How the Mint Made America Beautiful
Topic: After a very successful promotion with the “Statehood Quarter” series that lasted for ten years, the U.S. Mint has released a brand new form factor, 5 ounce, silver bullion coin depicting national parks and other national sites called, “America the Beautiful”.
REF: (http://www.usmint.gov/mint_programs/atb/). The new coins will begin being offered this year, in 2010, and they’re releasing five designs per year for the next ten years.
Minting an Unmintable Coin
To begin the minting of U.S. money, Congress must authorize the production of new currency, but in the creation of this most recent coin, a specification was created in the law which made this new coin almost impossible to mint.
The coin is three inches in diameter, it weighs five ounces, has reeded edge (which are those little lines around the edge of coins), and has a motto in letters around the edge of the coin. As a result of these rare design specifications, the mint has found it nearly impossible to produce the coin in significant numbers to be issued.
The Rush to Gouge
On December 1st, the U.S. Mint announced that they would begin shipping these coins to their authorized distributors on December 6th, but they also made breaking news along with the announcement.
Due to the complexity in minting the new coins, they were only able to mint thirty-three thousand pieces of the current five designs. This made for a total of only one hundred-sixty-five-thousand coins in all for a brand new issue from the U.S Mint. This also created one of the greatest rarities in the U.S. numismatic history.
The “America the Beautiful” is a bullion series coin, but the U.S. Mint doesn’t sell their bullion products directly to retail consumers. Therefore they allowed only authorized purchasers (eleven different companies in all that have an agreement with the US Mint to distribute their bullion products), to purchase and sell this new “America the Beautiful” quarter series. The U.S. Mint gave specific instructions to all its authorized purchasers though, “not to price gouge”, because if they did, their agreement to be an authorized purchaser for the U.S. Mint could be revoked.
The weekend prior to December 6, APMEX (American Precious Metal Exchange), the only authorized purchaser that is also a direct retailer, put up one-thousand sets on the Internet. They were sold out in nineteen hours at $1395 per set, which represented about a seventy-five percent mark-up.
On the morning of Monday, December 6, all of the authorized purchasers get faxed a surprising notice from the U.S. Mint. The fax in essence states that: You’ve been warned. We’ve told you not to price gouge the market with these coins. If you do, your agreement to be an authorized purchaser can be revoked. None the less, by the end of that same day, the sets were going for up to $2,500 on eBay for pre-sales, a mark-up of almost three hundred percent.
At the end of that Monday, the U.S. Mint issued a press release that was incredibly, and strongly worded for a government issued document and in so many words it stated that they told their authorized purchasers that the production numbers were extremely low on these coins and that they were not to price gouge.
The U.S. Mint’s Solution to Protect Small Collectors
The U.S. Mint decided to take action by postponing the delivery of the coins for one week and letting the distributors know that they had now decided to change the terms of agreement for the “America the Beautiful” Program. The changes were are as follows:
1. The maximum mark-up will be ten percent over what the authorized purchasers pay for their coins (which is the spot value of silver and that coin plus nine dollars and seventy-five cents).
2. The limit that is one per household of each design, for a maximum five coins per household.
These new guidelines were applied to their authorized purchasers, and though not many of them had the mechanisms in place to sell their products as retailers (limit one per household), as a result of the apparent market gouging, the U.S. Mint imposed these new standards regardless of the ability of the distributors to comply with them. In addition, the U.S. Mint decided that if the authorized purchasers did not have the ability to sell the coins on those terms, they would be allowed to return the coins they had previously purchased by December 20th. In addition, the distributors were also told that all of their sales records for the “America the Beautiful” coins would be audited to make sure that they were in compliance with the policy.
The Fall Out Benefits the American Consumer
As a result of the new terms, not many of the authorized purchasers were able to sell the coins because most are not set up to act as retailers who, for example, would be able to sell to three thousand separate individuals, in three thousand separate transactions. This resulted in six, out of the eleven authorized purchasers, changing their decisions to sell the coins at all and of those that did participate, only seventy-five thousand of the one-hundred sixty-five thousand were purchased during that first week.
After December 20th, the U.S. Mint announced that they had decided to distribute the coins to other distributors besides the initially ‘authorized eleven’. Distributors were selected who would be able to comply with the rules and guidelines that the U.S. Mint created for this particular issue, and as a result, greed lost and the American public won.
Joshua Abramson has been a professional numismatist and a Life Member of the American Numismatic Association since 1986, specializing in wholesale trading and diversifying precious metals investments. J Daniel Rare Coins Ltd: Joshua’s passion began at a young age working while working at the corner candy store in exchange for Ring Dings and whatever collectible coins he could find in the till. He is co-founder of Vault Wholesale, offering a variety of services including precious metals IRA.