Problems at the US Mint Archived. #DrainTheMint Fights Back.

Presenting Problem Going back about a year then fast forwarding to now

Washington, DC (August 26, 2022)

Rep. Alex Mooney (R-WV) is calling out U.S. Treasury Secretary Janet Yellen and U.S. Mint Director Ventris Gibson for the “long-running production slowdown” in the Silver American Eagle bullion coin program that has caused “shortages and dramatically higher market prices for this iconic silver coin as compared to its peers worldwide.”

Most gold and silver bullion forms do not carry much markup (also known as “premium”) over the actual market value of the metal itself, thereby enabling investors to acquire more precious metal for each dollar they invest.

However, this has not been the case with the Silver American Eagle since 2020, causing it to become known in some circles as “the most overrated silver coin in the world.”

In a letter dated August 25, West Virginia US House of Rep member Alex Mooney cited 31 U.S. Code § 5112(e) which states, “the [Treasury] Secretary shall mint and issue, in qualities and quantities that the Secretary determines are sufficient to meet public demand coins which— (1) are 40.6 millimeters in diameter and weight 31.103 grams; (2) contain .999 fine silver; (3) have a design— (A) symbolic of Liberty on the obverse side; and (B) of an eagle on the reverse side.”

But, as Mooney pointed out, the U.S. Mint has only made 11.6 million ounces of the silver bullion coin available to the public through July 2022 – barely half of what has been supplied through the first seven months of prior years when demand has been similarly strong.

“This shortage in U.S. Mint production has apparently led to extremely high market-based premiums on Silver Eagles (as high as 70% over the silver melt value) – even as comparable items produced by other sovereign mints and private mints were not beset by such shortages or historically high premiums,” Mooney wrote.

Photo Caption Rep. Alexander X. Mooney (R-WV)

“The high costs resulting from the U.S. Mint production shortage directly harm U.S. citizens wishing to avail themselves of a U.S. legal tender means of protecting their financial security from the effects of inflation.”

Rep. Mooney is demanding Yellen and Gibson provide answers to the following questions:

Does the Secretary believe the Silver American Eagle coin is being produced in “qualities and quantities that… are sufficient to meet public demand”?
Why is only a single supplier currently allowed to (or willing to) provide the U.S. Mint with silver blanks for its Silver Eagle program?
Given its statutory mandate to amply supply these coins to the public, why doesn’t the U.S. Mint have a policy to build a reserve of silver blanks during periods of slower demand in order to create a buffer for periods of higher demand?
Has the U.S. Mint examined the practices of other sovereign mints – such as Britain’s Royal Mint, Australia’s Perth Mint, the Austrian Mint, or the Royal Canadian Mint – to learn from their relative success in meeting high public demand for their own silver coins? If so, what were the resulting findings or recommendations?
What actions are currently being undertaken to address the Mint’s production problems (which reportedly extend beyond the Silver American Eagle coin program) and when will the U.S. Mint once again be able to fulfill its mandate to meet public demand?

Below is the letter typeset word for word from WV House member Alex Moody written to Janet Yellen and US Mint Director Gibson

August 25, 2022 The Honorable Janet Yellen

Secretary of the Treasury

1500 Pennsylvania Avenue, NW Washington, D.C. 20220

The Honorable Ventris C. Gibson

United States Mint Director

801 9th Street, N.W.

Washington, D.C. 20220-0012

Dear Secretary Yellen and Director Gibson,

I write with concerns regarding the U.S. Mint and its Silver American Eagle bullion coin program. A long-running production slowdown has led to shortages and dramatically higher market prices for this iconic silver coin as compared to its peers worldwide.

As you know, 31 U.S. Code § 5112(e) states, "the [Treasury] Secretary shall mint and issue, in qualities and quantities that the Secretary determines are sufficient to meet public demand coins which—(1) are 40.6 millimeters in diameter and weight 31.103 grams; (2) contain .999 fine silver; (3) have a design—(A) symbolic of Liberty on the obverse side; and (B) of an eagle on the reverse side."

Many Americans have sought to hedge their assets against the high rates of inflation caused, in large part, by excessive government spending. Some do this by acquiring hard assets, including gold and silver.

According to reports, overall market demand for bullion coins, bars, and other items, has thus risen to higher levels than seen in recent years, if not ever.

Yet the U.S. Mint has only made 11.6 million ounces of its Silver American Eagle bullion coin available to the public this year-half of what was supplied through the first seven months of prior years when demand was similarly strong.

This shortage in U.S. Mint production has apparently led to extremely high market-based premiums on Silver Eagles (as high as 70% over the silver melt value)—even as comparable items produced by other sovereign mints and private mints were not beset by such shortages or historically high premiums.

The high costs resulting from the U.S. Mint production shortage directly harm U.S. citizens wishing to avail themselves of a U.S. legal tender means of protecting their financial security from the effects of inflation.

Please provide answers to the following questions:

1. Does the Secretary believe the Silver American Eagle coin is being produced in “qualities

and quantities that... are sufficient to meet public demand”"?

2. Why is only a single supplier currently allowed to (or willing to) provide the U.S. Mint

with silver blanks for its Silver Eagle program?

3. Given its statutory mandate to amply supply these coins to the public, why doesn't the U.S. Mint have a policy to build a reserve of silver blanks during periods of slower demand in order to create a buffer for periods of higher demand?

4. Has the U.S. Mint examined the practices of other sovereign mints, such as the Britain's Royal Mint, Australia's Perth Mint, the Austrian Mint, and the Royal Canadian Mint, to learn from their relative success in meeting high public demand for their own silver coins? If so, what were the resulting findings or recommendations?

5. What actions are currently being undertaken to address the Mint's production problems

(which reportedly extend beyond the Silver American Eagle coin program) and when will the U.S. Mint once again be able to fulfill its mandate to meet public demand?

Swift action to address these difficulties will allow the Silver American Eagle coin to remain a symbol of Liberty and government efficiency.

I appreciate your attention to this matter and I look forward to your response to these questions.

Alex X. Mooney

Member of Congress

Here is the response written by Ventris Gibson, director of US Mint's office under Dept of Treasury (typeset word for word)

September 21, 2022

The Honorable Alex X. Mooney

U.S. House of Representatives

Washington, D.C. 20515-4802

Dear Representative Mooney:

I am writing in response to your letter to Treasury Secretary Janet Yellen and me dated August 25, 2022, concerning the United States Mint’s Silver American Eagle Bullion Coin Program. I appreciate the opportunity to address your questions.

As background, the United States Mint produces both bullion and numismatic versions of its precious metal coins. The bullion coins are not sold directly to the public but instead are sold through a network of Authorized Purchasers in large, wholesale quantities. They are sold to the Authorized Purchasers based on the underlying value of the precious metal in the coins plus a small “premium” to cover all associated production and distribution costs. By law, the program cannot and does not operate at any net cost to the American taxpayer.

1. Does the Secretary believe the Silver American Eagle coin is being produced in “qualities and quantities that . . . are sufficient to meet public demand”?

The United States Mint consistently endeavors to produce Silver American Eagle coins in qualities and quantities sufficient to meet public demand. Our silver bullion coins are the most widely-traded silver bullion coins in the world today, and no other sovereign mint produces them in the quantities the United States Mint does. Accordingly, the Mint’s demand for the silver blanks used to produce these coins is far greater than that for any other sovereign mint.

The United States Mint utilizes a forecast to determine production quantities for bullion products. The forecast considers historical sales levels and evaluates the economy and recent trends that may affect supply and demand. Bullion is a commodity, and for that reason demands can fluctuate. Although we do our best to meet the demands of the market, unfortunately, we cannot predict with 100 percent certainty how world events will affect demand. When turbulent market conditions drive the purchase of bullion, we use our best efforts to increase production to meet demand.

The process of allocation allows the Mint to equitably provide bullion to the Authorized Purchasers in periods where demand greatly exceeds our ability to supply. Ultimately, the United States Mint, like other sovereign Mints such as the Royal Canadian Mint, must allocate what silver bullion coins we can produce in the most fair and equitable manner possible.

The currently limited availability of silver blanks is due, by-and-large, to disruptions in the silver blank vendor production capabilities that resulted from the crippling effects of the pandemic.

More than two years after the start of the pandemic, these vendors continue to recover from those disruptions. The United States Mint is exploring options to increase the number of silver blanks we can get from our vendors, and continue attempts to develop additional silver blank suppliers for our vendor pool.

We note with pride that while many other sovereign mints were forced to shut down for extended periods of time during the pandemic, the United States Mint’s bullion coin

production/distribution center at its West Point facility remained, by-and-large, open and operational. This is a testament to the dedication and commitment of its staff to keep this important program up and running while other mints and industries were locking down.

2. Why is only a single supplier currently allowed (or willing to) provide the U.S. Mint with silver blanks for its Silver Eagle Program?

We currently have two suppliers of silver blanks for the Silver Eagle program. The United States Mint is continuously making an effort to identify and develop additional suppliers. We have an open solicitation in which we provided our specifications to several potential vendors who are considering fabricating blanks; however, these vendors would need time to purchase equipment and build the infrastructure to become suppliers.

3. Given its statutory mandate to amply supply these coins to the public, why doesn’t the U.S. Mint have a policy to build a reserve of silver blanks during periods of slower demand in order to create a buffer for periods of higher demand?

The United States Mint traditionally maintains a reserve stock of silver blanks. Due to continued high demand and reduced supply of silver blanks, the reserve stock was depleted. Given the limited supply of silver blanks, the United States Mint must judiciously consider how to divide those blanks among its various silver bullion coins and numismatic products.

4. Has the U.S. Mint examined the practices of other sovereign mints, such as Britain’s Royal Mint, Australia’s Perth Mint, the Austrian Mint, and the Royal Canadian Mint, to learn more from their relative success in meeting high public demand for their own silver coins? If so, what were the resulting findings or recommendations?

We continually look at the practices of other sovereign Mints and benchmark our performance. The United States Mint is aware that the Royal Canadian Mint, one of the largest producers of silver bullion coins, is itself on silver allocations and cannot meet market demand due to an inability to acquire a sufficient number of silver blanks.

5. What actions are currently being undertaken to address the Mint’s production problems (which reportedly extend beyond the Silver American Eagle coin program) and when will the U.S. Mint once again be able to fulfill its mandate to meet public demand?

Combined with increasing demand, Mint production is currently constrained by a variety of factors, including the current low level of incoming blanks supply. We continue to work with our current suppliers to increase capacity of blank fabrication. In addition, we have identified several potential new fabricators who have expressed interest in supplying blanks to the United States Mint once their equipment is installed and they have hired and trained staff.

I appreciate your concerns and thank you for your interest in the United States Mint and its coin programs. My staff and I are always available to discuss the bullion program with you in more detail, and we invite you to visit the United States Mint at West Point facility. Please directly reach out to Jennifer Warren, the Mint’s Associate Director for Legislative and Intergovernmental Affairs, at (202) 360-3154 or jennifer.warren@usmint.treas.gov.

Sincerely,

Ventris C. Gibson

Director United States Mint

Chat GPT weighs in - research by The illuminated Ape in his article titled iA = Ai

Question - Can you please explain 31 usc 5112 (3) as though I am 5 years old?

ChatGPT Let me explain 31 USC 5112(3) in a simple way for you. You know how we use money to buy things, right? Well, in the United States, there are special people called the government who make the money. They have some rules about how the money should look and what it should be made of.

31 USC 5112(3) is one of those rules. It talks about a special type of money called "legal tender coins." These coins are special because the government says they are worth a certain amount of money, and people have to accept them if you want to buy something. Now, in this rule, it says that legal tender coins should be made out of something called "gold." Gold is a shiny and valuable metal. The government wants to make sure that some of the coins they make are made of gold.

So, when you see 31 USC 5112(3), it just means that the government says they need to make some coins out of gold, and those coins are special because everyone has to accept them as money.

Continuing this though can you explain the part about the secretary and demand please? ChatGPT Of course! Let's continue with the explanation.

In 31 USC 5112(3), it also mentions something about the "Secretary" and "demand." Let's break it down.

The "Secretary" in this context refers to a person who works for the government, specifically the Secretary of the Treasury. This person is responsible for making decisions about money and coins in the United States.

Now, let's talk about "demand." Have you ever asked for something you really wanted? When you demand something, it means you want it and you ask for it strongly.

In this rule, it says that the Secretary of the Treasury has the power to decide how many gold coins should be made. But here's the interesting part: If people want these gold coins, the Secretary has to make them! They have to listen to the demand or the strong requests from the people. So, if lots of people want to have gold coins, the Secretary needs to make sure that there are enough of them available. They have to pay attention to what people want and make sure the demand for these coins is met.

So, when we talk about the Secretary and demand in 31 USC 5112(3), it means that the Secretary has the authority to decide how many gold coins should be made, and they have to make sure they meet the requests or demands from the people who want these special coins. What would happen if the secretary was doing a bad job or the government intentionally decided to not follow that law about demand?

ChatGPT If the Secretary of the Treasury was not doing their job properly or if the government intentionally decided to not follow the law regarding demand for gold coins, there could be some consequences. Firstly, if the Secretary of the Treasury was not fulfilling their duties, it could lead to a lack of gold coins in circulation. People who wanted to use or collect these coins might not be able to get them. This could cause frustration and dissatisfaction among the public. Secondly, if the government intentionally chose not to follow the law about demand, it could create a loss of trust and confidence in the currency system. People might start questioning the value and legitimacy of the money issued by the government. This could have negative effects on the economy and people's ability to conduct transactions smoothly. In such situations, there might be legal or political actions taken to address the issue. People could challenge the government's actions in court, and there could be calls for accountability and transparency. Ultimately, the aim would be to ensure that the government and the Secretary of the Treasury fulfill their responsibilities and follow the laws that govern the currency system.

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