U.S. Mint Makes Drastic Cuts to Its Collector Gold and Platinum Coin Offerings

Yesterday the United States Mint announced some sweeping cuts to the number of products that it will offer to coin collectors. The deepest cuts take place in the US Mint’s offerings of collectible versions of gold and platinum bullion coins.

Most people know about the US Mint’s bullion coin offerings. American Eagle coins composed of gold, silver, and platinum are sold to the public through a network of authorized bullion dealers. In recent years, American Buffalo Gold coins were added to the lineup. These coins are bought and sold primarily as a means of investing in precious metals.

Since 2006, the US Mint has also offered so-called “collectible” versions of the popular bullion coins for sale directly to the public. The coins have been available in fractional denominations, four coin sets, and one ounce sizes. They are differentiated from the “non-collectible” bullion versions by carrying a “W” mint mark. The coins are also struck on specially burnished blanks and come in custom Mint packaging.  In addition, the US Mint has offered proof versions of bullion coins, which have been sold to collectors for many years.

The US Mint’s discontinued products (via Mint News Blog) will include:

• American Buffalo Uncirculated Gold Coins - These are the collectible versions offered by the US Mint. All fractional denominations, 4 coin set, and the one ounce coin will be discontinued.
• American Buffalo Proof Gold Coins - The fractional 1/2 oz, 1/4 oz, 1/10 oz coins and 4 coin set will be discontinued.
• American Platinum Eagle Uncirculated Coins - These are the collectible versions offered by the US Mint. All fractional denominations, 4 coin set, and the one ounce coin will be discontinued.
• American Platinum Eagle Proof Coins - The fractional 1/2 oz, 1/4 oz, 1/10 oz coins and 4 coin set will be discontinued.
• American Gold Eagle Uncirculated Coins - These are the collectible versions offered by the US Mint. The fractional 1/2 oz, 1/4 oz, 1/10 oz coins and 4 coin set will be discontinued.

Why are these products being discontinued?

The US Mint would likely cite low sales figures for the offerings, but that doesn’t get to the root of the problem. Basically, the US Mint has had a disastrous time selling the products over the past few years. This was due in large part to the way the US Mint was required to set prices combined with the extreme fluctuations of precious metals prices over the past few years.

The US Mint is required to publish prices for upcoming collectible coin products in the Federal Register. This process seems to take about 30 days. As a result, every time these pseudo-bullion coins went on sale, prices were based on precious metals values from up to 30 days ago.  Any time the US Mint wanted to change prices, coin sales had to be suspended for at least 30 days while the publication process took place.

Throughout 2006 and 2007, sales of these “collectible” bullion coins were suspended numerous times as precious metals prices climbed. Premiums above the precious metal value were in constant flux, since coin prices were fixed and precious metals changed. Typically, premiums would be high at the start of sales, but then lower as precious metals prices climbed. If you timed your purchases right, you could buy the coins for around the same price as the regular bullion coins.

During 2008, the “collectible” bullion offerings were priced early in the year when precious metals prices were at their highs. As precious metals prices dropped from their peaks, coin prices remained the same, making premiums extraordinarily high. For example, the 2008-W 1 oz. Uncirculated American Gold Eagle is currently priced at $1,119.95 (see US Mint website).  Compare this to the gold value of $742. This premium is ridiculously high for a product slightly better than a bullion coin.

The only prices that were actually lowered this year were for the platinum products. Following nearly two months of suspension, platinum coins returned with prices approximately halved. Even after the reduction, prices still reflected huge premiums. The 2008-W 1 oz. Uncirculed Platinum Eagle is priced at $1,214.95 (see US Mint website). Compare this to the platinum value of $837. Another ridiculously high premium.

On the upside, this represents the end of a bad experiment in precious metals products from the US Mint. On the downside, this represents one less way for people to acquire precious metals.

Disclosure: Long physical gold and platinum.

Comments

[Michael Fit...:]

forget collectible sets, you can't even go to Kitco.com and buy regular gold american eagles or canadian maples! it's been this way for at least two weeks. the only gold you can buy at kitco right now is 400 oz gold bars (for $296,000) or "pool" gold. neither one of which would help an individual very much if we slide into a barter system society as happened in weimar germany. apparently, the bush fascists have learned from that and they want to make sure none of us will survive their economic "strategy".

2008 Nov 11 09:16 AM

[NOWHEREMAN:]

In a couple of months the Dems will move in, can you wait that long. Or do you believe there will be no difference in Economic strategies?

2008 Nov 11 10:43 AM

[GMiki1:]

Silver rounds or eagles for survival. Of course you can't find those, either. But I do know someone who just bought gold bullion in small amounts in L.A. Krugerands and Swiss coins. Look how someone or something knocked down the spot prices today for bullion you can't find to buy. Hello December contract calls for delivery.

2008 Nov 11 11:07 AM

[Conspiray Nut:]

Or is it because they are busy minting the new AMERO???

2008 Nov 11 11:25 AM

[Damian:]

This lack of available gold has been a real pain, and it seems like it's about to get worse. I've been finding some here and there on eBay and Bullion Direct's Nucleo Exchange, but it's getting tougher. When the inflationary effects of all of this currency debasement hits home, PMs should skyrocket.

2008 Nov 11 01:29 PM

[jimmy46:]

EBAY has a number of gold coins for sale,
doesn't hurt to look.

2008 Nov 11 04:13 PM

[Kelly Liebe...:]

So it continues...and so many think that we are making this up. This is only the beginning.. By now, if you were paying attention, you have your gold and silver and have added to your storehouse of provisions. Buy now while the dollar can purchase goods at decent prices. If we are wrong, then make a massive donation to a foodbank in 12 months. If not, you have a head start.
Good luck.

2008 Nov 11 06:42 PM

[fatcat:]

Recycled article...old news...why??

2008 Nov 16 11:16 AM

[Mark McHugh:]

Far be it from me to defend anything the Treasury is doing, but...

Paulson has the right to suspend the sale of the collectibles coins and coin sets (basically all the products mentioned in the article), and needs no justification to do so. So, he is not breaking the law by cutting production of those coins (and that includes the Platinum Eagles).

The important thing to remember is he must produce gold and silver eagles (of the non-collectible variety) in quantities sufficient to meet public demand and has no discretionary authority to do otherwise. I was glad to see that KITCO is once again offering gold and silver eagles (just in the last week).

The treasury could do a whole lot more to nurture public demand of precious metals. Like making gold and silver coins available for purchase at banks (because the mint's other coins go there), post offices (like they're doing in India) or through the treasurydirect.gov website. I'm not too fond of the idea that they only deliver to a very small network of dealers, but the law on this is not very specific.

To me, the availability of the gold and silver production coins is the key issue, and as long as they are available, I won't be screaming for Hank's head. I'd also like to thank the SA community for tolerating my repeated rants on this one point, and to apologize for beating it to death.

I'm going to post the link (hopefully for the last time), to the laws governing the Treasury and mint's coining. It's not fun reading, but worthwhile. By the way: the word "notwithstanding" means "in spite of" in legalese.

www.law.cornell.edu/us...

2008 Nov 16 02:05 PM

[toomuchgas:]

Why doesn't the Mint just ask Congress to change the rule and allow them to sell at market prices? Sounds like the intelligent thing to go. Oh, yeah, I forget, this is the U.S. government.

2008 Nov 16 09:49 PM

[Kelly Liebe...:]

Did anybody get the memo on CNN this morning that your dollarb is buying less groceries?

That's right. Kellogs, Skippy, and Dryers prices have risen 30-60% so they have reduced package/content size - while keeping prices the same so that you the consumer don't realize you are getting less.

Like it or not,that is hidden inflation....

2008 Nov 17 09:16 AM

[User 30121:]

To gold/silver buyers, BEWARE OF KITCO. Personally, I would prefer to buy from the guy on the corner that says, "Psst, hey buddy, wanna buy some gold/silver". I would canvas local coin shops, flea markets, etc, then go to ebay. I have had over 600 transactions with ONE bad experience, and Ebay refunded my $$$. That is a no brainer!

2008 Nov 17 04:01 PM

[Silver Bids:]

regarding silver & gold coins on eBay,

please check the gold premium versus silver premium graph on silverbids.com before you buy anything.

don't buy on metals on days then the premium is way out of whack.

buy the metal with the lowest premium over spot instead.

Acquire metals gradually, slowly, and steadily. Don't Panic.

Don't Panic.

Don't Panic.

Don't Panic.

2008 Nov 18 12:32 AM