Surging American Eagle silver coin sales give 2016 a strong start

NEW YORK (Reuters) - The U.S. Mint has sold nearly all of the 5 million ounces of American Eagle silver coins made available in 2016 so far in just over a week, a sign that low prices are still feeding strong demand after an unprecedented supply squeeze last year.

A quality control agent examines 2013 enhanced silver eagle silver coins at the United States West Point Mint facility in West Point, New York June 5, 2013. REUTERS/Shannon Stapleton

“This was not pent up (demand). There is legitimate demand and I expect that demand to continue throughout 2016,” said Roy Friedman, president of Manfra, Tordella and Brookes, one of the biggest U.S. wholesale bullion dealers.

“Our weekly sales are exceeding what I believe our weekly allocation will be.”

Spot silver prices fell to a six-year low at $13.60 an ounce in 2015, causing a surge in coin demand that forced mints around the world to ration sales. After temporarily running out of supplies in July, the U.S. Mint put American Eagle silver coin sales on weekly allocations of roughly 1 million ounces for the rest of 2015 due to tight supplies.

Last week, the mint sold 4 million ounces in its first week of sales after quadrupling the allocation. It reverted to 1 million ounces on Tuesday, when it sold 950,000 ounces as spot silver prices hovered around $14 an ounce.

January’s tally so far is at 4.95 million ounces, down just slightly from the entire month of January 2015 at 5.53 million ounces, mint data showed.

American Eagle gold coin sales have also been strong at 95,500 ounces this month so far, already up 18 percent from January 2015, mint data showed, as spot prices were up just 5 percent from December’s near-six-year low.

Erica Rannestad, senior analyst of precious metals demand at GFMS, viewed the strong 2016 sales so far as due to pent up demand after mint sales stopped in December.

The strong start to the year in the United States came after global silver bullion coin demand reached a record 130 million ounces in 2015, up 21 percent from 2014, Rannestad said, using data gathered primarily from official national mints as well as the Rand Refinery.

GFMS forecast sales to fall but remain relatively high in 2016 at 110 million ounces, with expectations for silver prices to average $15.95 per ounce, up from $15.51 last year, Rannestad said.

For global gold bullion coin sales, GFMS forecast 253 tonnes in 2016, down from 258.9 tonnes in 2015, which was up 4 percent from 2014 but below the 2011 record at 326 tonnes, she said.

Reporting by Marcy Nicholson; Editing by Sandra Maler