09 September 2008

US Mint Inventory

Interesting article by James Turk about US Mint inability to meet demand for gold coins. He notes that the US Mint's reported working stock has remained at exactly 2,783,218.656 ounces since April 2006. Now I agree with him that this is unlikely, but in addition to his suggested reasons:

* Maybe the Treasury does not want to part with its remaining gold at these current low prices.
* Maybe the Treasury does not want Americans to exchange their fiat dollars for the safe haven of gold as the central banking fiat money scheme implodes.
* Maybe the Mint doesn't have any gold because the 2,783,218.656 ounces were loaned out.
* Maybe the Treasury doesn't have any gold either.

I would like to propose some more mundane reasons:

* Some linking formula in a spreadsheet broke and the government official responsible for putting the numbers together didn't notice it because they don't give a stuff.
* US Mint realised it is competitively sensitive information and don't want to supply it anymore (should still disclose that in the noted to the figures).

Out of interest I used the fms.treas.gov online enquiry and let them know about the discrepancy. No reply as of yet, will be interested to see if I get one or if the numbers get fixed. Will let you know what happens.


  1. What I find interesting about Turk's article is the graph of US Mint output.
    If they could produce at several multiples above current production in 98-99, then what has changed ?
    Outsourcing perhaps ? Retirement of people who knew what they were doing ?
    Non-maintenance of mint machinery / non-replacement of decommissioned plant ? Clearly these could be reasons if the gold is in fact there.

    I don't think the competitively sensitive issue really arises. They are a government agency, and therefore committed to report, but not necessarily on the internet on a daily basis.

    Given the loose reporting standards of the BIS, and the ongoing suspicions about Fort Knox, etc, it easy to see why commentators are ready to express doubt about official statements.

    Our own RBA probably provides a slightly better accounting of the Oz gold reserves, but even there we only get a yearly snapshot of gold assets broken up by what is loaned, and what is actually held.
    Slightly off topic - why on earth has the RBA loaned out $34million worth of gold but not deriving any interest from it ? Any ideas ?
    The next annual report should be due soon and if this is still the case, I will send them a query.

  2. My view is that the US Mint still has the capacity. I think the difference with 98-99 is that they could plan for that demand because it was driven by Y2K concerns.

    This retail demand increase was not forecastable and they were running blank inventories sufficient to deal with "normal" demand, which were easily exhausted by a rapid increase in demand.

    My guess is that they have put out big orders with their blank suppliers, who have put big orders for raw gold and silver (hence refineries pulling back on retail bars to meet this wholesale demand). All this takes time to occur but once the blanks start turning up to the US Mint, I think we will see coins being churned out at 98-99 volumes. Time will tell.

    Thanks for that RBA link, at least they are upfront about it. I suspect that is why we in Australia are not as distrustful of our Government as the US.

    Anyway, at 30 June prices $2,001m = 80 tonnes. It looks like 53% loaned out, 47% held as physical. Looking further down, it appears 77% are with AA or AAA rated organisations.

    Interesting about the 45,000oz at no interest. Maybe it is cheaper than the cost of storing it? Or maybe a "lease 450,000oz get 45,000 for free" deal :)

  3. Bron,

    Yeah - it's weird. But if they still want people to borrow at zero interest, I might volunteer. lol