A Heads up to all the Gold and Silver Bugs.

U.S. Begins Rationing Popular 'Silver Eagles'; How $1 Fetches $19

By Ianthe Jeanne Dugan
The Wall Street Journal
Friday, May 23, 2008

The government rationed food during World War II and gasoline in the
1970s. Now it's imposing quotas on another precious commodity: 2008
dollar coins known as silver eagles.

The coins, each containing about an ounce of silver, have become so
popular among investors seeking alternatives to stocks and real estate
that the U.S. Mint can't make them fast enough. In March the mint stopped
taking orders for the bullion coins. Late last month it began limiting
how many coins its 13 authorized buyers worldwide are allowed to
purchase.

"This came out of nowhere," says Mark Oliari, owner of Coins 'N Things
Inc. in Bridgewater, Mass., one of the biggest buyers of silver eagles.
With customers demanding twice as many as they did last year, Mr.
Oliari would like to buy 500,000 a week. But the mint will sell him only
around 100,000.

The coins have a face value of $1. But the mint sells them for the
going price of silver, plus a small premium, to a handful of wholesalers,
brokerage companies, precious-metals firms, coin dealers, and banks. The
dealers mark the coins up a bit more and sell them to the public.
Currently, the coins are fetching about $19 apiece, with some sellers
seeking more than $20.

For Coins 'N Things alone, the shortage is costing hundreds of
thousands of dollars in lost sales of silver eagles. The firm sells about $1
billion worth of precious metal every year, including silver, gold, and
platinum coins. Mr. Oliari, a 50-year-old numismatist who has been in
the business since 1973, sniffs: "You can't print what I want to say
about the mint."

The mint, a bureau of the U.S. Treasury, has offered little explanation
beyond a memo last month to its dealers. "The unprecedented demand for
American Eagle Silver Bullion Coins necessitates our allocating these
coins on a weekly basis until we are able to meet demand," the mint
wrote. A spokesman declined to elaborate.

... 'Poor Man's Gold'

The rare shortage offers a glimpse into the growing love of a commodity
known as "poor man's gold." With more silver mined than gold
traditionally, silver has always been far cheaper than gold and today has less
than 2% of gold's value.

But silver is growing in popularity, and some investors are betting
that its value will surge as inventory shrinks. Big investors are loading
up on silver eagles, which are the only American silver coins allowed
in individual retirement plans. For small investors, they are an
accessible way to get into the metal boom.

"Unlike gold, these coins can be bought by regular citizens," says J.R.
Roland, a Brownsville, Tenn., judge who recently began buying the
coins -- and trading them on eBay. "In these economic hard times, silver
coins are a great way to invest."

In March, sales of silver eagles surged more than ninefold from the
previous month, to 1.85 million. This year, the mint has sold 6.8 million,
representing more than twice last year's pace. Still, numismatists are
clamoring for millions more as the price of silver soars. It has more
than doubled in the past three years and now trades at around $17 a
troy ounce, which is slightly heavier than a traditional ounce.

Linda Wood, a 57-year-old Pittsburgh accountant, scours eBay, coin
shops, and flea markets in search of silver eagles. One by one, she has
accumulated about 300 in the past few months and stores them in a bank
safe-deposit box.

Traditional coin collectors may be impressed with the government's
written description of silver eagles as "one of the most beautiful coins
ever minted." But Ms. Wood isn't in it for aesthetics. She became a
silver bug after she and her husband saw the value of their individual
retirement accounts decline by $2,500 -- a "significant" chunk. "I just need
bullion," she says. "I wouldn't care if the coins were ugly."

Amid the mint caps, shady silver-eagle hawkers are thriving. Some coins
are priced at $25 and higher. Mr. Roland says that he had to wait a
month after ordering some on eBay recently, because the sellers didn't
even have the goods. "I can't wait long, because you never know what's
going to happen with the price," he says.

In Manitowoc, Wis., Dan Zirk, owner of Manitowoc Card & Coin, has sold
twice as many silver eagles as he did last year. So he has stashed away
his remaining handful of 2008 coins, betting the price will rise. "I
want $22 apiece," says Mr. Zirk. He says customers, meanwhile, are
asking for earlier years and other forms of silver.

... Lady Liberty

The government began producing silver eagles in 1986, basing its design
on Adolph Weinman's 1916 "Walking Liberty" half dollar. The front
features a flag-draped Lady Liberty striding toward the sunrise, carrying
branches of laurel and oak symbolizing civil and military glory. On the
reverse, a design by John Mercanti features an eagle with a shield,
olive branch, and talon and arrows.

The coins are made at an armored facility in West Point, N.Y.,
alongside the military academy. Dealers say they heard the mint had run out of
planchets -- round metal disks ready to be struck into coins. The disks
are used for various coins, and the companies producing the blanks
also are busy, limiting the mint's ability to increase production. The
mint won't comment on the planchets.

... Coins Divvied Up

Each Monday morning now, the mint divides its silver coins into two
pools. It divvies up the first equally among authorized purchasers. The
second is allocated proportionately, based on the buyer's past purchases.
The mint limited purchases once before -- in the late 1990s, when
investors loaded up on silver, wrongly anticipating that a failure by the
world's computers to adjust to the new millennium would cripple the
economy.

Jim Hausman, head of the Gold Center in Springfield, Ill., one of eight
companies in the U.S. authorized to buy silver eagles, estimates that
the rationing will cut his expected annual sales of four million silver
eagles in half.

And the result, he says, is almost un-American.

Increasingly, investors are taking a shine to alternatives. The Royal
Canadian Mint saw its sales of silver Canadian maple-leaf bullion coins
rise 40% last year, to 3.5 million, according to a spokesman.

Some investors expect the craze to end badly. They draw comparisons to
what happened to silver in the 1970s. A rich Texas family poured
billions of dollars into silver, and prices surged above $50 an ounce in
1980, only to plunge again after government intervention.

"It's akin to what happened when the Hunt brothers tried to corner the
silver market," says Wendell Curry, who owns McAllen Gold & Silver
Exchange in McAllen, Texas. "The silver hawks are now trying to corner
silver American eagles. And it's making it harder for mom and pop to buy
these for their grandchildren."

Some of the old guys were selling the old silver certificates. Made me sad.

___________

Lisa C.

http://www.women4ronpaul....

Well, that would be GREAT! I'm surprised so many people believe that the Fed will voluntarily give up their usury business.

"first by inflation, then by deflation, the banks...will deprive the people of all property" -Thomas Jefferson

Silver is getting harder and harder to find. Today, May 22nd, I had to go to 3 coins shops just to purchase 10 silver rounds. My preferred shop was out, so I went to another coin shop and purchased his last 7 coins then found 3 more at another shop.

Trade with all nations; alliances with none. ~Thomas Jefferson

http://www.denverpost.com...

The article talks about how mining companies are going to go bankrupt if they don't see $1500.00 gold soon. My question is, what is the price of gold going to go to if there are no more producers?

....but don't have a lot of money to do it with...I'm working 2 jobs, 7 days...and barely scaping by. I just looked at the "Silver Snowball" site that was posted below, but it is $36 per month to be a "member". Sorry, but I just can't swing it. Where can I purchase coins or bars? I would prefer to do it at a local venue...so that if it's full of lead, I can break someone's leg. I cannot afford to join some club. I'm just trying to do the best I can to hang on. Any suggestions?
---------------------
BC

If you can find, take a look at a silver price chart for the 1920's and the 30's.

I only have a printed copy that I purchased about 10 years ago, but I don't have a link.

"first by inflation, then by deflation, the banks...will deprive the people of all property" -Thomas Jefferson