American Silver Eagle Bullion Coins

Beginning in the 1970’s, momentum started to build for the federal government to sell off surplus silver from the Defense National Stockpile Center (DNSC). Some legislators viewed the sale of the unneeded silver as a good way to bring in revenue. While this may have seemed like a wise course of action, the mere mention of a government sale caused the silver market to plummet, as traders dumped their futures contracts in anticipation of falling prices.

The Lucky Friday Mine of the Coeur d’Alene district in Idaho has long been one of the top silver mines in the world. In 2009, it produced 3.5 million ounces. Image courtesy of Wikipedia (Plazak).

In July 1981, Congress agreed to sell 105.1 million troy ounces of the stockpiled silver over the next three years, leaving only 25% of the original total. The first auction occurred in October 1981, but further sales were blocked due to skilled maneuvering by congressional members of silver producing states.

As further attempts to resume sales were stymied, the silver spot price rose in response to the gridlock, plus increased worldwide demand for the metal.

Still concerned about the possibility of releasing silver from the DNSC and resultant price plunges, Senator James McClure of Idaho – a major silver mining state – proposed legislation several times throughout the early 1980’s to provide for the disposal of silver from government storage through the issuance of silver coins.

McClure reasoned:

“...if we are forced to accept a sale, why use the method guaranteed to depress the price and dispose of the silver with the lowest possible return to the taxpayers? Why not instead, if we must sell, at least get as much for it as we can? Therefore, today, I am introducing legislation which provides that in the event the President proposes and Congress authorizes the sale of silver from the strategic stockpile, this silver would be sold through the minting and distribution of a silver-bearing coin”.

On June 21, 1985, McClure proposed a “Liberty Coin Act”, as an amendment to other coinage legislation under consideration at the time. McClure’s proposal was accepted by both houses of Congress and signed into law by President Ronald Reagan on July 9, 1985. Officially known as Title II of Public Law 99-61 (Liberty Coin Act), its key points are:

-- Authorizes the Secretary of the Treasury to mint and issue silver bullion coins.

-- Defines coin specifications: diameter, weight, fineness, general design, inscriptions, and edge finish. Regulation of coin sales.

-- Establishes numismatic (i.e. Proof) and legal tender statuses.

-- Silver is to come from the Defense National Stockpile Center.

-- Stipulation that no coins may be issued or sold before September 1, 1986.

The first American Silver Eagle bullion coin was struck at the San Francisco Assay Office on October 29, 1986. [This was the third SF Mint building, opened in 1937. In 1962, it was demoted to an assay office, but was restored to mint status in 1988]. Treasury Secretary James A. Baker III was on hand for the striking ceremony. As Baker activated the coining press with the push of a button, he remarked “I don't need a pick and shovel to start the San Francisco Silver Rush of 1986”. Silver Eagle bullion coins were released by the United States Mint to the eager public on November 24, 1986.

The image on the front side of the American Silver Eagle bullion coin did not originate specifically for this issue. It was first used on the Walking Liberty Half Dollar of 1916 to 1947. The “Walker” design of Adoph A. Weinman was well liked by the public during its heyday, so when the new United States silver bullion coin was authorized, the decision was made to re-introduce Weinman’s concept to a new generation of Americans, in anticipation that it would increase the popularity of the Silver Eagle.

The reverse, on the other hand, was designed especially for the Silver Eagle. John Mercanti, a sculptor/engraver who joined the US Mint in 1974 and went on to produce more coin and medal designs than any employee in Mint history, created the reverse image. The central element of Mercanti’s design is a heraldic eagle with shield above breast grasping an olive branch (peace) in its right talon and arrows (strength) in the left, reminiscent of the Great Seal of the United States. The Great Seal first appeared on US coinage in the 1790’s and very early 1800’s. There are 13 stars above the eagle representing the 13 American colonies. Reverse inscriptions include UNITED STATES OF AMERICA, 1 OZ. FINE SILVER-ONE DOLLAR, and E. PLURIBUS UNUM (Latin for “Out of Many, One”).

The Walking Liberty Half Dollar of 1916-47 was the model for the obverse of the American Silver Eagle bullion coin. Designed by Adolf A. Weinman, the "Walker" was widely acclaimed as one of the most beautiful coins in United States history. Coin Photos courtesy of Heritage Auction Galleries.

The legislation passed in 1985 required that the silver used in the bullion coins be acquired from the DNSC. As the stockpile dwindled over the years, it became obvious that if the American Silver Eagle program was to continue, new legislation would eventually have to be enacted to permit a new source of silver.

In June 2002, Senator Harry Reid of Nevada introduced a bill called the “Support of American Eagle Silver Bullion Program Act”. The bill was passed by both houses of Congress and signed into law by President George W. Bush on July 23, 2002. The new law ensured the extension of the Silver Eagle coin by authorizing the Secretary of the Treasury to purchase silver on the open market when the DNSC silver stash was depleted.

Public Law 107-201 authorized the acquisition of silver from sources other than the Defense National Stockpile Center, as required in the 1985 law that established the American Silver Eagle program. This was necessary if the Silver Eagle was to continue, since by 2002 it was clear the stockpile would soon be depleted. Image Courtesy of United States government.

From the inception of the Silver American Eagle program in 1986 until 1992, Proofs were minted at San Francisco and carry the “S” mintmark. From 1993 to 2000, Proof Silver Eagles were produced at the Philadelphia Mint and accordingly bear the “P” mintmark. In 2001, the proof operation was transferred to the West Point Mint, where it remained until production ceased in 2008. Naturally, West Point Silver Eagle Proofs display the “W” mintmark.

Proof Silver Eagles were ordered directly from the Mint, delivered in upscale packaging. Image courtesy of Coin Page.

All throughout this time, individuals could order Proof specimens for the current year directly from the Mint, packaged in a plastic capsule shield, displayed in an upscale presentation case, along with a certificate of authenticity.

Proof production was halted in June 2008 when the Mint announced all Silver Eagle planchets were going toward the making of the bullion version of the coin, due to very heavy demand from precious metals buyers seeking a hedge against inflation in the face of a global economic downturn. No Proofs were issued in 2009 or 2010.

It is easy to distinguish a "W" Silver Eagle Uncirculated (top photo) from the "W" Proof version (bottom). The Proof has mirrorlike reflective fields. Images courtesy of United States Mint.

The term “Uncirculated” is a bit tricky when discussing Silver American Eagles. From 1986 through 2005, “Uncirculated” really meant any Silver Eagle that was not a Proof, and were struck by the millions and marketed simply as silver bullion coins. These bullion coins, or if you will, “Uncirculated”, were distributed to retail buyers through a network of authorized purchaser wholesalers (see section below to learn how this network functions).

A small percentage of the bullion coin population that by luck escaped the rigors of mass production (i.e. suffered very minimal scratches, abrasions, or other imperfections), were pulled aside, graded, and encapsulated (aka “slabbed”) in private enterprise holders (e.g. PCGS). These high grade Uncirculated Silver Eagles were sold to collectors at a premium above (sometimes far above) their bullion coin value. None of the Uncirculated Silver Eagles dated 2005 and earlier have a mintmark.

Things changed in 2006. In celebration of the 20th anniversary of the Silver Eagle program, the Mint began offering directly to the public a collectible Uncirculated version of the coin.

These special Uncirculated Silver Eagles are individually hand-loaded in the coining press and struck on a burnished (i.e. polished) blanks and housed in glitzy packaging, similar to Proofs.

Burnished Uncirculated Silver Eagles were coined at West Point from 2006-08 and bear the “W” mintmark. None were produced in 2009 or 2010. Of course, during the years of the Burnished Uncirculated product, standard bullion coins worthy of the grading process continued to be slabbed by grading services and marketed as Uncirculated Silver Eagles.

Thus, collectors have two types of Uncirculated Silver Eagles to consider: one specifically manufactured, packaged, and marketed directly by the Mint with a “W” mintmark, and the other arising from the ranks of the standard bullion population with no mintmark, distributed by a network of authorized wholesalers.

Since 2009, the only Silver Eagles produced have been the standard bullion version. No Proofs or Burnished Uncirculated were issued. As usual, choice high quality bullion Silver Eagles continue to be slabbed by grading services and sold to collectors.

Just as with the gold and platinum line of bullion coins, the Mint does not sell American Silver Eagle bullion coins directly to the public. Their distribution method employs a network of “authorized purchasers”, consisting of banks, brokerage companies, coin dealers, and precious metals firms. To become an authorized purchaser, a company must meet numerous stringent requirements.

The Mint distributes Silver American Eagle bullion coins to authorized purchasers through shipments of green "Monster Boxes" Each box containes 500 coins. Image courtesy of Wikipedia (Diiscool).

Bullion coins are shipped in green "monster boxes." The boxes are made of plastic and each box holds 500 coins. The 500 coins are packaged in 25 tubes with a capacity of 20 coins per tube. The wording “United States Mint” is written a couple of times in elevated lettering across the lid of the Monster box, complemented by two Treasury Department seals.

Every box is specially strap sealed and assigned a serial number before shipping to an authorized purchaser.

The Silver Eagles are sold to authorized purchasers in quantities of at least 25,000 coins per order. The authorized purchasers pay $1.50 per coin above the silver spot price. Once in the hands of an authorized purchaser, Silver Eagles are retailed to the general public.