Losing a Mint: Curb on Coin Sales Angers Collectors By IANTHE JEANNE DUGAN
May 23, 2008;
U.S. Begins Rationing
Popular 'Silver Eagles';
How $1 Fetches $19
The government rationed food during World War II and gasoline
in the 1970s. Now, it's imposing quotas on another precious
commodity: 2008 dollar coins known as silver eagles.
coins, each containing about an ounce of silver, have become
so popular among investors seeking alternatives to stocks
and real estate that the U.S. Mint can't make them fast enough.
In March, the mint stopped taking orders for the bullion coins.
Late last month, it began limiting how many coins its 13 authorized
buyers world-wide are allowed to purchase.
"This came out of nowhere," says Mark Oliari, owner
of Coins 'N Things Inc. in Bridgewater, Mass., one of the
biggest buyers of silver eagles. With customers demanding
twice as many as they did last year, Mr. Oliari would like
to buy 500,000 a week. But the mint will sell him only around
The coins have a face value of $1. But the mint sells them
for the going price of silver, plus a small premium, to a
handful of wholesalers, brokerage companies, precious-metals
firms, coin dealers and banks. The dealers mark the coins
up a bit more and sell them to the public. Currently, the
coins are fetching about $19 apiece, with some sellers seeking
more than $20.
For Coins 'N Things alone, the shortage is costing hundreds
of thousands of dollars in lost sales of silver eagles. The
firm sells about $1 billion worth of precious metal every
year, including silver, gold and platinum coins. Mr. Oliari,
a 50-year-old numismatist who has been in the business since
1973, sniffs: "You can't print what I want to say about
The mint, a bureau of the U.S. Treasury, has offered little
explanation beyond a memo last month to its dealers. "The
unprecedented demand for American Eagle Silver Bullion Coins
necessitates our allocating these coins on a weekly basis
until we are able to meet demand," the mint wrote. A
spokesman declined to elaborate.
'Poor Man's Gold'
The rare shortage offers a glimpse into the growing love
of a commodity known as "poor man's gold." With
more silver mined than gold traditionally, silver has always
been far cheaper than gold and today has less than 2% of gold's
silver is growing in popularity, and some investors are betting
that its value will surge as inventory shrinks. Big investors
are loading up on silver eagles, which are the only American
silver coins allowed in individual retirement plans. For small
investors, they are an accessible way to get into the metal
"Unlike gold, these coins can be bought by regular citizens,"
says J.R. Roland, a Brownsville, Tenn., judge who recently
began buying the coins -- and trading them on eBay. "In
these economic hard times, silver coins are a great way to
In March, sales of silver eagles surged more than ninefold
from the previous month, to 1.85 million. This year, the mint
has sold 6.8 million, representing more than twice last year's
pace. Still, numismatists are clamoring for millions more
as the price of silver soars. It has more than doubled in
the past three years and now trades at around $17 a troy ounce,
which is slightly heavier than a traditional ounce.
Linda Wood, a 57-year-old Pittsburgh accountant, scours eBay,
coin shops and flea markets in search of silver eagles. One
by one, she has accumulated about 300 in the past few months
and stores them in a bank safe-deposit box.
Traditional coin collectors may be impressed with the government's
written description of silver eagles as "one of the most
beautiful coins ever minted." But Ms. Wood isn't in it
for aesthetics. She became a silver bug after she and her
husband saw the value of their individual retirement accounts
decline by $2,500 -- a "significant" chunk. "I
just need bullion," she says. "I wouldn't care if
the coins were ugly."
Amid the mint caps, shady silver-eagle hawkers are thriving.
Some coins are priced at $25 and higher. Mr. Roland says that
he had to wait a month after ordering some on eBay recently,
because the sellers didn't even have the goods. "I can't
wait long, because you never know what's going to happen with
the price," he says.
In Manitowoc, Wis., Dan Zirk, owner of Manitowoc Card &
Coin, has sold twice as many silver eagles as he did last
year. So he has stashed away his remaining handful of 2008
coins, betting the price will rise. "I want $22 apiece,"
says Mr. Zirk. He says customers, meanwhile, are asking for
earlier years and other forms of silver.
The government began producing silver eagles in 1986, basing
its design on Adolph Weinman's 1916 "Walking Liberty"
half dollar. The front features a flag-draped Lady Liberty
striding toward the sunrise, carrying branches of laurel and
oak symbolizing civil and military glory. On the reverse,
a design by John Mercanti features an eagle with a shield,
olive branch, and talon and arrows.
The coins are made at an armored facility in West Point,
N.Y., alongside the military academy. Dealers say they heard
the mint had run out of planchets -- round metal disks ready
to be struck into coins. The disks are used for various coins,
and the companies producing the blanks also are busy, limiting
the mint's ability to increase production. The mint won't
comment on the planchets.
Coins Divvied Up
Each Monday morning now, the mint divides its silver coins
into two pools. It divvies up the first equally among authorized
purchasers. The second is allocated proportionately, based
on the buyer's past purchases. The mint limited purchases
once before -- in the late 1990s, when investors loaded up
on silver, wrongly anticipating that a failure by the world's
computers to adjust to the new millennium would cripple the
Jim Hausman, head of the Gold Center in Springfield, Ill.,
one of eight companies in the U.S. authorized to buy silver
eagles, estimates that the rationing will cut his expected
annual sales of four million silver eagles in half.
And the result, he says, is almost un-American. Increasingly,
investors are taking a shine to alternatives. The Royal Canadian
Mint saw its sales of silver Canadian maple-leaf bullion coins
rise 40% last year, to 3.5 million, according to a spokesman.
Some investors expect the craze to end badly. They draw comparisons
to what happened to silver in the 1970s. A rich Texas family
poured billions of dollars into silver, and prices surged
above $50 an ounce in 1980, only to plunge again after government
"It's akin to what happened when the Hunt brothers tried
to corner the silver market," says Wendell Curry, who
owns McAllen Gold & Silver Exchange in McAllen, Texas.
"The silver hawks are now trying to corner silver American
eagles. And it's making it harder for mom and pop to buy these
for their grandchildren."