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Dimes and quarters hold U.S. Mint’s fate

American coin collectors like to gripe that the Mint’s coin prices are too high.

The numbers in the Mint’s latest annual report for fiscal year 2017 imply they are too low.

The report notes that the profit for all numismatic products declined from 8.4 percent of sales to just 5 percent.

That’s a 40 percent plunge.

Collectors want lower prices.

The Mint needs higher prices to increase its profit margin.

So how is it that collectors and the Mint have come to this?

Collectors have long maintained that the Mint’s indifference to what happens to coins on the secondary market is hurting its sales.

How can collectors not conclude that prices are too high if you take what you bought to a coin shop after decades of purchases from the Mint and discover that you have a net loss?

Word gets around. Collectors aren’t fools. They cut back or cut out purchases from the Mint.

The Mint has a huge product lineup.

But the annual report says that buyers acquired only 3.9 million units of all these products put together.

Collectors bought more proof sets than that in 1981 when the Mint offered little more than proof sets and mint sets.

If you add the mint sets, the Mint sold 7 million units in 1981.

But despite this long-term decline, collectors have been a remarkably loyal base. They bought $387.5 million worth of numismatic products.

From fiscal year 2016 to 2017, numismatic sales dropped just 6.1 percent measured by units and 6.2 percent measured by revenue.

That is far smaller than the drops in bullion revenues and circulation coinage seigniorage.

Bullion revenue fell 33.9 percent in FY2017, profit by 80.3 percent.

Circulating coin revenue sank 21.2 percent, profit by 36.9 percent.

It’s not a pretty picture.

Despite the fact that bullion coin sales made up 52.3 percent of total mint revenue, it generated only 2.59 percent of the Mint’s profit.

Numismatics generates 14.7 percent of revenue and just 4.55 percent of the profit.

Circulating coinage generates 33 percent of revenue and 92.86 percent of its seigniorage and net income total, the correct term for this form of profit.

This profit comes from the difference in the face value of coins made and the costs to make them.

And as you might guess, there are no profits from cents or nickels.

The cost to make a cent rose to 1.82 cents.

For the nickel, it rose to 6.6 cents.

Dimes and quarters are still highly profitable.

It costs 3.33 cents to make a dime. It costs 8.24 cents to make a quarter.

As you might guess, half dollars and dollar coins are profitable also, but because neither one is made for circulation any longer, these numbers aren’t even listed with the other denominations.

What do we conclude?

The whole fate of the Mint seems to rest on what happens to dimes and quarters.

Should it gamble that the trend to cashlessness won’t bite any harder?

Hope for a surge in bullion demand?

Pray collectors will suddenly begin buying more?

Take your pick.

Those are the choices facing the Mint’s managers.

Buzz blogger Dave Harper won the Numismatic Literary Guild Award for Best Blog for the third time in 2017 . He is editor of the weekly newspaper “Numismatic News.”

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3 Responses to Dimes and quarters hold U.S. Mint’s fate

  1. Tom D in SC says:

    There is one more option. The Mint could follow Canada’s lead and start stamping out trashy little colored tokens of cartoons, flowers, moles, rabbits, and other such stuff then put exorbitant prices on them. Perhaps this type of junk would be profitable down here also.

  2. Bob says:

    Perhaps if people started buying things because they wanted to own one rather than because they are hoping to flip them to make a profit… The mint could also help by not having production limits…sell as many as people want. If no one wants them, they may become a rarity in the future. I buy items when they are something I can afford and would like to own, and then don’t much care what the value is in 6 months or 2 years.

    Mint sets are one I don’t understand though…prices always seem to immediately fall. Why would someone buy mint/proof sets from the mint and then sell them the next year at a loss? I don’t get how they are losing value so quickly…seems like it should hold up, at least for a few years…

  3. Tom D in SC says:

    I, like you, am a collector I buy what I like (and what I can afford) without much regard of how it will appreciate in the future. I think the mint should be break-even, not for profit operation. If you want to buy WWI commemorative medals, you must also buy the over priced dollar coin for each medal you want.

    As far as the value of the mint sets falling, I believe there are two reasons. First, the Mint makes hundreds of millions of each denomination, so unless there is a mint error on a particular coin they are all easy to get. Modern “rare” coins are never actually rare, they’re just a few hundred million less than the others. Second, The coins no longer have intrinsic value to them. Half-dollars, quarters, and dimes have no silver in them, pennies almost no copper, dollars have nothing in them, and with the exception of the WWII silver nickels, the 5 cent pieces have been junk since the demise of the half-dime. The proof is with the value of the pre 1965 coin sets that had the silver coins in them. They continue to appreciate while the modern coin sets continue to fall. Perhaps in three or four generations from now, assuming that coins are still in use, the older clad sets may begin to turn around.
    Tom D

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