aren't anywhere near Spot and they carp when we say "No deal".

You mean the bid price is $26 or so but the ask is closer to $40 ?  That's insane. 

[Alex in PA.]

28 minutes ago, GoldFinger1969 said:

You mean the bid price is $26 or so but the ask is closer to $40 ?  That's insane. 

Kitco today:  Ask 26.10  Bid 26.20.    Pinehurst 2021 Uncirculated ASE 1 to 9 $40.99 Check or wire  $42.22 CC 

Now, there's no way I'd pay that for an ounce of silver.

[GoldFinger1969]

3 hours ago, Alex in PA. said:

Kitco today:  Ask 26.10  Bid 26.20.    Pinehurst 2021 Uncirculated ASE 1 to 9 $40.99 Check or wire  $42.22 CC   Now, there's no way I'd pay that for an ounce of silver.

Is Kitco's price for an ASE or silver in general ?  That bid-ask spread is fine.  Pinehurst is $8 higher than I think is fair.

[Woods020]

2 hours ago, GoldFinger1969 said:

Is Kitco's price for an ASE or silver in general ?  That bid-ask spread is fine.  Pinehurst is $8 higher than I think is fair.

The Kitco price is for 1 Troy ounce of silver. 

[VKurtB]

On 6/27/2021 at 11:54 PM, Woods020 said:

The Kitco price is for 1 Troy ounce of silver. 

Perhaps one Troy ounce of ground up silver shavings. It makes NO sense to expect to be able to buy ASE’s anywhere NEAR the spot price. If a dealer can clear his inventory at $40, he’s gonna. It doesn’t matter if spot is $6 or $35. 
 

There’s only ONE way to make premiums fall - STOP BUYING. 

Edited June 29, 2021 by VKurtB

[Woods020]

37 minutes ago, VKurtB said:

Perhaps one Troy ounce of ground up silver shavings. It makes NO sense to expect to be able to buy ASE’s anywhere NEAR the spot price. If a dealer can clear his inventory at $40, he’s gonna. It doesn’t matter if spot is $6 or $35. 
 

There’s only ONE way to make premiums fall - STOP BUYING. 

Agreed. It’s basic pricing theory. They are priced and sold at what the market will support. It does fluctuate a little with spot but it’s also never going to be near spot. 

[RWB]

Also note that the U.S. Mint is required to publish its prices in the Federal Register and cannot make arbitrary changes. The buyers can do anything they want with prices and delivery - the can even sell you "futures" on silver eagle deliveries.

[Alex in PA.]

1 hour ago, VKurtB said:

There’s only ONE way to make premiums fall - STOP BUYING.

Absolutely correct.  The so called 'dealer' expects you to sell him your Silver at $26.00 per ounce, or less, and then he will sell it back to your granny, pappy, cousin Rose or Uncle Possum at $42.00 and ounce + or - a few Greenbacks.  The only fools who really profit from Bullion are people like me who bought it 20 some years ago and have held on it through all these High - Low  fluctuations.  When Gold reaches $5,000.00 and ounce I might sell.

[Conder101]

On 6/27/2021 at 9:27 AM, Alex in PA. said:

Why doesn't the Mint use that Captcha stuff to get rid of those pesky bots?

My understanding is that they do.  At least there were a lot of complaints from people saying they got knocked out at the Captcha page.  If that is true then their excuse about the bots doesn't hold water.  The bots weren't placing orders so all they could do was clog the lines which would result in the coins remaining on sale even longer.

 

On 6/26/2021 at 2:53 PM, RWB said:

This is as likely as anything, unless the prime supply contractor has encountered other problems.

And this is probably part of the problem,  There are not a lot of firms that are equipped to make these silver planchets, and there is a limit to how many they can make per month.  Right now demand for silver bullion coins is high from mints all over the world, and all of them are demanding planchets from this limited number of firms.  The requests for planchets exceeds the number that can be produced,  The firms try to keep their customers at least somewhat happy by rationing and shipping partial orders to each of them.(This happened back in 2009 as well and is one of the reasons there were no proof silver eagles that year.--  But the mints need more than they are receiving so commitments for future production become questionable.

[RWB]

Added to that is the fact that most US domestic silver is a by-product (you know, the stuff in sausage and "pasteurized process cheese spread slime") of lead, tin, zinc and copper mining.

[GoldFinger1969]

20 hours ago, Woods020 said:

Agreed. It’s basic pricing theory. They are priced and sold at what the market will support. It does fluctuate a little with spot but it’s also never going to be near spot. 

Basic pricing theory says that a large premium should translate into a higher underlying price.

[Woods020]

11 minutes ago, GoldFinger1969 said:

Basic pricing theory says that a large premium should translate into a higher underlying price.

Not when there is a regulated monopoly supplier (I.e. US Mint in this case). That would be the case in a free market, but not when it’s a regulated supplier. I’m sure the mint leadership would love to be able to behave in that way and hate seeing the dealers margins grow and theirs stay flat. 

[VKurtB]

21 hours ago, RWB said:

the can even sell you "futures" on silver eagle deliveries.

Like Type 2 reverse 2021 ASE's and AGE's.

[Woods020]

@RWB

 

A random question I’ve always been curious about. Why did the US make the decision to strike coins with “coin alignment” and not “medal alignment”. I know it’s a fairly common practice in many countries but I’ve always been curious why. Not that it matters much one way or another but seems like medal alignment would be more intuitive. 

[RWB]

1 hour ago, Woods020 said:

@RWB

A random question I’ve always been curious about. Why did the US make the decision to strike coins with “coin alignment” and not “medal alignment”. I know it’s a fairly common practice in many countries but I’ve always been curious why. Not that it matters much one way or another but seems like medal alignment would be more intuitive. 

I've never seen anything explaining why this was done. we were mostly a backwater, imitative bunch in the 18th century. Maybe David Rittenhouse liked another country's coin....? Actually, more likely that Henry Voigt, who had European coining experience, did it the same way as in the past.

[Woods020]

3 minutes ago, RWB said:

I've never seen anything explaining why this was done. we were mostly a backwater, imitative bunch in the 18th century. Maybe David Rittenhouse liked another country's coin....? Actually, more likely that Henry Voigt, who had European coining experience, did it the same way as in the past.

I figured it was a mystery

[GoldFinger1969]

12 hours ago, Woods020 said:

Not when there is a regulated monopoly supplier (I.e. US Mint in this case). That would be the case in a free market, but not when it’s a regulated supplier. I’m sure the mint leadership would love to be able to behave in that way and hate seeing the dealers margins grow and theirs stay flat. 

Silver is a mostly-globally traded market.  It is NOT exclusively local where a monopoly supplier can set price.

[Woods020]

Just now, GoldFinger1969 said:

Silver is a mostly-globally traded market.  It is NOT exclusively local where a monopoly supplier can set price.

ASEs are a single source supplier (US Mint) and is not a free market based on their regulations. We were talking ASEs and the premium dealers charged. 

[RWB]

Kellogg is the only maker Cheerios cereal; the U.S. Mint is the only maker of American Silver Eagles.

If you want to buy their brand, you have to pay "their" price.

[VKurtB]

37 minutes ago, RWB said:

Kellogg is the only maker Cheerios cereal; the U.S. Mint is the only maker of American Silver Eagles.

If you want to buy their brand, you have to pay "their" price.

Cheerios is a General Mills product. Maybe you could choose your examples with more regard for factual truth. But RWB gonna be RWB, right?

Edited July 1, 2021 by VKurtB

[GoldFinger1969]

15 hours ago, Woods020 said:

ASEs are a single source supplier (US Mint) and is not a free market based on their regulations. We were talking ASEs and the premium dealers charged. 

But there are lots of other silver substitutes for ASEs....the ASEs are NOT the only way to get an ounce of silver or even to buy a silver coin.

[GoldFinger1969]

4 hours ago, RWB said:

Kellogg is the only maker Cheerios cereal; the U.S. Mint is the only maker of American Silver Eagles.

If you want to buy their brand, you have to pay "their" price.

Cheerios has other competition.  If General Mills wants to charge $10 for a box of Cheerios, more people will buy Total or Wheaties or Fruit Loops.