Mint News Blog

News, Information, and Commentary on US Mint Products

Saturday, November 22, 2008

US Mint Responds, New Pricing Method Coming in 2009

Shortly after the US Mint suspended most gold and platinum products and then brought them back at predominantly lower prices, I wrote a post entitled "How the US Mint Could Have Handled Price Reductions Better."

I was very grateful that Numismatic News recently republished this post as a Viewpoint article. You can find the post republished online at Numismaster.com. Shortly after the article went live, the US Mint sent a response to Dave Harper the editor of Numismatic News.

Apparently, the US Mint had provided statements regarding price changes and pricing policies. These statements were sent (presumably) to a number of coin related news outlets around the time when pricing was first adjusted for the 2008 Platinum Eagles. From what I can determine, these statements were not distributed very widely and not published anywhere.

The statements provide some insight into the US Mint's current pricing methods and mention a new method which will be effective for 2009. From my perspective, this is very encouraging. It shows that the US Mint is aware that the pricing methodologies currently in place are less than ideal, especially in times of volatile precious metals prices. I look forward to seeing details on their new pricing methods and hope they will take some of my recommendations into consideration.

Reprinted below in full are the bullet points provided by the US Mint:
The United States Mint’s gold, silver, and platinum numismatic coins are intended as collectibles, rather than investment tools. Accordingly, the United States Mint strives to maintain the established prices for these coins throughout the life of the program year.

As a Federal agency, Federal law (31 U.S. C § 9701) requires the United States Mint to base its price for each numismatic product on the production cost to the Government, as well as on the current value of the product to its recipient. Significant increases in the price of gold, silver, or platinum must trigger a pricing review. A review ensures that the Agency establishes a new price that recovers our production costs, and is consistent with the prevailing market value of the product’s precious metal content.

Significant decreases in the price of gold, silver or platinum also trigger internal reviews of our pricing. Where possible, should the price of these metals fall significantly, the United States Mint will attempt to re-adjust their pricing downward. The degree to which the United States Mint can lower its prices is driven primarily by the cost paid for the gold, silver, or platinum that was used in the fabrication of the coins.

The United States Mint is developing a method by which it will be able to adjust the prices of its 2009 numismatic products in a manner that is more responsive to substantial changes in the value of their precious metal content. More details will be available in the coming weeks.

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3 Comments:

At November 29, 2008 at 10:05 PM , Anonymous Anonymous said...

According to Federal law at 31 U.S.C. 5112 "Silver Coins" and "Gold Bullion Coins" coins shall be sold with regard to "THE MARKET VALUE of the bullion AT THE TIME OF SALE" plus other costs. This does not seem consistent with the bullet point: "the United States Mint strives to maintain the established prices for these coins throughout the life of the program year." Now the Mint promises "a manner that is more responsive to substantial changes in the value of their precious metal content" when the letter of the law requires a production markup only upon "THE MARKET VALUE of the bullion AT THE TIME OF SALE".

Is the Mint in compliance with the law?

 
At November 30, 2008 at 1:06 PM , Blogger Michael said...

The Mint would likely make the distinction that these prices are for collectible coins (proof coins and uncirculated "W" mint mark coins). The laws mentioned apply to bullion coins.

It's up for argument how big of a distinction there really is in the minds of collectors.

 
At December 1, 2008 at 2:50 AM , Anonymous Anonymous said...

The laws mentioned apply to all gold legal tender coins per 31 U.S.C. 5112(i). The law also requires the Mint to "make bulk sales of the coins...at a reasonable discount" at 5112(i)(2)(B). The executive branch of government is supposed to execute the law as plainly written by the legislature. Yet the Mint does not offer a bulk discount or market prices.

 

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