It's not out of the question whether the price of silver goes much higher or not. Here's why...
by Larry White of the Gold & Silver Education Center
There is an interesting situation unfolding related to the bullion silver eagles produced by the US Mint. Is it possible a combination of factors is lining up that could actually lead to 2021 silver eagles selling as high as $50 by this summer? It's not out of the question whether the price of silver goes much higher or not. Here's why.
In 2020, the US Mint struggled like everyone else trying to work around the COVID pandemic. The Mint endured multiple shut downs, impacting its ability to produce all its coins including silver eagles. Meanwhile, the Mint had also announced that for the first time since they began selling silver eagles in 1986, they would change the design on the reverse side of the coin. The original heraldic version of the eagle would be replaced with a new design.
Everyone assumed that this would mean the Mint would start out in 2021 with the new version of the silver eagle and end the old design in 2020. Surprisingly, they announced that because they had been thrown off schedule in 2020 by the pandemic, they would continue to produce the old version of the silver eagle in early 2021 and then switch over to the new version in mid 2021. All this was taking place while demand for silver eagles has been surging, so the Mint wanted to be able to produce a few million coins using the existing dies to try and meet the typical demand surge for silver eagles when dealers stock up for the new year.
This decision meant that for some period of time in 2021, the US Mint would likely be unable to produce any new silver eagles while they are switching over to the new design. It is anticipated that this may happen in May. With the "silver squeeze" popping up starting in February 2021, even more demand pressure appeared in the physical silver market impacting silver eagles as well. Dealers used to getting certain allocations of the coins were cut back and premiums shot up such that $40 silver eagles were selling briskly.
All these factors are seemingly coming together heading into this summer and so we might see silver eagles selling for as high as $50. Demand is way up. We have added coin collector demand because they want to own both the old and new version of the silver eagles the Mint will produce in 2021. Dealers have already spoken for all the old version eagles the Mint can make before they shut down to switch designs. If you look at the US Mint production totals for 2021, you can see production of silver eagles abruptly stopped in early April at 1/4th of earlier months production. It appears they will only make about 13 million of the old style eagles this year. A silver eagle market already out of balance between supply and demand will probably go through several weeks with no new coins available at all from the US Mint.
It will be interesting to see how this plays out. We haven't even talked about silver moving back up to challenge $30 or perhaps even breaking above that price point. Silver eagle premiums might go high enough to get close to $50 per coin even without a silver price at $30 or more. If silver does move higher in May or June, $50 silver eagles seem very possible. It's something to keep an eye on as we head into this summer.