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After it surfaced that the U.S. Mint couldn’t meet demand for bullion coins, people started taking the potential of a gold and silver shortage more seriously. It’s rare that the world’s largest mint manufacturer has production problems, but when such a situation unfolds, it affects nearly everyone.
Of course, plenty of debate has raged over whether an actual shortage exists. Even as mints across the globe report being unable to meet demand, some claim it’s specific items in short demand rather than precious metals themselves. Either way, investors feel the pinch.
At Silver Gold Bull, we recognize that being informed is an essential aspect of buying bullion products. That’s why we’ve created this guide to help you understand how the gold and silver shortage at the U.S. Mint could affect you. Because an informed investor is a better investor.
The Gold and Silver Shortage at the U.S. Mint
The headline was both striking and unbelievable: US Mint couldn’t meet demand for gold and silver coins. This piece by The Guardian — along with articles from various other sources — told of a shortage driven by pandemic buying and online activists.
In 2020, sales of American gold coins increased 258%, and even though gold was the metal of choice for many, demand for silver coins also jumped 28%. Although the story focused on events in 2020 that worsened the shortage, a single statement hinted that the issue may be far from over:
“For this year, the Mint has a limited window to produce its current gold and silver coins… It is limiting distribution of its gold, silver and platinum coins to specific dealers because of heavy demand.”
Even the U.S. Mint Facebook page spoke of the shortage. The post described how the “global silver shortage” drove demand for numismatic and bullion products to “record highs.” They later clarified the statement to mention silver blanks specifically, but the message was already clear.
The largest mint in the world suddenly couldn’t keep up with demand. Because of this, everything from gold and silver coins to platinum bullion became restricted and only offered to certain dealers. How does this — or the potential for future shortages — directly affect you?
The answer is complex.
Can I Still Buy Gold and Silver Coins?
If you typically shop around for bullion online, the gold and silver shortage at the U.S. Mint may have gone unnoticed. This doesn’t mean you didn’t see its effects, but they may not have stood out to you. Maybe a coin you really wanted was out of stock, but a similar coin was available.
This was a particular issue with the most popular coins. Buying American Gold Eagles, for instance, may have seemed impossible at certain online dealers. Others who had a steady supply, however, had availability for longer periods of time.
Could you still buy coins during the gold and silver shortage? Definitely yes. Your options were likely just limited. And if your investment goals didn’t focus on American coins, there were many other bullion products from foreign governments available.
A Florida coin dealer explained where the real issue emerged:
“There was going to be a backlog in the silver bullion supply chain that rendered Silver Eagles more scarce either way… The silver coins and silver bars that are available have acquired significantly higher premia.”
This is where many investors and collectors saw issues. Local dealers simply didn’t have the access afforded to larger companies like Silver Gold Bull. Because of this, the gold and silver shortage hit those who shop locally especially hard. There simply weren’t enough coins to go around.
And as the aforementioned Florida dealer pointed out, investors faced a “significantly higher premia” even when they could find these coins locally. The truth is that the gold and silver shortage affected every investor and collector out there — just in substantially different ways.
Are Bullion Bars a Better Investment?
Since the precious metal shortage primarily affected the U.S. Mint, it’s logical to think that bullion bars were more available. After all, refineries around the world create them, and they’re not often used as legal tender. Plus, coin collectors typically have no interest in them.
Unfortunately, this didn’t make finding precious metal bullion bars any easier. The heightened demand resulted in higher premiums in many cases. Dealers also saw a major depletion of gram gold bars due to the gold and silver shortage.
If your concern for gold and silver bars relates more to general investing rather than shortages, though, consider the following advantages of this type of bullion:
Lower Premiums
Whenever you buy precious metals — particularly during a gold and silver shortage — you will not pay spot price. Every sale typically has a premium to cover mining and production costs, dealer expenses, refinery expenditures, and more.
When you buy bullion bars rather than coins, though, you’ll typically see lower premiums. That’s because coins made of any precious metal cost more to produce than their bullion bar counterparts. You won’t likely notice a substantial price difference, but there’s certainly a disparity.
Easier to Store
Although a roll of coins may sound easy to store, its shape is not very space efficient. While you may have slowed down your purchases during the gold and silver shortage, storage space will be your biggest issue once you own large amounts of bullion.
Silver and gold bars simply take up less space. They easily stack on each other and need no protective coverings. You can avoid headaches by using allocated storage options — such as those provided by Silver Gold Bull — but focusing on space will still get you “more bang for the buck.”
Is There Really a Gold and Silver Shortage?
Even though we all witnessed the effects of the shortage, there are still those who claim it’s not a big deal. They point towards the clarification from the U.S. Mint that their shortages had more to do with high demands and low supplies of rounds.
Even if demand stabilizes, though, the U.S. Mint may still have difficulty catching up. This is why they postponed preorder periods for certain bullion coins. So if you couldn’t figure out why it was hard to find new Peace Silver Dollars, now you’ve got a better understanding.
Even if the U.S. Mint catches up, though, there are signs that shortages may continue. This is a particular issue for silver. Just consider all the industries that use this precious metal:
- Consumer electronics (most silver goes here).
- Solar panels and other green energy.
- Soldering and brazing.
- Jewelry and silverware.
- Chemical production.
- Medications.
- Photography.
- Automobile engines.
Some of these industries felt the gold and silver shortage even more than investors. In fact, about 2.5 times more silver gets consumed for industrial uses than for producing coins and bullion. But since studies show peak silver production could occur by 2027, problems may continue for everyone.
Of course, gold isn’t immune from problems either. Unfortunately for those who love the yellow metal, mined gold supply has consistently failed to meet growing demand. Even if higher prices could provide production incentives, gold mines simply don’t have the capacity to meet demand.
So while things may soon calm down on the precious metals market, they may not stay that way for very long.
Buying Before the Gold and Silver Shortage Worsens
There’s no way to predict the future of the bullion market, and with any luck, shortages will not last for years. As we’ve seen from recent events, though, even the largest mint in the world can run short on precious metal items. This is why it’s important to “strike while the iron is hot.”
Even if the U.S. Mint quickly gets back to its normal production, there are signs that shortages may be our future reality. Silver mines are quickly becoming depleted, and the demand for gold consistently exceeds supply.
Fortunately, potential gold and silver shortages have not yet stopped investors and collectors from buying bullion. At Silver Gold Bull, we still have plenty of precious metals available. And with our price match guarantee, you’ll know you’re always getting a fair deal.
Visit our Silver and Gold Bullion page today to see all our offerings.
