The United States Mint planned on releasing its new America the Beautiful Silver Bullion Coins today. Interest in the debuting 12-year series is strong and the opening demand for them was as well — despite asking prices that were out of the park. It was the exceptionally high prices that caused the US Mint to delay their launch.
"The United States Mint is aware of reports of concern by many consumers about the high prices and premiums being charged in the market for the newly released America the Beautiful Silver Bullion Coins," said US Mint spokesman Michael White. "We are 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."
As a bullion product, the US Mint does not offer America the Beautiful Silver Bullion Coins directly to the public but instead uses its network of Authorized Purchasers who buy in quantity and then resell to dealers, precious metals providers and others. Each AP was allocated 3,000 coins of each design, for an overall total of 15,000 coins. In addition, the five 2010 bullion coins each have a mintage cap of 33,000.
The three-inch, five-ounce .999 fine silver coins which feature the same designs as the circulating America the Beautiful Quarters® were being sold for between $280 and $340 per coin, according to price checks at many well known coin dealers from around the nation.
Each bullion coin includes five ounces of silver and carries a US Mint inherent premium of $9.75. With silver prices that hovered around $30 an ounce during most of the day, the secondary market premiums for the America the Beautiful Silver Bullion Coins calculated to a hefty $120 to $160 per coin — a level many would call price gouging.
In response to consumer concerns, the US Mint sent the following memo to its Authorized Purchasers late Monday afternoon:
The United States Mint issued a press release on December 1, 2010, announcing the December 6, 2010, availability of the 2010 America the Beautiful Ounce Silver Bullion Coins through the established network of Authorized Purchasers who, in turn, would make them available on the secondary market. Due to the limited availability of the 2010 America the Beautiful Silver Bullion Coin coins, public anticipation has been extremely strong. Since the press release was issued, the United States Mint has received numerous calls and inquiries from the public regarding premiums being charged for these coins. As a result, we are delaying the launch of this program. No America the Beautiful Ounce Silver Bullion Coins orders will be confirmed today.
Some buyers were obviously spending their money. Only time will tell as to whether premiums remain so high, or go down with the influence of the US Mint.
Aside from demand, at least two things support higher than normal values — their limited mintages, and the added possibility that this year’s issues may feature design elements and specifications that could change next year, making them a unique variety. The Coin Modernization, Oversight, and Continuity Act of 2010 is set to become law in days. Language within the Act gives the US Mint the authority to change the diameter of the America the Beautiful Silver Coins, remove their edge letterings and tweak their design so they have a "likeness" of the America the Beautiful Quarters instead of being "exact duplicates" of them.
The US Mint did anticipate high demand given the circumstances, and asked its AP’s to keep prices in check in a memo dated December 1, 2010:
Because the United States Mint was only able to produce and make available a limited quantity of each these silver bullion coins in the relatively short period since the authorizing legislation was approved, we anticipate that demand for these coins will be significant.
Accordingly, as Authorized Purchasers of the United States Mint, we want to remind you of your commitment, under your Authorized Purchaser Agreement, "to maintain buy/sell premiums for the United States gold and silver bullion coins with as narrow a spread between buy and sell prices as prudent business judgment permits. These premiums are to be competitive with those charged for other bullion coins, considering prevailing market conditions."
Although the United States Mint has no control over the fair market value of these coins once they reach the secondary market, we anticipate that our Authorized Purchasers will carry out the United States Mint’s objective to market these silver bullion coins in a manner which ensures that that they will be available, accessible, and affordable to all members of the public.
As can be expected with a brand new coin series that was just released and is not available directly from the US Mint, finding dealers who offer them can be a chore. Many dealers today indicated that they will only begin selling the coins toward the end of the week. Those who are offering them say demand is high. Some dealers said that their allocated inventory had already sold out, and required interested buyers to join a waiting list.
Many collectors said that the high premiums forced them out of market, and that they would instead wait for the release of the collector versions next year. In America the Beautiful Silver Bullion Coins release details provided last week, the US Mint said that:
A numismatic version of the three-inch, five-ounce silver coins, also minted in .999 silver, will be available for purchase directly from the United States Mint during the first quarter of 2011. The maximum mintage for these collector versions is set at 135,000 units — 27,000 units for each of the five 2010 coins. The United States Mint will strike all 2010-dated numismatic coins by the end of the year, as required by law. Additional information about the release date and pricing for the America the Beautiful Five Ounce Uncirculated Coins will be available at a future date.
While it is too early to say where prices will end up for the bullion coins, at least for much of the day expectations were that the numismatic versions would be less expensive — a rare situation for modern coinage.