The 2021 Global Mint Supply Crunch
By Paul Vanguard, for BullionMax.com
Whoever thought that the bullion supply shortages of 2020's pandemic-fueled buying frenzy as an outlier were just plain wrong. Over the past four months, we've seen report after report of mints worldwide selling out.
While last year's supply shortages probably had as much to do with covering financial derivatives as they did with haven demand, this year's insatiable demand seems to be purely driven by your average investor wanting to get their hands on gold and silver coins.
The supply crunch hasn't slowed record sales
Since the start of the year, mints have been posting record sales while at the same time dealing with shortages that some might be a little too quick to ascribe to lack of preparation. Australia's Perth Mint has had a good few months, selling 130,000 ounces of gold coins and bars in March, a 38% year-on-year increase and a 4.8% increase from February. In total, the 330,200 ounces sold by the Mint in Q1 2021 are roughly double year-over-year figures.
Although silver sales decreased on a year-on-year basis, the 1.6 million ounces of the metal sold in March prompted Neil Vance, Perth Mint's General Manager of Minted Products, to at least state that the Mint is overworked due to silver demand. Vance went on to say that the Perth Mint is nonetheless supplied in abundance, yet other reports and its relationship with the U.S. Mint prompt one to raise an eyebrow to the claim.
Numismatic News points out that some are questioning if Perth Mint really has the material to back up all of its certificates, as it is required to. Without getting too much into Perth Mint's true vault supply, it's still worth noting that it has a contract with the U.S. Mint to supply it with blanks for silver American eagles, likely one of many such contracts.
As for the U.S. Mint, it is also on record over being unable to produce enough coins to meet public demand (federal law prevents it from purchasing materials above their spot price). This is happening during a time of booming developments in the numismatic sphere.
Between May and June, the U.S. Mint will begin accepting pre-orders for six different varieties of commemorative coins. The five 2021 Morgan dollars will each have a 175,000 coin production limit, and the 2021 Peace dollar a 200,000 one. The Mint has had to lower the number of coins an individual household can order in each product option from 25 to 10 to make room for public access in anticipation of high demand.
Numismatic News columnist Patrick A. Heller expects a near-instant sellout of these coins, followed by an immediate aftermarket price increase. With the 2021 Morgan and Peace coins' delivery being delayed until October, Heller thinks there could be additional secondary market dynamics going on. Besides these coins, the U.S. Mint is both launching a wide new series of commemorative quarters that will be distributed over the coming years and redesigning its gold and silver American Eagle coins for the first time in decades. It's hard not to expect this to cause a bit of a stir in the numismatics community, and perhaps in the Mint's factories, too.
Paul Vanguard is a lifelong precious metals enthusiast and a proud member of the BullionMax team.