Bill could create new silver market
ASSOCIATED PRESS
6/8/2002 06:30 pm
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KELLOGG, Idaho (AP) — 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 Sen. Harry Reid, D-Nev., and representatives from two of the nation’s other silver-producing states, would create a new market for domestically produced silver in government-minted coins.
That would be good news for Nevada, Idaho and Colorado mines, many of which have been idled amid slumping metal markets.
Based on the current consumption rate, the legislation would create a market for 10 million ounces of silver annually, the equivalent of two of Idaho’s Sunshine mines.
The initiative was prompted by news that the government’s 730 million-ounce strategic stockpile of silver — accumulated in the years immediately following World War II — will be empty this summer.
Since 1986, the stockpile has quietly poured 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. At the current rate, the stockpile will be gone by the end of July, said U.S. Sen. Michael Crapo, R-Idaho.
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 created by 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.
Crapo’s legislation, co-sponsored by Reid and Sen. Wayne Allard, R-Nev., calls for a continuation of the American Eagle 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.
A Crapo staffer said the legislation could require the Mint to purchase silver from American refiners, if it complies with current trade treaties.
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