-- Posted 13 October, 2010 | | Discuss This Article - Comments:

The U.S. Mint should soon release a new five ounce silver bullion coin that it first suggested would be launched “later in 2010.”  The coins will be .999 pure and utilize the same design as the mint's “America the Beautiful” quarters, which were first coined at the beginning of the second quarter 2010.

Dealers that carry American Silver Eagles directly from the Mint will also be offered these new bullion five ounce rounds.  One interesting tidbit is that these coins will be massive at three inches in diameter.

Minting Millions

The U.S. Mint is clearly expecting strong demand for the new coins, with estimates suggesting that as many as 100,000 coins of each of the first five quarter designs will be released in 2010.  At present market value, that comes out to roughly $115 million worth of fresh bullion for investors.

The bullion coins are a byproduct of House Resolution 6162, which outlines the characteristics the bullion pieces should have.  Unfortunately, there is little information available about these coins except for HR 6162, and no one has yet received word on the premiums the U.S. Mint will charge its dealer network.  The mint recently raised its premiums on the American Silver Eagle to $2 per ounce, but it would be foolish, though not unlike the government, to charge $10 in premiums on the new issues. 

Silver investors have long seen the American Silver Eagle as a piece of artwork, something only an artist could design and create.  Couple the artwork with the beauty of pure silver, and the combination is a match made in heaven. 

While I've yet to study the new quarters that are supposedly being used as legal tender today, the fact I've not once seen one stand out gives me concerns that these pieces aren't particularly pieces of art.  Nonetheless, as an excited silver investor, I'm sure they'll be beautiful, if only for their silver content.

One Government, Two Different Perspectives

The U.S. Mint clearly understands that investors are fearful, and they want precious metals as a way to reduce their exposure to the dollar and protect against inflation.  The U.S. Treasury, however, has yet to come to that conclusion, as it seemingly borrows more and more money each week to finance stimulus packages and spending that only increase the desire for the new coins.

If the Treasury were to take some consideration from the Mint, it might realize that investors are running scared.  The Mint has on several occasions run out of silver blanchets from which it can coin its bullion pieces, and it has raised premiums considerably without at all reducing the total demand for American Silver Eagles. 

With any luck, competitive pricing from the U.S. Mint will help cool the exceptionally high premiums that physical silver investors have combated for many months.  Since they will contain a hefty amount of silver, investors should expect demand mostly from other investors instead of collectors, due to the fact that one coin will set you back a full $115 in the silver content alone.

Dr. Jeffrey Lewis

www.silver-coin-investor.com