Mint News Blog

News, Information, and Commentary on US Mint Products

Friday, January 22, 2010

2009 United States Mint Annual Report


The United States Mint has released their 2009 Annual Report, which covers the results and performance during the fiscal year from October 1, 2008 to September 30, 2009.

I will be reviewing the US Mint's performance from a financial perspective with a series of articles on Coin Update News. Read the first article United States Mint 2009 Financial Results. On Mint News Blog, I wanted to highlight certain information provided in the report of particular interest to coin collectors.

Web Integration

Following results from a usability test, the US Mint determined that some website visitors were confused by the general information presented on usmint.gov and the product catalog at catalog.usmint.gov.

In response, the Mint will begin a Web Site Integration Project, which will integrate and consolidate the information and e-commerce sites. In FY2009, they began the project by drafting content requirements and initiating the design phase. In the coming year they will continue integration and development tasks.

Transition to New Call and Fulfillment Center

The US Mint recapped their change to a new call and order fulfillment center on January 3, 2009 admitting that they "experienced some missteps." The issues mentioned were answer times for calls, overall knowledge of represntatives, and waiting times for order fulfillment. After these issues became apparent, the Mint responded by increasing staffing levels and training for representatives. Warehouse processes were streamlined to increase shipments.

The report mentioned some of the specific problems encountered with fulfilling early orders for the 2009 Ultra High Relief Gold Eagle Coin. Availability of gold planchets, quality issues with the companion books, and incorrect shipping procedures resulted in a suspension of shipments. Uninterrupted shipments resumed in March 2009.

Product Portfolio

In November 2008, the US Mint announced that they were reducing their product offerings by 60%. Some of the discontinued products included the fractional Proof Gold Buffalo Coins, all Uncirculated Gold Buffalo Coins, fractional proof Platinum Eagles, all Uncirculated Platinum Eagles, fractional Uncirculated Gold Eagles, and others.

The discontinuation of these products came following a portfolio assessment performed by the United States Mint. The intention of the assessment was to realign their portfolio to contain only core products with the broadest appeal. The annual report provided more detail on the how this assessment was performed.
"We evaluated each discretionary product based on its contribution to sales volume. All products that consisted of at least one percent of total unit sales were retained for the 2009 product portfolio."
Looking back at the period when products were evaluated, I think that the US Mint's assessment did not give an accurate impression of the popularity of some discontinued products.

During 2008, precious metals prices experienced an extremely volatile year. To complicate matters, the US Mint's collectible gold and platinum products were released at times when the prices of the underlying metals were high. In the ensuing months, precious metals prices would experience an extended decline.

In the case of the platinum products, they were suspended for several months while the US Mint tried to adjust prices. During this time period, publication in the Federal Register was required in the before price changes could be put into effect, a process which could take several weeks. Because the price of platinum kept steadily declining, the US Mint could never get a fix on the price and the products remained under a prolonged suspension.

In the case of gold products, prices were never adjusted during the year. This resulted in prices reflecting excessive premiums compared to the market price of gold. Prices remained with these unusually high premiums for much of the year, impeding sales. Prices were not reduced until after the discontinuation announcement. After that point, the pace of sales increased and products quickly sold out.

I believe that the period examined for the assessment was not reflective of the actual collector demand for these products. The secondary market has shown the huge popularity of the discontinued fractional Gold Buffalo coins, in particular. Other products would have likely contributed more than one percent to sales, if not for the unusual circumstances.

Of course, this became somewhat moot when even the non-discontinued products were canceled due to the Mint's requirement to produce bullion coins to satisfy public demand before collector coins.

Direct Ship Program

During the fiscal year, the US Mint distributed 85.2 million dollar coins through the Direct Ship Program. This consisted of 62.6 million Native American Dollars and 22.6 million Presidential Dollars. This represented 18.6% of total dollar coin shipments for the fiscal year.

This amount represents a substantial number of the dollar coins minted in 2009. For the 2009 Native American Dollar, the US Mint's website shows coin production of 71.26 million coins for the calendar year, meaning that the vast majority of the mintage was distributed through the Direct Ship Program.

Abuses of the Direct Ship Program were recently covered by the mainstream press. A small group frequent fliers had been ordering tens of thousands of coins through the program, with one individual claiming to have bought $800,000 in coins. The US Mint has since implemented some controls to curb these abuses.

With the prior abuses now under control, will the US Mint see a dramatic decline in the number of Direct Ship Dollars sold in the coming year?

Design Capacity and Artistic Excellence

The US Mint listed design capacity as one of their challenges for the coming year and expressed the need to develop new ways to design coins on a timely basis with greater artistic excellence. The report included the following frank assessment of current designs:
"Our designs have tended to focus on literalism, functionality and the limitations of prescribed design elements. Too often, designs lacked a unifying balance or transcendent quality that clearly links them together as part of the body of American coinage."
In response, the US Mint created a white paper defining what artistic excellence means and developed a plan to move towards "better-looking coins." The white paper, provided five criteria by which the US Mint would judge their artistic output: (1) uniquely American, (2) exemplifies the current era of creation, (3) tells a great story, (4) advances the craft, and (5) aesthetically beautiful.

The US Mint asked the Citizens Coinage Advisory Committee to evaluate coin designs of fiscal year 2007 and 2008 on these criteria. Later in the year, the CCAC evaluated 2009 designs under the same criteria. The average annual scores were 6.1 for 2007, 5.9 for 2008, and 5.0 for 2009.

In the ongoing coverage of the results of the Mint News Blog survey, many respondents had expressed their disappointment about US coin designs. It is encouraging that the US Mint realizes there is an issue and is trying to address it.

You can view or download a complete copy of the US Mint's 2009 Annual Report here.

Labels:

16 Comments:

At January 22, 2010 at 10:42 AM , Anonymous vaughnster said...

Follow the money. If the Mint had a net increase in profit instead of a decline, you wouldn't hear a word about any problems. I guess better late than never. Great job Michael!

 
At January 22, 2010 at 8:26 PM , Anonymous Anonymous said...

The mint really screwed up by dropping some of these popular collector coins. Fractional Buffalo gold coins in proof finish would be greatly welcomed by collectors. Fractional platinum proof coins should also be reconsidered.

 
At January 22, 2010 at 9:06 PM , Anonymous Anonymous said...

Everytime I turn around it seems someone else pops up with a scam on the 2009 D nickels or dimes.Here is another.Please don't fall for this scam.

http://cgi.ebay.com/2009-P-D-Roosevelt-Dime-Set_W0QQitemZ250566725406QQcmdZViewItemQQptZCoins_US_Individual?hash=item3a56f0cf1e

 
At January 22, 2010 at 9:15 PM , Anonymous Anonymous said...

Don't stop posting such articles. I love to read articles like this. BTW add more pics :)

 
At January 22, 2010 at 10:06 PM , Blogger Peter said...

Thank you for posting the link about the '09 Roosevelt Dimes. Did you see the sticker on the roll? Not very sophisticated, but could certainly fool the hayseed.

 
At January 23, 2010 at 5:55 AM , Anonymous Anonymous said...

Peter.....if you think seller wording is tricky on eBay ads, study some of the full page ads in Coin World for Chattanooga Coin Co. LOL!

BTW, I'm not prositive, but think these same people are connected or are the same behind one of those TV coin shows. They seem to survive on staying just a hair this side of the legal line. It's their intention to hope customers will not see, read, think, or listen very closely to what is being shown or advertised. Personally, it's my opinion that they could sell the pants off coins-sets-etc. if only they kept it true, and not exist on baloney. Running a business based on expected customer gullibility doesn't go unnoticed. Yes, I wouldn't order or buy an empty 2x2 cardboard coin holder from these people.

 
At January 23, 2010 at 7:10 AM , Anonymous Anonymous said...

Isn't it amazing how the seller changed the description after I emailed him and asked him to please be truthful about where the 2009 D mint Dime came from.ROFLMAO.If you go on ebay There is 1000 scams for every good deal.It's used as a dumping ground for the most part in coins.So you should know your stuff if you plan to buy there.As far as notable auctions here.I really believe you should stop that Michael.Because one day someone rich might get burned and sue you.The notable auctions I see are usually way over bid and completely misleading as to true value of coins.Not sure if you look for those to help hype up coins.But one day it may come back to haunt you.Just a suggestion.Thanks for the great job on the site.My club and I do enjoy the posts.

 
At January 23, 2010 at 4:09 PM , Anonymous Anonymous said...

Have I missed something regarding the auction that someone posted a link to at 9:06 PM above? The auction ended at $3.50 + $0.99 SH. So someone just got $10.00 cash for $4.49.

 
At January 23, 2010 at 4:11 PM , Anonymous Anonymous said...

Re: Above. Nevermind. I thought it was for two ROLLS. Not two coins. Yes, an idiot buyer. Wow.

 
At January 24, 2010 at 9:56 AM , Anonymous Anonymous said...

I don't understand how some people are selling 2010 pennies already.
One person is trying to scare people into paying $7.39 for three pennies by saying they are going to be as scarce as 2009 nickel and dimes. Others are trying to charge $9.99 for a pre-sale single roll.
I have to laugh at the person who is selling LP1,2,3,4,5,and 6. He is trying to call a 2008 single roll a LP5 and a 2010 single roll a LP6.

 
At January 24, 2010 at 1:38 PM , Anonymous vaughnster said...

Anyone out there think it's worth picking up some extra LP4's from the Mint since it has the lowest mintage of the four designs? Any chance it can fetch a premium on the secondary market like the
LP1's?

 
At January 24, 2010 at 3:08 PM , Anonymous Anonymous said...

It will most likely not command the kind of premiums the LP1 sets do, but the LP4 is the next best one in the series. I think it will be the kind of product where once it's sold out at the Mint everyone will decide they want it after all. I can see it fetching around $25-$30 a set after sellout, especially if it really DOES sell out (as opposed to just being ended at an arbitrary time determined by the Mint.) If the LP4 sells out while the LP3 is still on sale, that should help it's value tremendously as it will create the perception of scarcity.

I bought 11 sets the other day, since it only costs around $100 to do so, and the prospects for gain seem to outweigh the prospects for loss. The product DOES have a greater risk than other roll products, due to the huge discrepancy between sale price and the face value of the coins it contains ($8.95 vs. $1). I know the difference between sales price and face value is the exact same as the Territories Quarter rolls ($7.95 over face), but it's a much larger percentage difference for the pennies. With the penny rolls face value is only 11% of your investment, while face value is about 76% of your investment in the quarters. However, having to break the rolls down for face is usually not necessary, as they often command enough premium to at least recover PART of your premium investment.

Sorry to be so long-winded there. I hope I helped you.

 
At January 24, 2010 at 4:46 PM , Anonymous Anonymous said...

Along the same lines as the LP4, I am still debating on whether to purchase some more 2009 Mint Sets. The total sales to date is still below last years(which were sold until 2/25/09) and with the copper cents, I wonder if they have some investment potential?
Any thoughts on this?

 
At January 24, 2010 at 5:46 PM , Anonymous Anonymous said...

Proof sets from the post silver age have historically been bad investments. Sure there are a few examples, but they are few and far between. Buy them if you enjoy the coins, buy bullion if you want an investment.

 
At January 24, 2010 at 6:48 PM , Anonymous Anonymous said...

Thr 2009 Unc mint sets might be a good investment since they contain the Satin finish Lincoln pennies, which are the rarest ones. In years to come there will not be enough for those who want to complete thier penny collestions.

 
At January 24, 2010 at 8:45 PM , Anonymous Anonymous said...

Once the mint publicly says a coin series is discontinued, it would be unethical to make those again for collectors in the future.

If you want the buffalo gold coins they still are making them every year in one ounce, so they do have them. If you want the fractionals you can buy the 2008 coins.

The US mint needs to look forward now in improving the collector base, not making collectors angry.

I could see the US Mint making gold coins with the Indian Head Cent design if they want to do another popular gold coin. This would fit in with the earlier gold buffalo coins.

 

Post a Comment

Subscribe to Post Comments [Atom]

<< Home