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Mint holds forum

fedphilaOn Oct. 13, the U.S. Mint conducted its Numismatic Forum in Philadelphia at the Federal Reserve Bank, followed by a reception at the U.S. Mint. I was one of those invited and was among approximately 50-55 people to come to this event. The program’s objective was to discuss how the U.S. Mint could enhance promotion of coin collecting, especially in conjunction with the Mint’s 225th anniversary next year.

The attendees included a number of leaders involved with numismatics and also a handful of everyday collectors. Since those attending had to pay their own costs to be there, it was evident that pretty much everyone came to contribute their generally constructive thoughts.

Jon Cameron, the U.S. Mint’s associate director of numismatic, bullion and coin studies, served as the emcee for the day. Rhett Jeppson, the U.S. Mint’s principal deputy director, welcomed the guests, introduced several of the Mint staff in attendance and emphasized that the event was meant to gain external insights to help the Mint in the future. American Numismatic Association President Jeff Garrett also welcomed participants.

Dr. Robert Goler, curator of the U.S. Mint’s Heritage Assets Program, presented historical background on the Mint. Dr. Ellen Feingold, curator of the National Numismatic Collection at the Smithsonian Institution’s National Museum of American History, traced the history and current challenges facing the NNC.

Next Cameron presented data on the U.S. Mint’s current customer base. This showed that the typical Mint customer is far more likely to be older, Caucasian, male and with a higher income than the median for the entire U.S. population. He also outlined the current anticipated releases of numismatic coins, medals and sets for the following two years. One limitation on the Mint is that authorizing legislation for new coinage often includes detail specifications on metal content, designs and mintage limits. Perhaps the most common request from the U.S. Mint’s customers is for the commemorative silver dollar issues to be struck on 1 troy ounce pure .999 silver planchets. Unfortunately, the Mint has no discretion to do so if the authorizing legislation requires (as it always does) 90 percent silver purity of the same weight of the older Morgan and Peace silver dollars.

Next, five industry leaders sat on a panel for “Invigorating the Coin Collecting Hobby.” The moderator was Jeff Garrett. The other panelists were Mary Burleson (president of Whitman Publishing), Beth Deisher (retired 27-year editor of Coin World), Lee Minshull (honored by the ANA as Young Numismatist of the Year in 1978 and as Harry Forman National Coin Dealer of the Year in 2014) and Mark Salzberg (chairman of the Numismatic Guaranty Corporation’s parent organization).

After lunch, the attendees were each assigned to one of seven breakout groups to discuss particular subjects to present to Mint personnel. The subjects covered were Packaging, Mintage/Household Order Limits, Medals, Who is our Customer of the Future/Customer Engagement, Working with Youth, Historic Design Reproduction, and America the Beautiful Quarters Follow-on.

Although I would have been pleased to contribute on any of these themes, the one that I would most have enjoyed, Working with Youth, was the group to which I was assigned. To give you an idea of the caliber of the attendees, this group included Dr. Feingold, Mary Burleson, two major national coin dealers, a small scale online dealer, a collector and me.

The reports from these groups tended to be “small picture” ideas. For instance, the group that discussed packaging asked if it would be possible to make available some of the numismatic coins either 1) in capsules only for bulk sales where the buyers would likely be sending the coins to grading services (and at a lower selling price to reflect the lack of boxes and certificates), or 2) to put coins in flat sleeves so that they would fit in safe deposit boxes or vaults more efficiently yet would still be in original US. .Mint packaging for products owned by precious metals Individual Retirement Accounts. The Mint staff said that these ideas might be possible to implement soon since packaging was not specified in the authorizing legislation for coins.

The group that discussed mintages and household order limits acknowledged that there were some problems with insufficient transparency of the ordering process for new issues. They suggested that the Mint consider a couple of ideas. First, upon initial release, the Mint might set low order limits in order to allow as many ultimate collectors as possible to have the opportunity to purchase the coins and sets. Then, a few days later, the order limits could be raised so that dealers seeking bulk quantities could do so easily. One proposal for mintage limits was to accept orders for a 30-day period, strike enough coins to fill these orders, then cut off orders. This would be a change from current specifications in authorizing legislation on the mintage limits.

The suggestions from the other groups have largely been incorporated in my analysis submitted to the Mint earlier this week, as detailed at the end of this column. This tends to focus more on a “big picture” perspective.

One subject that did not really come up is that there is an inherent conflict between the U.S. Mint serving collectors directly yet also working with coin dealers to help sell more of these products. If the Mint charges dealers the same price as collectors would pay, that discourages dealers from handling the newest issues. If the Mint sold to dealers at discounted prices, some dealers may charge the public a price lower than the Mint and divert potential customers away from the Mint – which has happened under some past wholesale programs.

The attendees expressed a general view that U.S. Mint staffers were genuinely interested in receiving this outside feedback. When asked whether another such program should be repeated, the response was overwhelmingly in favor. When asked how often, the responses ranged from every six months to five years, with most advocating once every year or two years.

Some of the changes proposed would require Congressional legislation, which the staff at the Mint do not initiate. To have any prospect of success, collectors and other non-Mint people and organizations would need to get behind and advocate for a small number of changes through legislation. Mint officials noted that pushing for a large number of changes at the same time would run the risk of none of the revisions being enacted.

Here is the text of my follow up analysis sent to the US Mint. The Mint solicits other suggestions. If you had additional ideas that you would like me to pass along to the US Mint staff, please send me an email at path@libertycoinservice.com.

 

U.S. Mint Numismatic Forum
Philadelphia, Pennsylvania
October 13, 2016

Ways to Stimulate and Revitalize the Hobby: Observations and Suggestions from a 52-year Collector, 35-year Dealer, and Numismatic Media Participant

By Patrick A. Heller, Owner Emeritus and Communications Officer of Liberty Coin Service, Lansing, Michigan
Phone: 800-933-4720
Email: path@libertycoinservice.com

Strengths
1. The US monetary system is one of the most stable and longest lasting of any in the world. Coins and paper money issued by the US government, other than Trade Dollars, have retained their legal tender status.
2. The dollars and cents monetary system has remained constant throughout the history of the US government.
3. The US dollar has been the dominant world currency for decades. Even though its dominance is reduced over past decades, more than 60% of current global central bank reserves are denominated in US dollars.
4. As a consequence of the above, US coins and currency are spent as legal tender in several other nations such as Ecuador, the Marshall Islands, Palau, and Panama. American money is readily spendable across much of the Caribbean.
5. There are more collectors of United States coins and currency than that of any other monetary system.
6. Americans are among the most prosperous in the world, giving a relatively high proportion of the population the wherewithal to devote discretionary assets to collecting coins and paper money.
7. It is possible to begin collecting coins and paper money at face value out of circulating coins and currency, items which a high percentage of the population handle on a constant basis.
8. During much of the US Mint’s history it issued gold and silver coins, which are metals that have been used for commerce for thousands of years. Precious metals coinage has value on the basis of its intrinsic metal value rather than solely on “the full faith and credit of the US government.”
9. Of any collectible, coins and currency may have the greatest liquidity and the tightest buy/sell spreads.
10. The US Mint has an outstanding track record of fabricating high quality coins.
11. The US Mint’s website has extensive free information to educate beginning collectors.
12. Coins and currency can be collected by people of all ages on just about any size of budget. There is a tremendous flexibility in defining the scope of a collection. People of diverse other collecting interests may also find that incorporating certain coins and paper money enhance their main collection.
13. Overall, the US Mint operates at a profit, unlike almost all other government agencies.
14. Collections can be formed out of current issues or from any time going back 2,600 years.

Weaknesses
1. Since 1985, according to the US Department of Commerce, the United States is now the world’s largest debtor nation. This increases the risk of foreigners becoming less willing to accept US coins and currency in commerce, and also potentially diminishes foreign interest in US numismatics.
2. Monetary systems such as the Australia dollar, Canada dollar, euro, New Zealand dollar, and the United Kingdom pound no longer issue paper currencies in denominations lower than five of their units. This higher threshold has increased the usage of coins in such countries compared to the experience in the United States.
3. US circulating coinage, similar every other monetary system does not now have any precious metal content. This potentially reduces the attraction of collecting coins.
4. The purchasing power of US coinage has diminished over the decades. The effect of this decline has contributed to a decline in the public’s perception of coins as a store of value and increased the thought that coins are more of a “nuisance.”
5. Internationally, the metric system of weights is replacing ounces and pounds, which are commonly used in America.
6. High mintages often lead to lower prices in the secondary market, which discourages future sales.
7. Inconsistent distribution methods. Sometimes there are extremely low order limits and sometimes high or no limits.
8. There is a perhaps insurmountable conflict of interest between the US Mint serving the end collectors and serving the coin dealer industry that provides secondary market liquidity to US Mint numismatic products. Collectors may complain about not being able to purchase a particular product direct from the Mint “because the dealers bought them all before I could get in my order.” Yet, if dealers only have the same access and prices as the ultimate collectors, that discourages them from then handling current Mint offerings for retail sale.
9. The US Mint is not operated in the same manner as a business. In part this reflects it being subject to legislation as to what it may or must produce.
10. Coins, currency, and precious metals are tangible assets. Unfortunately, personal entertainment and interests are now more being enjoyed over the internet and social media, where these items cannot be “touched.”
11. In years past, the US Mint personnel were relatively non-communicative at sharing industry “best practices” with other mints and fabricators of precious metals products.
12. The cost of collecting one of each issue of all US coins is now beyond the budgets of most potential and existing collectors.
13. The US government does not help provide secondary market liquidity for the numismatic products that it sells, though this may well be for the best.
14. The US Mint needs to elicit better cooperation from the Federal Reserve in dispersing new issues of circulating coinage that collectors would seek.

Opportunities
1. The 50 State Quarters® Program was immensely popular with the public, which resulted in the US Mint sparking tens of millions of beginning coin collectors. The program also generated a higher profit to the US Mint than originally projected. The popularity of this program sparked other issues of changing designs including the Native American Dollars, US Presidential Dollars, and America The Beautiful Quarters®. Some of these beginning collectors expanded their collecting interests to other coins and currency. Issuing circulating coinage of regularly changing designs can both stimulate interest in coin collecting and potentially increase profits at the US Mint. While the 10-11 years series of coins is probably too long for children and grandparents to comfortably collect, a collection of coins issued over a 3-5 year time frame would likely be popular. Among possible design series for circulating coins are:
A. Historic inventions by state
B. Historical events by state
C. Historical non-politicians by state
D. A combination of state flora and fauna (flowers, trees, birds, animals, fish)
E. Historic colleges and universities by state
F. Reproductions of past coins designs, especially if they appear on coins of the same denomination as originally produced, which designs could each be issued for one year with the different denominations initially released in different months
G. Nations of the world with which the US government has diplomatic relations, perhaps in order in which current relations were established
H. State capital cities by state
I. Signers of the Declaration of Independence in some sequences that makes sense
J. Transportation innovation, by decade
2. If the US government were to discontinue the $1 and $2 Federal Reserve Notes, that would significantly increase demand for coins of these denominations. Studies have shown that replacing the $1 paper currency with a coin would also be more cost effective for the US Treasury. Further, half dollars could again be struck for circulation, using a series theme.
3. The current America The Beautiful Quarters® Program does not allow for public input on designs. My experience soliciting public input for the 2004 Michigan State Quarter showed demonstrated a high degree of interest, especially from teachers who used this as an educational experience.
4. I have proposed a thesis that children who collect coins and paper money, on average, grow up to be more successful adults. There are no known studies to confirm or disprove this thesis. However, I have discussed this idea with hundreds of people over the years who all intuitively concur. The skills developed in handling money and forming a collection help prepare children for similar activities in school, the workforce, and living as independent adults.
5. Coins and paper money can be excellent low cost teaching materials. Learning is enhanced when a greater number of the senses are involved. Using touch to handle coins and paper money can reinforce lessons learned by sight and sound. Coins can be used to teach art, communication, economics, geography, history, languages, math, and other subjects.
6. The US Mint could issue precious metals coins that are legal tender but not denominated in dollars. Perhaps they could be measured in metric weights rather than ounces.
7. Discontinue production of the one cent coins, which costs the US Mint more than face value to produce. A handful of countries have stopped producing the equivalent of this denomination.
8. Consider the proposal by Hugo Salinas Price, an American-born Mexican businessman, investor, and philanthropist. He is urging the Mexican government to issue coins with a small quantity of silver content to help stabilize the value of that nation’s monetary system. Such coins may be hoarded by the public, even though the intrinsic metal value and production cost is well below face value.
9. The US Mint could expand its efforts to strike coins for other nations as it has done over the years, and perhaps even incorporate such coins into numismatic offerings.
10. The US Mint could be more helpful at providing the public, coin clubs, and dealers with quality artwork to be used to help promote numismatics.
11. The US Mint could increase is efforts to trade a variety of information on best practices with other mints and private ingot and medal fabricators.
12. The US Mint could initiate an internship program of high school or college students in the Philadelphia area to work with the Mint’s artists.
13. The US Mint could make available kits used by the Boy Scouts and the Girl Scouts in their coin collecting merit badge/patch activities. Try to make sure each set of requirements includes the need to access usmint.gov website to complete.

Threats
1. The use of coins and currency in everyday commerce has mostly been replaced by the use of electronic transactions. This trend is increasing over time. An example: in the 1960s many newspapers were personally delivered by children, who also collected payment for them. In handling coins and paper money for this purpose, a high percentage of paper carriers developed into coin and paper money collectors. Today, printed newspaper circulation has declined sharply. Those newspapers that are delivered are less likely to be handled by children. Subscription payments are now almost all handled by the business office of the periodical.
2. The expansion of intangible entertainment and education of the public through the internet and social media.
3. A significant economic downturn could impair collector demand.
4. To the extent that the US Mint succeeds at selling numismatic products to the public and collectors, that can reduce potential sales made by dealers, assuming that there is only a finite total amount that buyers would spend on numismatic products.
5. Sweden is abolishing the use of coins and currency from everyday commerce, which is a trend that could expand to other nations. Merchants may completely refuse to accept any coins and currency. In that country only about 2% of transactions are paid in coins or currency. In the Netherlands, merchants are allowed to decline payments of coins and currency.

Note: a draft of this report submitted to the US Mint was presented at a meeting of the Polish American Numismatic Society in Troy, Michigan on October 15. Attendees at this meeting contributed multiple ideas to improve this report, for which I thank them.

 

Patrick A. Heller was the American Numismatic Association 2012 Harry Forman Numismatic Dealer of the Year Award winner. He was also honored by the Numismatic Literary Guild in 2016 for the Best Dealer-Published Magazine/Newspaper and for Best Radio Report. He is the owner emeritus and communications officer of Liberty Coin Service in Lansing, Michigan and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. Some of his radio commentaries titled “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 AM Wednesday and Friday mornings on 1320-AM WILS in Lansing.

 

This article was originally printed in Numismatic News.
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