Bill would create new silver market

Strategic stockpile will be empty in two months

By DAVID BOND
Staff writer

KELLOGG -- Legislation before Congress will enable the federal government to become a net silver buyer for the first time in four decades.
The bill sponsored by representatives from three of the nation's silver-producing states, would create a new market for domestically produced silver in government-minted coins. It is good news, if preliminary, for North Idaho mines -- many of which have been idled amid slumping metal markets.
The initiative was prompted by news that the U.S. government's 730 million-ounce strategic stockpile of silver -- accumulated in the years immediately following World War II -- will be empty within the next two months.
Since 1986, the stockpile has quietly walked out of the U.S. Treasury, been stamped into rounds by Sunshine Minting Co. and struck by the U.S. Mint into 1-ounce investment coins - at the rate of about 10 million troy ounces per year.
Since its congressional authorization, the U.S. Mint's coin program has consumed 137.5 million ounces of the white metal. At current consumption rates, the stockpile will be gone by the end of July, Sen. Mike Crapo, R-Idaho, told The Coeur d'Alene Press.
"With the depletion of silver reserves in the Defense Logistics Agency Stockpile, it has become necessary for the Department of the Treasury to acquire silver from other sources," Crapo said.
The American Eagle program has netted more than $264 million to the Treasury since its 1986 enactment, Crapo said. But now that the government's silver is gone, the Mint should be authorized to replace it from the market.
Crapo said the American Eagle is the world's most successful silver coinage program. It was a creation of then-Sen. Jim McClure, R-Idaho, to thwart Carter and Reagan administration-era threats to dump the entire Strategic and Critical Materials Stockpile of silver on the open market.
Both Carter and Reagan auctioned silver during the 1979-1980 price runup in order to shore up the treasury and quash the silver and gold markets, which were threatening the US Dollar.
Crapo's legislation, co-sponsored by Sen. Wayne Allard of Colorado and Sen. Harry Reid of Nevada calls for a continuation of the American Eagle coinage program. It additionally would allow the U.S. Mint to buy silver off the open market"while not paying more than the average world price," Crapo said.
"I feel very positive about this legislation. This is a benefit to the Treasury and to the silver mining industry. The fact that my co-sponsor, Sen. Reid, is Senate Majority Whip, is also encouraging," Crapo told The Coeur d'Alene Press.
Based on the Mint's current consumption rate, the legislation would create a market for 10 million ounces of silver annually - the equivalent of two Sunshine mines.
A Crapo staffer told The Coeur d'Alene Press on Friday that the legislation could contain language requiring the Mint to purchase silver from US refiners, if it complies with current trade treaties.
At current consumption rates, the Mint would need to buy, at the mill-head, about one-fifth of all American silver production.
The legislation, as-yet unassigned a bill number, is printed and will be introduced next week, Crapo told The Coeur d'Alene Press on Friday.

P.O. Box 7000 / 2nd & Lakeside / Coeur d'Alene, Idaho 83814 / 208-664-8176




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