US Mint Backtracks on ‘Global Silver Shortage’ Claims, Stoking Supply Fears

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U.S. Proof Silver Eagle bullion coin. Physical silver shortage is a widespread phenomenon as demand is outpacing supply in a chaotic world.
U.S. Proof Silver Eagle bullion coin. Physical silver shortage is a widespread phenomenon as demand is outpacing supply in a chaotic world. (Image: Erik Golub via Flickr CC BY 2.0)

On May 27 the United States Mint sent an email to customers that greatly alarmed silver bulls and proponents of a long-standing theory the world’s reserve currency, the Federal Reserve-printed U.S. fiat dollar, would soon come to a stunning end caused by the natural repercussions of helicopter spending amid the SARS-CoV-2 pandemic. 

The email was sent to retail customers of the Mint regarding website outages said to be caused by overwhelming preorder demand for the new 2021 Morgan Dollar and Peace Dollar silver bullion coins, which opened with “The United States Mint is committed to providing the best possible online experience to its customers. The global silver shortage has driven demand for many of our bullion and numismatic products to record heights. This level of demand is felt most acutely by the Mint during the initial product release of numismatic items.” [Emphasis added]

The Mint said it would be delaying the pre-order windows for the coins from June 1 and June 7 to an undisclosed future time for the purpose of obtaining “web traffic management tools to enhance the user experience.” However, the Mint notably added in the final paragraph “As the demand for silver remains greater than the supply, the reality is such that not everyone will be able to purchase a coin.” [Emphasis added]

The next day, the Mint sent out a corrected version of the email, which opened with the preamble “We made reference to a global shortage of silver. In more precise terms, the silver shortage being experienced by the United States Mint pertains only to the supply of silver blanks among Mint suppliers.”

The correction was updated to change the first paragraph to read “The Mint is being impacted by silver blank shortages among its suppliers. The demand for many of our bullion and numismatic products is at record heights and increasingly outpacing the supply of silver blanks available through our suppliers.”

It also changed the final paragraph to read “As demand remains greater than supply, the reality is that not everyone will be able to purchase a coin.”

The price of physical silver is determined by the price of the current month’s silver futures contracts traded on COMEX. The beginning of February of 2021 saw silver post an 8-year high when it briefly traded over $30 USD per troy ounce the week after retail bullion dealers reported widespread supply shortages and skyrocketing premiums over spot prices. 

In March of 2020, during the fever of the hysteria of the SARS-CoV-2 pandemic’s beginnings, silver dumped to an 11-year low trading just above $11.60. 

January of 2021 saw a year-over-year increase of 290 percent for sales of Gold Eagles and 24 percent for Silver Eagles at the U.S. Mint. That being said, the Mint sold almost 5 million ounces of U.S. Silver Eagles in January, according to Kitco.

Mining Weekly says the current demand for silver in printed and flexible electronics is close to 50 million ounces per year worldwide, and expected to grow. The printed and flexible electronics industry is a $57 billion market.

Bullion dealer JM Bullion says physical silver supply has always been scarce for the human race, “It is estimated that throughout human history approximately 1.5 million tonnes of silver have been mined able to fit into a 52-meter cube.” Each ton contains approximately 35,000 ounces. 

They say that of the roughly 52 billion ounces that have been mined in history, 90 percent have been lost to landfills, leaving only 5 billion ounces remaining, and only 2 billion of that is in bullion form. 

UK website Market Oracle says “Very little newly-produced silver is available for investment, perhaps only 10% of the one billion oz produced yearly (mine plus recycling), or 100 million oz annually. In dollar terms, at current prices that comes to less than $2 billion per year.”

“Today, only a little over one billion oz of metal in accepted bullion industrial form exists with perhaps another billion oz existing in coins and bars. In dollar terms, that comes to $20 to $40 billion, where most other asset classes (stocks, bonds, real estate and even gold) are measured in the many trillions of dollars.”

  • Neil lives in Canada and writes about society and politics.