September 28, 2023

US Mint Boosts America the Beautiful Silver Bullion Coin Production

The United States Mint plans to issue the first of this year’s America the Beautiful Silver Bullion Coins in late April. Last year, the series caused quite a stir when the low mintages made them more akin to scarce collectibles than bullion coins. For the current year, the US Mint has planned significantly higher production levels that will eliminate some of the excitement, but hopefully allow the coins to trade as intended, based primarily on the precious metals content.

The coins are struck in 5 troy ounces of .999 fine silver, representing the first time the US Mint has offered bullion coins with a weight greater than one ounce. The designs are exact duplicates of the America the Beautiful Quarters series, which features five different releases annually depicting National Parks or sites in each of the states and territories. The oversized bullion coins also include edge lettering indicating the weight and fineness of the precious metals content.

Each of the 2010-dated bullion releases had a limited production of 33,000 units each. The US Mint tried to solve the problem of high demand for a limited supply by requiring their primary distributors to follow specific terms and conditions, which capped premiums and sought broad distribution.

Recent reports indicate that the US Mint has produced 125,000 of the first 2011-dated releases featuring Gettysburg National Military Park. With production closer to market demand, the same terms and conditions will not apply for the distribution of this year’s coins. However, in order for the primary distributors to participate, they must certify that they have sold their complete allocation from last year in accordance with the rules established by the US Mint.

The remaining 2011-dated releases will feature Glacier National Park, Olympic National Park, Vicksburg National Military Park, and Chickasaw National Recreation Area. These will be released at intervals throughout the year.

With higher mintages, there will be less collector allure for the 2011 coins, however, the status of the 2010 coins as desirable rarities may be reinforced. If the US Mint manages to keep production levels high for the reminder of the twelve year series, the 2010 coins will take on the status of key dates for the bullion series.

America the Beautiful Silver Bullion Coin Distribution

Nine out of eleven of the US Mint’s authorized purchasers have decided to go along with the new terms and conditions covering the distribution of the America the Beautiful Silver Bullion Coins.

The 5 ounce silver bullion coins featuring duplicate designs of the circulating quarter dollar series became hot items once collectors learned of the limited mintage of just 33,000 coins per design. Based on the high demand and limited supply available, one of the US Mint’s primary distributors began accepting orders for the coins at a premium considered to be excessive.

Complaints from customers caused the US Mint to halt and relaunch the program with price controls and other measures to ensure broad distribution to the public. In order to participate in the distribution of the America the Beautiful Silver Bullion Coins, the primary distributors had to agree to sell all coins directly to the public, limit premiums to 10% above acquisition cost, and impose household ordering limits. The rules seemed problematic for some of the distributors who generally only sell in bulk quantities to other dealers.

The US Mint’s eleven primary distributors were able to place orders with the United States Mint from December 10 to 17. The nine who purchase their allotments of 3,000 coins of each designs are included below:

  • A-Mark Precious Metals (Los Angeles)
  • Coins ‘N Things (Massachusetts)
  • MTB (New York)
  • American Precious Metals Exchange, Inc. (Oklahaoma)
  • Dillon Gage Incorporated of Dallas (Texas)
  • Prudential Securities Inc. (New York)
  • The Gold Center (Illinois)
  • Jack Hunt Coin Broker (New York)
  • Fidelitrade (Delaware)

The coins allocated to the two primary distributors who did not place orders will be reallocated to active sellers this week.

In the first quarter of 2011, the United States Mint plans to offer numismatic versions of the 2010 America the Beautiful Silver Bullion Coins. These would be limited to 27,000 coins per design and sold directly to the public via the US Mint’s website and by telephone.

America the Beautiful Silver Bullion Coins Relaunch with Price Controls

After putting the program on hold earlier this week, today the United States Mint has relaunched the eagerly awaited America the Beautiful Silver Bullion Coins. If primary distributors wish to purchase the coins from the Mint, they must agree to a new set of terms and conditions, which includes price caps and very specific guidelines for distribution.

Despite extremely limited mintages of only 33,000 coins per design, the coins technically represent a bullion series. By law, the coins must be distributed through the United States Mint’s authorized purchaser network. A small group of 11 primary distributors are able to purchase the coins directly from the Mint based on the market price of silver plus a mark up of $9.75 per coin.

When one of the distributors started charging considerably more than their cost, customer complaints prompted the US Mint to put the program on hold.

The series has relaunched today with a new set of terms and conditions for authorized purchasers.

1.  Authorized Purchasers shall make available for sale to the public all 2010 America the Beautiful Silver Bullion Coins that they acquire.  The intention of this condition is to ensure that all 2010 America the Beautiful Silver Bullion Coins minted and issued by the United States Mint are sold to the public.

2.  Authorized Purchasers may charge to their customers a price no higher than ten percent above the price at which the Authorized Purchasers acquire 2010 America the Beautiful Silver Bullion Coins from the United States Mint.  Authorized Purchasers may charge their customers a reasonable shipping and handling fee; however, Authorized Purchasers may not charge any other fee, premium, or other expense to their customers to circumvent this ten-percent markup limitation.  The intention of this condition is to ensure that members of the public can obtain these coins at a reasonable and affordable purchase price.

3.  Authorized Purchasers must establish and enforce an order limit of one coin of each design for each household.  A household is defined as all persons of a family, or living as a family, at a single mailing address.  The intention of this condition is to ensure the broadest and fairest public accessibility to 2010 America the Beautiful Silver Bullion Coins, which are limited-mintage United States Mint products.

4.  Authorized Purchasers may not sell, either directly or indirectly, 2010 America the Beautiful Silver Bullion Coins to their officers or employees.  The intention of this condition is to ensure that 2010 America the Beautiful Silver Bullion Coins are available to the public and that Authorized Purchaser officers and employees do not have an unfair advantage over members of the public.

Although there was definitely a problem with the distribution system in this particular situation, by imposing price controls, the US Mint is treading into dangerous waters. There may be future implications for the authorized purchaser system and average consumers seeking to invest in gold or silver bullion.

Back in late 2008, the price of silver had plummeted to less than $10 per ounce. The rush to buy physical silver resulted in supply shortages, which pushed premiums to around 50% even for typically low premium products like 100 oz. silver bars. The United States Mint’s American Silver Eagle bullion coins were typically sold for a $4.50 per coin premium or more.

This represented a mark up greater than 10% above the cost to the primary distributors who, at the time, were able to buy the coins directly from the Mint at a $1.40 per coin premium. There weren’t many complaints to the Mint, presumably because all silver bullion products were priced at similar premiums.

The next time there is a silver supply shortage and premiums start to rise, will the US Mint seek to impose price controls for Silver Eagle bullion coins? How do you think that will work out?

America the Beautiful Silver Bullion Coins on Hold

The America the Beautiful Silver Bullion Coins should have been released on December 6, 2010, but instead the program has been delayed by the United States Mint. The delay was prompted by widespread complaints about secondary market prices, which had risen to more than two times the value of the 5 ounces of silver content.

As a bullion product, the coins were to be distributed through the US Mint’s network of authorized purchasers. A small group of primary distributors would be allowed to purchase the coins directly from the Mint at a price based on the market value of the silver content plus a premium of $9.75 per coin. Because of the expected high demand for the coins and the limited mintage available, the Mint urged the primary distributors to keep prices reasonable.

At least one primary distributor began offering the coins for sale at a premium of around $130 per coin over the market value of the silver content. Other bullion and coin dealers further down the distribution chain began offering the coins for even higher prices. The situation ultimately led to a flood of complaints, which caused the US Mint to halt deliveries to primary distributors while they determined the best course of action.

Based on a statement provided by the US Mint, they are currently, “evaluating these reports and collecting information in order to assess the appropriate course of action to make certain that our customers are best served in the distribution of the coins, and to ensure the widest possible availability, accessibility and affordability of these coins.”

The situation stems from the fact that each of the five 2010 America the Beautiful Silver Bullion Coins will have production of only 33,000 units each. The low mintage and high demand for the coins make them more akin to modern rarities than bullion coins. The other bullion coins distributed through authorized purchasers are produced in large quantities to ensure that they are priced and treated like commodities.

In order to accomplish their goals of “availability, accessibility, and affordability,” the natural course of action for the US Mint would be to distribute the coins directly to the public. The US Mint has sold low mintage numismatic products to the public in the past. They have imposed ordering limits or other procedures deemed necessary to achieve fair and widespread distribution.

Unfortunately, this option does not seem to be allowed under the law authorizing the bullion series, which calls for the coins to be distributed through the authorized purchaser network.

Other seemingly logical options such as selling the 2010 releases into the following year or completely scrapping the program for 2010 are also not possible under law. The Mint is required to strike and make the coins available for sale. The bullion coins may only be available for sale during the year in which the corresponding circulating quarter dollars are issued.

Keeping in mind the legal requirements, what options does the US Mint really have for the America the Beautiful Silver Bullion Coins?

  1. Distribute existing production through AP’s and require them to keep prices at a “reasonable” level set by the US Mint. The problem with this option is that the US Mint can only impose such pricing requirements at the primary distributor level. Most primary distributors don’t sell directly to the public, but resell to other bullion dealers. The retail prices would simply be marked up at the next level before reaching the consumer.
  2. Distribute the existing production through the National Park Service. The authorizing legislation allows the NPS to purchase the bullion coins directly from the Mint for resale to the public. Currently the NPS uses partner organizations or concessioners operating under contract to sell products at National Parks. Potentially, the NPS could create pricing and distribution guidelines for their concessioners to follow when offering the coins for sale. The US Mint could assist the NPS in formulating these guidelines.
  3. Increase the premiums charged to primary distributors to a higher level. It seems possible that the US Mint may have underestimated the costs of production anyway. One long time coin dealer stated that their calculations were likely based on much higher production levels, which would have allocated fixed costs over a greater number of units. The US Mint could recalculate the premium charged to primary distributors based on the actual limited production. This would prevent primary distributors from absorbing additional premiums, which were really just attributable to misallocated costs borne by the Mint.
  4. Increase the number of 2010 ATB Silver Bullion Coin minted to a level appropriate for a bullion product. The Secretary of the Treasury has discretion to establish the number of bullion coins available, so the number authorized could certainly be increased. However, with a complicated manufacturing process and less than one month to go, additional production is probably not be possible. Presumably, the low production level announced was the maximum number that the US Mint could reasonably produce before year end.
  5. Seek a change to the legal requirements for the coins. This would require some very prompt action from Congress, which seems unlikely. At mid year or earlier, the US Mint had asked for modifications to some of the more troublesome specifications for the 5 ounce bullion series. The bill containing these fixes (and a questionable modification to the Gold and Silver Eagle laws) was only recently passed in the House and Senate.

When the US Mint announced the halt of the America the Beautiful Silver Bullion Coin Program, I hope they realized that an easy solution was not apparent. Whatever choice they make to address the issues created by this year’s coins will likely upset someone. Even though they haven’t been issued yet, the coins have already been sold and resold on the secondary market based on a certain production and rarity perception.

New US Mint Silver Bullion Coin Series Starts Next Week

The release date, mintages, and premiums for  the United States Mint’s America the Beautiful Silver Bullion Coins were finally revealed this week. Precious metals investors and collectors were in for a few surprises.

As covered in a previous post, the coins will feature the same designs as the America the Beautiful circulating commemorative quarter dollars. This will result in five different issues per year from 2010 to 2020, and a single issue in 2021. The bullion coins will be struck in 5 troy ounces of .999 fine silver with the curious legal tender face value of 25 cents. Specifications include a diameter of 3 inches and thickness of 0.16 inch.

The release date for the new series will be December 6, 2010. This is the first date that the United States Mint’s authorized purchaser network can place orders for the new series. As with other bullion coins, the US Mint uses a small network authorized dealers to handle distribution. They purchase the coins in bulk quantities directly from the Mint and then resell them to other dealers and/or the public. Individuals are not able to buy the America the Beautiful Silver Bullion Coins directly from the Mint, but must purchase them from a bullion dealer or other market source.

The US Mint will only be producing 33,000 units for each of the 2010 designs. This results in total production of 165,000 of the silver bullion coins. It had previously been reported that 500,000 would be struck, but for unspecified reasons this amount was reduced. In terms of bullion, 825,000 ounces (165,000 of the 5 ounce coins) is an incredibly small amount. In the last  month, the US Mint sold more than 4.2 million ounces of silver bullion.

Premiums charged to authorized purchasers for the America the Beautiful Silver Bullion Coins will be $9.75 per coin. This is a very reasonable amount, but the premiums that are paid on the secondary market might be another matter. At the primary distribution level, the US Mint has warned authorized purchasers to set premiums at a level “competitive with those charged for other bullion coins.” I think the primary dealers will do their best to follow this mandate, but at subsequent levels of distribution, market forces will take precedence and drive prices higher.

In the first quarter of 2011, the US Mint will offer numismatic versions of the 5 ounce silver coins. These will be limited to only 27,000 units each. This will be another adventure waiting to happen. However, in this case the US Mint will sell the coins directly to the public at fixed prices, and will likely impose household limits to ensure broad distribution.

Details Awaited for America the Beautiful 5 oz. Silver Coins

Silver investors and coin collectors have been awaiting the final details of the United States Mint’s new silver bullion coins. Some preliminary information such as the design, specifications, and production levels have been revealed, but the premiums and exact release dates remain unknown.

The America the Beautiful Silver bullion coins will feature the designs of the new circulating commemorative quarter series struck in 5 ounces of .999 fine silver. Under Public Law 110-456, the coins will be produced with an unusually large diameter of 3.0 inches. By comparison, the Perth Mint’s 5 oz Lunar silver bullion coins have a diameter of about 2.58 inches. The larger diameter makes the US Mint’s coins more difficult to produce and potentially bendable by hand, due to the thickness of only 0.16 inches.

Following the America the Beautiful Quarters Program, a total of 56 different designs will be released between 2010 and 2021. The releases will feature a National Park or National Site from each of the 50 States, 5 U.S. Territories, and Washington, D.C. The order of release has been established based on the dates the areas were federally designated.

By law the US Mint may issue make the coins available for sale only during the calendar year that the corresponding quarter dollars are released. This means that the 2010 5 oz silver bullion coins featuring Hot Springs, Yellowstone, Yosemite, the Grand Canyon, and Mount Hood must be issued available for sale before the close of the year.

Overall production is left to the discretion of the Treasury Secretary. This is in contrast to the American Silver Eagle, which must be struck based on public demand. For 2010, the US Mint has planned production of 500,000 of the America the Beautiful Silver Bullion Coins, equally divided amongst the five designs.

The new silver bullion coins will be distributed through the US Mint’s authorized purchaser network, which currently distributes other bullion products. The premium that authorized purchasers will need to pay above the market value of the silver has not yet been announced. For the American Silver Eagle, the premium is currently $2.00 per coin. Premiums for American Gold Eagles range from 3% to 9% depending on the bullion weight.