Canadian Mint Restates Financial Results as Silver Sales Fall

Third Quarter 2016 Canadian Mint Silver Sales Fall 36% in Third Quarter 2016.

The Royal Canadian Mint Sold 6.1 million ounces of silver in the third quarter of 2016.

Third Quarter 2016 Canadian Mint silver sales fell 36% year over year in Q3 2016 from 9,500,000 ounces sold in the same quarter in 2015.

First quarter 2016 Canadian Mint silver sales rose 19.3% year over year in Q1 2016 to 10,600,000 ounces from 8,900,000 ounces sold in the first quarter in 2015.

First Half of 2016 Canadian Mint Silver Sales of 19,000,000 ounces were up 21% vs First Half 2015 Sales of 15,700,000 ounces*

Canadian Mint reports 3rd Quarter 2016 results three months later than normal, restates financial results.

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The Royal Canadian Mint released its third quarter 2016 report last week.

The report showed that Royal Canadian Mint third quarter 2016 silver sales decreased 35.8% year over year from the third quarter of 2015. (6.1 million ounces vs. 9.5 million ounces)

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Silver Sales at the Royal Canadian Mint in the 3rd Quarter 2016

Sales of Canadian Silver Maple Leaf coins and bars set a record in 2015 with 34,300,000 ounces sold, an increase of 5,200,000 ounces, or 18% from 2014’s then record sales.

Silver sales at the Royal Canadian Mint in 2015, while a record, were curbed by a lack of products to sell as Canadian Silver Maple Leaf coins and ten ounce silver bars were sold out for a few months during the year.

The Royal Canadian Mint noted in its first quarter 2016 report: “Sales of silver bullion have been driven for several quarters by demand that exceeds supply in North America and Europe.”

Royal Canadian Mint Ups Production

In order to avoid any shortage in 2016, the Canadian Mint noted in its first quarter 2016 report in reference to the Canadian Mint’s circulation coinage system:

“During the quarter, the Mint produced 138.4 million coins compared to 64.3 million in the first quarter of 2015. The increased production is to rebuild inventories to target levels, for higher demand anticipated over the summer and holidays later in the year. The efficient management of the coinage system that ensures no shortages of coins is achieved.

It seems the Canadian Mint is acutely aware of the issues that shortages create and we would imagine that they are also better prepared for increased silver bullion demand in 2016. The drop off in sales at the Royal Canadian Mint in the second quarter mirrored the decline in sales at the U.S. Mint in the second quarter. Sales at the U.S. Mint declined significantly in July and August.

The Canadian Mint second quarter report warned that silver sales SINCE June 23, 2016 (the date of the Brexit vote) had not increased:

“The result of the Brexit vote is expected to continue to cause uncertainty and increase volatility in the financial and precious metals markets. Both gold and silver metal prices jumped significantly after the vote, but have not yet translated into a material increase in bullion demand.”

The third quarter report released last week showed a decrease in silver sales.

Canadian Mint Silver To Gold Sales Ratio

Q1 2016: 10.6 million ounces of silver sold vs. 212,600 ounces of gold sold or 49.86 to 1.
Q2 2016: 8.4 million ounces of silver sold vs. 251,400 ounces of gold sold or 33.4 to 1
First Half 2016: 19 million ounce of silver sold vs. 464,000 ounces of gold sold or 40.95 to 1.
Q2 2016: 6.1 million ounces of silver sold vs 201,000 ounces of gold or 30.35 to 1.

Click here to see the current and historic gold silver ratios.

Click here to see Second Quarter Canadian Mint Gold Sales

Canadian Mint Silver Sales

canadian mint silver sales 2004 - 2016 (through third quarter)

Through the third quarter of 2016, Royal Canadian Mint silver sales were 25.1 million ounces.

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Canadian Silver Maple Leaf

Description: Obverse: Picture of of Queen Elizabeth II of England
Reverse: Depiction of a Maple Leaf “CANADA” “Fine Silver 1 oz Argent Pur”
Composition/Weight: 1 ounce/.9999 fine silver; ridged edge
Face value: $5
Designer: Susanna Blunt
Mint Location: Ottawa, Canada
Years Minted: 1988-present

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Royal Canadian Mint Financial Restatement

Why was the Royal Canadian Mint third quarter report so late?

The Canadian Mint has been selling silver coins at the price of their face value. These coins have face values of $20, $50 $100 or $200. The face value coins contain far less silver than the dollar amount stamped on them. For example the $20 silver face value coins have about a quarter ounce of silver worth about $4 or $5. Compare this to one ounce Canadian silver maple leaf coins that have a face value of $5. Because the face value coins can be redeemed at their face value, as the price of silver falls many coins will probably be “redeemed” at their face values. The returns on these coins it seems is vastly higher than the Canadian Mint’s other coin offerings. Here is what the Canadian Mint noted in the third quarter report:

“Face Value products have different characteristics than other numismatic products as they have a Face Value equal to their purchase price which, combined with the unlimited redemption and return period permitted by the Mint’s current redemption and return policies and practices, make Face Value products significantly more likely to be redeemed or returned than other numismatic products.

Consequently, the historical redemption and return patterns for other numismatic products cannot be used to estimate the redemptions and returns for Face Value products and noreasonable, reliable alternative method exists. As a result of this review, it was determined that revenue should not be recognized until a reasonable estimate of redemptions and returns can be made.”

The price of silver and the value of the Canadian dollar vs the U.S. dollar were identified as factors in returns. As a result of these coins and their undetermined return rate, the Canadian mint created a “provision representing the cumulative value of unredeemed/unreturned Face Value products and the costs of redemptions and returns, net of the value of the corresponding silver content, was recorded in Q3 2016 with retrospective adjustment to the inception of the Face Value program.”

“This net provision will increase each period with new sales and decrease or increase each period as the market price of silver (in U.S. dollars) increases or decreases and the Canadian dollar weakens or strengthens with respect to the U.S. dollar. These movements in the net provision will impact profit (loss) each period. As a result of this change in accounting, the consolidated balance sheet at December 31, 2015 and the consolidated statements of operations and changes in equity and comprehensive income for the year ended December 31, 2015 and the 13 week and 39 week periods ended September 26, 2015 were restated.

*Canadian Mint reported for the first 26 weeks silver sales increased 26% to 19.7 million ounces from 15.7 million ounces in the previous year. (first 26 weeks) The slightly different numbers we reported are the sum total of the silver sales reported by the Royal Canadian Mint in the first and second quarters of 2016.

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Further Reading:

Canadian Mint Sales (quarterly and annual archives)

US Mint Sales (monthly archive)

Perth Mint Sales (monthly archive)

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