For the second time in 30 days, evidence of a silver shortage is presenting itself. Back in December, we questioned whether there would be a shortage of Silver Eagles when the U.S. Mint sold out of its 2012 coins and informed authorized purchasers that there would be no more production or delivery.
Well, it appears that brisk sales of 2013 Silver Eagles has resulted in the exact same thing for the 2013 coins. At the time of the 2012 notice, dealers began taking pre-orders for 2013 coins, with notice that delivery would begin around January 20th of this year. A shortage for new 2012 Eagles resulted in some dealers lifting premiums and others directing buyers directly to their 2013 Eagle pre-order pages.
Authorized purchasers have been informed that the mint will not be able to deliver additional 2013 coins until around January 28th. We would indeed define this as a developing shortage. The simple fact is that demand for both 2012 and 2013 silver eagles have outpaced production twice now inside of 30 days. The U.S. Mint apparently can’t keep up with demand, which has been heavy. According to CoinUpdate.com:
“On the first day of availability for 2013-dated Silver Eagles, authorized purchasers had placed orders for 3,937,000 of the one ounce coins. This seemed to mark the highest one-day sales in the entire history of the program. The strong demand has continued with sales now having reached 6,007,000 according to the latest information posted on the Mint’s website.”
As the most popular silver bullion coin, a shortage in Eagles is going to eventually spill over into other forms of bullion. Premiums on Silver Eagles have already started going up. Bars and Rounds can’t be far behind, especially if we see investor demand pick up in the current precious metals rally.
This development, along with increasing Central Bank demand for its gold bullion from New York, is going to begin raising awareness as to how tight supply in the precious metals markets truly is, and we could at some point see physical silver and gold break away from paper prices in a dramatic fashion. Spot Silver has had a nice rally over the past few days and if delivery demand begins to increase, shorts are going to be in for a real pickle.
Physical is still available at online silver dealers, but premiums are drifting higher (and this is most evident in the Eagle right now). Unlike our note on the mint selling out of 2012 coins in December, we won’t assure those still needing to add to their stack that there is no need to panic. A lot of events are conspiring to suggest silver may soon launch higher. Right now, PMBull suggests looking at Canadian Maple Leafs, bars or rounds as an alternative during this temporary mint delay. They will get you more silver for your dollar.