The top retail markets for silver bullion coins are North America and Western Europe, while other major markets -- China and India -- favor small bars over coins.
In the silver bullion coin market, the U.S. Mint's American Eagle coin program celebrates its 25th anniversary this year. Since their launch in 1986, these coins have dominated the global market for physical bullion coin investments. The U.S. Mint produced nearly 35 million ounces of silver Eagles last year, and would have sold more if it weren't for a shortage of blanks to make coins.
The Eagle's principal competitors are the Canadian Maple Leaf, the Austrian Philharmonic and the Australian Kookaburra, Lunar and Koala. But Eagles outsell their competitors collectively by about 3 to 1.
"While U.S. Mint sales of silver bullion coins could be as much as 40 million ounces this year and a record, I think more can be done to boost demand for the Mint's offerings," Hanlon said. First, the Mint needs to overcome production problems and ensure that it has a reliable stream of blanks to meet its needs. And second, the U.S. Treasury Dept. should find a way to level the playing field for bullion investors with regard to tax treatment.
Current tax laws impose a maximum rate of 28% on bullion investments held one year, rather than the 15% levied on securities and mutual funds. By lowering that rate, Congress could boost demand for American Eagles. "Earlier this year, I testified before the U.S. Congress and recommended that it give a competitive edge to Eagle bullion products by adjusting capital gains tax treatment," Hanlon stated.
In North America and Western Europe, silver investors have long bought small bars and coins, favoring their portability and anonymity. Indian investors, who buy jewelry and silverware for their silver investments, are beginning to include small bars in that mix. And in China, which liberalized its silver market over the past two years, investors are starting to invest in small bars...
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