August 13, 2022

Gold and Silver Bullion Coin Sales Rebound Strongly In May

According to the latest report from the U.S. Mint, sales of both gold and silver bullion coins rebounded strongly during May.

Sales of the American Gold Eagle bullion coins during April had declined to only 20,000 ounces, the lowest monthly sales since June 2008 when 15,500 ounces were sold.  During May, the U.S. Mint sold 50,000 ounces of gold bullion coins, up 150% from April sales of 20,000 ounces.

The monthly sales figures for bullion coins can vary dramatically for a number of reasons, but support for the increase in demand during May may be due to the recent pullback in gold prices.  During May, the closing London PM Fix Price for gold declined by 6.3% from $1,664 to $1,558 per ounce.  Through the end of May, gold has declined by $40 from $1,598 at the beginning of 2012.  Gold reached a 2012 high of $1,781 on February 28th.

Sales of the American Eagle gold bullion coins hit a record high during the financial turmoil of 2009 as investors eagerly purchased 1,435,000 ounces of gold.  Ironically, sales of gold declined during the next two years despite the fact that the financial system has become more unstable as sovereign governments worldwide continue to borrow and print fiat money on an unprecedented scale in an effort to prop up a world economy burdened by unsustainable debt levels and nonexistent economic growth.  The ongoing simultaneous collapse of the banking systems and economies of the Eurozone is the most obvious trigger for the next phase of the financial crisis.  As confidence in paper money evaporates, expect gold to soar as investors stampede into the only currency that governments cannot debase.

Gold Bullion U.S. Mint Sales By Year
Year Total Sales Oz.
2000 164,500
2001 325,000
2002 315,000
2003 484,500
2004 536,000
2005 449,000
2006 261,000
2007 198,500
2008 860,500
2009 1,435,000
2010 1,220,500
2011 1,000,000
2012 280,500
Total 7,530,000
Note: 2012 totals through May 31, 2012

Sales by the U.S. Mint of the American Silver Eagle bullion coins for May almost doubled from the previous month.  Total sales of  silver bullion coins for May totaled 2,750,000 ounces, up 81% from sales of 1,520,000 ounces in April.  Year to date sales of the American Silver Eagle bullion coins through May 31st came in at 14,409,000, down by 23.8% from the first five months of 2011.  Sales of the silver bullion coins reached all an all time high during 2011.   Since reaching a multi decades high of $48.70 during April of 2011, silver has since corrected, closing out the month of May 2012 at $28.10.

Total annual U.S. Mint sales of the American Silver Eagle bullion coins since 2000 are shown below.  Sales totals for 2012 are through May 31.

In addition to gold and silver bullion coins, the U.S. Mint also sells numismatic versions (uncirculated and proof) of gold and silver American Eagle coins which can be purchased by the public directly from the U.S. Mint.  Gold and silver bullion coins are sold by the U.S. Mint only to authorized purchasers who in turn resell them to the general public and secondary retailers.

American Silver Eagle Bullion Coins
YEAR OUNCES SOLD
2000 9,133,000
2001 8,827,500
2002 10,475,500
2003 9,153,500
2004 9,617,000
2005 8,405,000
2006 10,021,000
2007 9,887,000
2008 19,583,500
2009 28,766,500
2010 34,662,500
2011 39,868,500
2012 14,409,000
TOTAL 212,809,500

Are Gold And Silver Bullion Sales Reported To The IRS? Tips For Keeping Bullion Sales Private

Long term gold and silver investors who have gradually accumulated physical precious metals over the years have seen the value of their holdings increase substantially when measured against the value of the paper dollar.   Astute investors realize that a large part of the “gains” on their precious metals have merely preserved purchasing power compared to paper money which has been consistently debased by the monetary and fiscal policies of the government and federal reserve.

In the eyes of the taxing authorities, however, the increased value of an investment due to inflation is still considered a gain regardless of whether or not there was an increase in purchasing power.  As the chart below graphically depicts, a $4,000 investment made in 1986 and now worth $8,000 is still worth only $4,000 in purchasing power -thus the true economic gain is zero.  Try telling that to the IRS!  After paying long term capital gains on the phantom $4,000 “profit”, you are left with less that you had in 1986.

There is, however, a silver and gold lining for investors in physical precious metals since, under many circumstances, the sale of your gold and silver bullion is not reported to the IRS.  There are circumstances, however, in which a bullion dealer is required to file a Form 1099-B with the IRS which reports sales transaction proceeds, name, address and social security number.  It is obviously important to most investors to know what types of sales are kept private and what types of sales are reported to the IRS.

Thanks to our friends at GoldSilver.com, here is the essential up to date information that you need to know before selling gold and silver bullion.

Before we begin, the following information covers aspects of investor privacy, not an investor’s responsibility to pay income tax gains on any profits made from the purchase and sale of investment grade bullion products.  For tax questions, please seek professional tax consul.

We know investor privacy is very important to physical silver and gold purchasers and confidentiality is one of the values we covet most along with our customers.

For some bullion investors, ensuring themselves a private sale is their most important objective and we understand the myriad of reasons as to why this is so.

That being said, we must always adhere to the rules of our industry.

Being a bullion dealer, we are often asked by customers questions like…

– Are my transactions private?

– When I sell my gold bullion or silver bullion, is it a private transaction, or is it reported to the IRS?

 

First, when a customer buys from our dealership, the transaction is private.

We have specifically designated the current payment method options on our website so that investors who buy bullion from us, do so in confidentiality.

Secondly, when an investor sells their gold bullion or silver bullion to a dealer like us, some of these trades are private while some are not.

Depending upon what you are selling will depend upon whether the powers that be require us as a bullion dealer to fill out something called an IRS 1099-B Form.

 

 

IRS 1099 Gold Reporting & Silver Reporting

When you sell your bullion back to a dealer, the pertinent questions for a dealer are:

1) What form of gold and or silver bullion are you selling?

2) What amount of silver bullion and or gold bullion are you selling?

 

The following covers private investor sales of bullion products we currently offer at GoldSilver.com.

1099 EXEMPT PRIVATE SILVER BULLION

Private silver bullion ( IRS 1099 Form exempt ) consists of any quantity sold to a dealer of the following items:

– American Silver Eagle Coins

– Canadian Maple Leaf Silver Coins

– Austrian Philharmonic Silver Coins

 

1099 REQUIRED SILVER BULLION

Reported silver bullion ( IRS 1099 Form required ) consists of 1000 ounces or more sold to a dealer of the following items:

– .999 fine silver bullion bars  (any sizes)

– .999 fine silver bullion rounds  (any sizes)

 

1099 EXEMPT PRIVATE GOLD BULLION

Private gold bullion ( IRS 1099 Form exempt ) consists of any quantity sold to a dealer of the following items:

– American Gold Eagle Coins

– American Gold Buffalo Coins

– Gold Austrian Philharmonic Coins

 

1099 REQUIRED GOLD BULLION COINS

Reported gold bullion coins ( IRS 1099 Form required ) consists of 25 ounces or more sold to a dealer of the following items:

– Canadian Gold Maples (1 oz)

– South African Krugerrands (1 oz)

 

1099 REQUIRED GOLD BULLION BARS

Reported gold bullion bars ( IRS 1099 Form required ) consists of 32.15 ounces or more sold to a dealer of the following items:

– .999 fine gold bullion bars (any sizes)

***

These are the IRS 1099-B Form reporting requirements for the bullion products we offer at GoldSilver.com as of May 2012.

Stay tuned to GoldSilver.com for any future news or proposed changes to the current IRS 1099 gold and silver reporting requirements.

Gold And Silver Bullion Coin Sales Plunge In April – What Is John Q Public Thinking?

The latest sales figures from the U.S. Mint show a continuing trend of lower gold bullion coin sales. Sales of American Gold Eagle bullion coins hit an all time high in 2009 when the Mint sold 1,435,000 ounces. During 2010, sales declined to 1.2 million ounces and in 2011 only 1 million ounces of gold bullion coins were sold.

Sales of the American Gold Eagle bullion coins in April totaled only 20,000 ounces, the lowest monthly sales figure since June 2008 when 15,500 ounces were sold.  Total year to date gold bullion sales of 230,500 ounces through April 2012 are down a substantial 43% from the first four months of 2011 when the U.S. Mint sold 407,500 ounces.

If sales of the American Eagle gold bullion coins continue at their present pace, 2012 could turn out to be the fourth year in a row of declining sales.

Gold Bullion U.S. Mint Sales By Year
Year Total Sales Oz.
2000 164,500
2001 325,000
2002 315,000
2003 484,500
2004 536,000
2005 449,000
2006 261,000
2007 198,500
2008 860,500
2009 1,435,000
2010 1,220,500
2011 1,000,000
2012 230,500
Total 7,480,000
Note: 2012 totals through April 30, 2012

Total sales of the American Silver Eagle bullion coins for April 2012 totaled 1,520,000 ounces, down from 2,542,000 ounces in March.  Year to date sales of the Silver Eagle coins through April 30 totaled 11,659,000 ounces, down by 23.5% from total sales of 15,248,000 ounces in the first four months of 2011.  Sales of the American Silver Eagle bullion coins reached an all time record high of 39,868,500 ounces during 2011.

Shown below are the U.S. Mint sales figures for the American Silver Eagle bullion coins since 2000.  Sales totals for 2012 are through April 30th.

American Silver Eagle Bullion Coins
YEAR OUNCES SOLD
2000 9,133,000
2001 8,827,500
2002 10,475,500
2003 9,153,500
2004 9,617,000
2005 8,405,000
2006 10,021,000
2007 9,887,000
2008 19,583,500
2009 28,766,500
2010 34,662,500
2011 39,868,500
2012 11,659,000
TOTAL 210,059,500

The American Gold and Silver Eagle bullion coins cannot be purchased by the public directly from the U.S. Mint. Instead, the Mint sells the coins to a network of authorized purchasers who in turn resell them to the public and secondary retailers.

Sales figures shown above do not include U.S. Mint sales of gold and silver Eagle numismatic coins.  The public is allowed to purchase numismatic versions (uncirculated and proof) of gold and silver coins directly from the U.S. Mint and sales of these coins have also been declining during 2012.

According to Mint News Blog, sales of the 2011 Proof Gold Eagles declined by about 50% from 2010 and sales of the 2012 Proof Gold Eagles have declined by over 60% from the previous year.  The same trend has been seen in the proof version of the American Silver Eagle with 2012 sales down 19% through April.

There are a number of factors likely contributing to the drop off in sales. Over the past few years, the US Mint has caught up with demand for bullion coins, allowing more certainty for the numismatic offerings. The sense of urgency and pent up demand that characterized the product return in 2010 has greatly diminished. There also seems to be a shift away from precious metals in recent months, with some moving back to collector coins. Sales of the US Mint’s Gold Eagle bullion coins were down 30% in the first quarter.

Gold prices may also be having an impact in various ways. For the past two years, the Proof Gold Eagles were released in an environment of rising prices. For the current year, prices have fallen over the past two months leading up to the release. Despite this recent drop, the initial prices for this year’s offerings were higher by the equivalent of $200 per troy ounce compared to last year, possibly making affordability a factor for some collectors. Finally, some collectors may have been delaying orders in anticipation of the price decrease which will take place later today.

With the world economy on the brink of collapse in 2008, Americans decided that they needed to prepare for a financial hurricane and subsequently purchased record amounts of both gold and silver.  Perhaps the public has not noticed that a financial crisis potentially worse than 2008 (and certain to impact the U.S. economy) is brewing “across the pond” with European governments and banks tottering on the brink of insolvency and many countries already in full blown depressions.

With the global economy drowning in debt and facing unprecedented financial problems, it is almost comical that many Americans are avoiding the only asset class able to preserve their wealth.

U.S. Mint Sales of Gold and Silver Bullion Coins Jumps 100%

The U.S. Mint reports that March sales of the American Eagle Gold and Silver Bullion coins are on track to more than double from February sales levels.  Sales during February were unusually low with gold bullion sales down 77.3% and silver bullion sales down 54% from the prior year.  Shown below are the U.S. Mint sales figures for gold and silver bullion coins through March 15, 2012.

The U.S. Mint bullion program has been extremely popular with the public and sales of the bullion coins has soared since 2007.  The gold and silver American Eagle bullion coins are sold by the U.S. Mint to authorized purchasers who pay the U.S. Mint for the cost of the metal plus a mark up to cover operating costs.  The dealers, who are required to maintain a market for the coins, sell to the general public at the market price of the coin plus a premium to cover operating costs.  The weight, purity and content of each bullion coin is guaranteed by the United States Mint.

During the U.S. Mint’s fiscal year 2011, demand for bullion coins reached all time highs with sales of 45.2 million ounces of silver and gold bullion coins, up 26.2% from the prior year.  Total U.S. Mint revenue from the sale of the bullion coins also hit an all time record high of $3.5 billion.  Demand for the American Eagle Silver Bullion Coin was especially robust with sales more than doubling from the previous year’s total.   Last year’s sales of the American Eagle Gold Bullion coins, however, declined by 22.7% due to the higher price of gold and a change in the product release schedule for the American Gold Buffalo Bullion coin.

U.S. Mint Bullion Sales

The U.S. Mint also produces numismatic proof versions of the American Gold and Silver Eagles coins which are sold by the Mint directly to the public.  Due to unprecedented demand for gold and silver, the U.S. Mint was unable to offer the proof coins during fiscal year 2009.

The top selling numismatic coin for the past two years was the American Eagle Silver Proof 1 ounce coin with sales of 850,000 coins  in 2010 and 751,000 coins in 2011.

The 2012 American Silver Eagle Proof coin is scheduled to go on sale April 12, 2012 at an expected price of $59.95.

Gold And Silver Bullion Coin Sales Plunge In February

The latest production figures from the U.S. Mint show a dramatic decline in the sale of both gold and silver bullion coins.

According to the U.S. Mint, sales of American Gold Eagle bullion coins in February 2012 totaled 21,000 ounces, a decrease of 83.5% from January sales of  127,000 ounces.  Gold bullion coin sales declined by 77.3% from the prior year when a total of 92,500 ounces were sold in February 2011.

Sales of the American Gold Eagle bullion coins during February is the lowest since June 2008 when the Mint sold 15,500 ounces.  During 2011, the U.S. Mint sold an average of 83,333 ounces of gold bullion coins each month and rang up annual sales of 1,000,000 ounces.  During 2011, sales of the gold bullion coins declined for the third consecutive year.

Sales of the American Silver Eagle bullion coins also declined dramatically during February.  The U.S. Mint reports total February sales of 1,490,000 silver bullion coins, down 76.6% compared to 6,107,000 during the previous month.  Sales of the silver bullion coins during February declined by 54% from February 2011 sales of 3,240,000 ounces.  Sales of the American Silver Eagle bullion coins were the lowest since November 2011 when the U.S. Mint sold 1,384,000 ounces.

Gold and silver sales detailed above do not include U.S. Mint gold and silver numismatic coins which are sold directly to the public.

The American Gold and Silver Eagle bullion coins cannot be directly purchased by the public from the U.S. Mint.  The U.S. Mint sells the gold and silver eagle bullion coins only to a network of authorized purchasers (AP’s) who in turn resell them to the public and secondary retailers.  The U.S. Mint determined that the AP distribution system was the most efficient means of retailing coins to the public at competitive prices.

Total yearly U.S. Mint gold bullion coin sales from January 1, 2000 to February 29, 2012 are shown below.

Gold Bullion U.S. Mint Sales By Year
Year Total Ounces Sold
2000 164,500
2001 325,000
2002 315,000
2003 484,500
2004 536,000
2005 449,000
2006 261,000
2007 198,500
2008 860,500
2009 1,435,000
2010 1,220,500
2011 1,000,000
2012 148,000
7,397,500
Note: 2012 total through February 29, 2012

Shown below are the yearly U.S. Mint sales figures since 2000 for the American Silver Eagle bullion coins.   Sales totals for 2012 are through February.

American Silver Eagle Bullion Coin Sales
YEAR OUNCES SOLD
2000 9,133,000
2001 8,827,500
2002 10,475,500
2003 9,153,500
2004 9,617,000
2005 8,405,000
2006 10,021,000
2007 9,887,000
2008 19,583,500
2009 28,766,500
2010 34,662,500
2011 39,868,500
2012 7,597,000
TOTAL 205,997,500

The U.S. public has acquired over 200 million ounces of American Silver Eagle bullion coins since 2000 which are now valued at roughly $7.4 billion.  By comparison, the iShares Silver Trust ETF (SLV) currently holds 313 million ounces of silver bullion valued at $11.7 billion.

American Silver Eagle Bullion Sales Soar As Investors Buy At Bargain Prices

The US Mint’s latest monthly reports on the sale of American Silver Eagle bullion sales show that investor buying has hit all time record levels.

Total sales of the American Silver Eagle bullion coins in 2010 came in at a record high of 34,662,500.

With over two months remaining in 2011, sales of the American Silver Eagle have already surpassed the record level of 2010 with sales of 36,375,500 ounces.  If sales of the Silver Eagle for November and December match the levels of 2010, total sales for 2011 should total over 42 million ounces or more than 20% above the record breaking sales level of 2010.

A review of sales by month for 2011 indicate solid fundamental buying by silver investors.  Typically, buying of an asset will increase as prices go higher and decrease as prices decline.  This was not the case with the American Silver Eagles – despite a sharp sell off in May and September, monthly sales increased as investors took advantage of bargain prices.

Silver had a volatile year, selling at $30.67 per ounce at the beginning of the year and moving up to a high of $48.70 (as measured by the London PM Fix Price) on April 28th.  Silver closed yesterday at $33.47, up $2.80 or 9.1% on the year.

Based on strong fundamental demand for physical silver, expect silver prices to end the year considerably higher.

US Mint To Increase Production Of Silver Bullion Coins To Meet “Unprecedented” Demand

The United States Mint announced that it will commence production of American Eagle Silver Bullion Coins at its San Francisco Mint.  For several years now, the Eagle Silver Bullion coins had only been produced at the Mint’s West Point facility.

In a press release this week, the US Mint noted that “Demand for American Eagle Silver Bullion Coins remains at unprecedented high levels.   Adding production at the United States Mint at San Francisco provides manufacturing flexibility across the bullion and numismatic product lines to meet customer needs.”

In the face of huge demand for the silver bullion coins, the US Mint has been allocating orders among its authorized purchasers.  The high demand and limited production has lead to high premiums of up to $5 per coin for purchasers of the silver bullion coins.

The US Mint recently came in for criticism for its failure to meet demand for physical bullion coins.  In early April, during a hearing by the House Financial Services Subcommittee, Rep. Ron Paul criticized the Mint for its failure to meet public demand for silver and gold bullion coins.  Ron Paul linked the shortage of bullion coins to the “huge debasement” of the United State currency and said that it was “imperative” that the US Mint meet public demand for bullion coins.

The US Mint said that it has capacity to mint up to “several hundred thousand coins per week” at the San Francisco facility.  The Mint will use the same packaging and manufacturing process at San Francisco that it uses at West Point and the coins will not have a mint mark.

Although demand for the American Eagle Silver Bullion coins remain high, the purchase of 90% silver coins is becoming a more cost effective and popular way to invest in silver.  There is a very small premium or even a discount from bullion value on the purchase of 90% silver coins.

APMEX is currently selling a $1,000 face value bag of 90% silver coins which contain 715 ounces of pure silver for $27,541.80.  Based on today’s closing New York price for silver of $38.16 per ounce, the silver value of the bag of coins being sold by APMEX is $27,284.

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.

As Silver Prices Soar, Silver Coins Get Smaller

Ten years ago, one ounce silver bullion coins could be purchased for around $7 each. This reflected market silver prices below the $5 level. As recently as one year ago, the prices for one ounce bullion coins had risen to around $18 each. Following the dramatic rise in the silver price experienced in the last five months, newly minted one ounce silver bullion coins from a major world mint are now priced around $39, assuming a purchase in quantity.

Silver has been called “poor man’s gold”, but after the significant rise in price, even the traditionally smallest sized coins are becoming expensive. Thus, it was only a matter of time before smaller sized coins would be introduced.

Last month, the Perth Mint of Australia began selling one-tenth ounce Silver Koala coins. Previously, this series had been offered in sizes ranging from one-half ounce to 1 kilo. Other numismatic and bullion coin offerings from the Perth Mint have also been available in sizes starting at one-half ounce, but this seems to be the first instance that a one-tenth ounce size has been available.

As will generally be the case with silver products, the smaller weight offerings carry a larger premium than than larger weight products. This can be the result of the fixed costs associated with manufacture or volume discounts which may be available for purchases in bulk quantities.

The Perth Mint’s website shows the one ounce 2011 Silver Koala priced at US $41.88, reflecting a premium of $5.57 or 15.34%. The one-tenth ounce version is priced at $13.76, reflecting a premium of $10.13 or 279%! (All prices at time of post.)

Obviously when purchasing silver for investment purposes, it makes sense to pay the lowest premium possible. That way, you will get more silver for your money and won’t risk seeing contraction of premiums offset gains.

The move by the Perth Mint to smaller sized silver coins is certainly an interesting one. How long will it be before other world mints follow suit?

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.