The Eagle Has Been Grounded By IANTHE JEANNE DUGAN
August 21, 2008
Mint Halts Gold-Coin Sales After Supply Depleted
Amid Price Drop
gold prices tumbled from their highest level ever, investors
and collectors loaded up on one-ounce "American eagle"
gold-bullion coins. The buying spree came to an abrupt halt
this week after the U.S. Mint stopped selling the coins for
the first time since production began 20 years ago.
"Due to the unprecedented demand...our
inventories have been depleted," the Mint -- part of
the U.S. Treasury Department -- told its dealers Friday. "We
are therefore temporarily suspending all sales of these coins."
The move shocked sellers and collectors of the coins, which
are the most widely traded in the U.S. Suppliers became angry
as they turned away customers. Theories about the decision's
underlying cause ran rampant -- from investors in gold futures
to Russia's invasion of Georgia.
"This whole thing started about the time the Ruskies
made their move," a collector noted in an Internet chat
room called goldismoney.info. "It may very well be that
the USGovt is preparing for the real financial meltdown by
hoarding all remaining gold flows."
The Mint says it simply was wiped out. It has sold 311,000
ounces of the coins this year -- about 50% more than in all
of 2007. In the first few weeks of August alone, buyers snapped
up 63,500 ounces.
United States Mint The U.S. Mint has stopped selling American
eagle gold-bullion coins.
"We are working diligently to build up our inventory
and hope to resume sales shortly," the Mint wrote in
a memo to dealers.
The American-eagle bullion program was launched in 1986 with
the sale of gold and silver bullion coins. One-ounce coins
have a face value of $50 and $1, respectively, although the
coins trade close to the market value of the underlying metal.
After the 2008 silver coins, known as silver eagles, surged
in popularity earlier this year as silver prices rose, the
Mint began rationing them. Dealers were upset by the latest
blow. "If I don't have something to sell, I lose business,"
says Rand LeShay of A-Mark Precious Metals, a Los Angeles
The Mint announced the suspension Friday, the day prices
of gold-futures contracts -- bets on what gold will cost later
-- finished below $800 an ounce for the first time this year.
The drop accelerated a buying spree among investors. Gold
began bouncing back and late Wednesday traded at $810.30.
In March, gold futures hit a high of $1,003.20 an ounce.
American-eagle gold-bullion coins are made from 22-karat
gold mined in the U.S. The front side's design was inspired
by August Saint-Gaudens' $20 gold piece, minted from 1907
to 1933. On the reverse side is a nest of American eagles.
The coins are sold by the Mint to 10 dealers world-wide for
a premium above the price of gold. These dealers resell the
coins, which now fetch about $815.
The American Precious Metals Exchange, an online gold dealer,
posted an alert about the Mint's move, generating confused
and angry responses. Many customers said they were mystified
because the silver-coin rationing followed a price surge,
while the gold suspension followed a drop.
"The situation is strange and doesn't fit the 'normal'
supply & demand economic model," the firm wrote to
The Gold Anti-Trust Action Committee, an advocacy group,
said the Mint's move proved financial institutions are colluding
to set prices.
"The suspension is overwhelming evidence...that the
commodities exchanges are being used...as part of a massive
scheme of manipulation of the precious metals, currency and
bond markets," the group wrote on its Web site.