The Mystery of US Mint Gold & Silver Authorized Purchasers

As an investor, you want the best price for gold and silver coins. This is where a competitive marketplace really benefits you. Distributors, on the other hand, particularly those whose business it is to sell to other distributors and dealers, are in the position of making the market, charging a premium above the U.S. mint price.

A free market, but slanted toward distributor advantage

Sometimes, these prices can get out of hand, as what happened in 2010 when the U.S. Mint stepped in to set price controls over skyrocketing premiums. And why the need for price controls? It’s because the mint won’t sell directly to the public. Well, that’s not entirely true, but the public realistically cannot do it: the minimum bulk requirement is often too high for most.

A strange disappearance of privileged buyers, aka, the Authorized Purchasers

Instead of selling to the public, it was rumored that the mint sold directly to Authorized Purchasers. Furthermore, it was rumored that there were eleven of them. But who are they?

We know that APMEX is an Authorized Purchaser of gold from the U.S. Mint. And in their press release, they mentioned joining HSBC, Deutsche Bank, Commerzbank, and Prudential Securities as fellow Authorized Purchasers.  Knowing JPMorgan’s stance toward silver, might they be an Authorized Purchaser of American Silver Eagle Coins?

Unfortunately, when it comes to procuring a list of U.S. Authorized Purchasers, an official list is nowhere to be found. And the U.S. Mint denies that such a status even exists.

The problem that alleged authorized purchases bring to the market

Authorized purchases generally have the effect of disrupting and obscuring a free market. Authorized Purchasers get first dibs on gold and silver coins, allowing them to set a premium on those products. And because these purchasers sell to other distributors and dealers, premiums tend to rise as companies across the supply chain need to make a profit.

By the time the coins are being sold to investors, the price can at times be exorbitant. This is especially true when it comes to high-demand coins with limited editions, such as the 2010 America the Beautiful Silver Bullion Coins. The premiums skyrocketed to what even the U.S. Mint considered excessive levels.

Yet the U.S. Mint denies that such Authorized Purchasers exist, claiming that anyone can purchase directly from them upon the release of a newly minted product.

Confronting the U.S. Mint

Louis Cammarosano of smaulgld.com attempted to investigate the issue, contacting the U.S. Mint directly to get answers. Here’s the mint’s response:

Thank you for your recent inquiry to the United States Mint concerning bullion dealers.

Please accept our apologies, but we do not maintain a list of authorized dealers for bullion products. We do have a webpage which will assist you with finding a dealer in your area at http://catalog.usmint.gov/bullion-dealer-locator. Please note that, per that page, “The companies that appear on this list are neither affiliated with, nor are they official dealers of the United States Mint.”

Unsatisfied with the mint’s response, Cammarosano pressed further, stating that such a statement “seems to contradict the concept of applying to become an authorized purchaser as set forth here: https://www.usmint.gov/wordpress/wp-content/uploads/2017/09/AP-Criteria-Silver-Bullion-Coins.pdf"

So what’s the point of all this?

Why is the government not being forthcoming with the market makers that they approve to buy bulk coins in unlimited quantities?

Maybe it has something to do with the requirements of a company prior to being indoctrinated as an Authorized Purchaser. If you read closely on the AP requirements, the dealer is required to have a complete audit of 5 years of sales history and subject to annual random audits. This sensitive client data is to be turned over to the US  Government and will become their property, NEVER TO BE RETURNED.  (See page 7 of the procedures)

"Applying firms are requested to label “proprietary/confidential” on each page of the documentation submitted which contains proprietary and/or confidential information that should not be made available for public release. Upon receipt, all documents will become the property of the U.S. government and will not be returned."

Gold and Silver is typically purchased to protect a person's finances beyond government and bankers control. However, in the case of purchasing from Authorized Purchaser's the privacy aspect is quickly eroded through random audits and sleuthing. If the US Mint published this list of firms turning over client data on a regular basis it would make it easy for privacy-seekers to simply avoid these firms. Hence the big secret. 

If privacy is a priority when purchasing gold and silver coins, be sure to compare prices from privately owned firms to make sure you are getting the most favorable deal.

Aside from this, also note that with the current low prices of gold and silver, the market itself is already giving you a good deal, presenting an opportunity to get in at discount prices.  Now is a good time to take advantage of this buyers market to add more intrinsic value and diversification to your retirement portfolio.

GSI Exchange is a privately held, boutique firm, ready to handle all of your precious metals needs in the most discrete manner possible. Give us a call to explore your IRA investment options at 800-474-9159.