This article was originally printed in the latest issue of Numismatic News.
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“Where did all the coin collectors go?” the U.S. Mint might very well ask.
Its annual report for the fiscal year ending Sept. 30, 2010, shows what the Mint calls its numismatic customer base dropped 25 percent from the prior year to 798,515 from 1.06 million.
Part of the blame was placed on the lack of proof gold and silver Eagle production in 2009 because the gold and silver blanks were diverted to the bullion coin program.
But wherever they went, they took some Mint profits with them.
For the second year in a row, revenue generated by sales in the collector coin programs dropped. Total numismatic revenue in 2010 was $413.1 million, down 6.1 percent from the prior year’s $440 million.
Numismatic sales in fiscal 2008 were $557.2 million.
In the bullion coin area, where sales are high and rising, the profit margin remains fairly low.
Bullion coin revenue rose 68 percent to $2.8 billion from $1.7 billion. Nevertheless, the bullion coin program’s profits totaled $55.2 million, hardly more than the $49.8 million generated by the numismatic program, which was just one-seventh the size.
Seigniorage revenue generated by circulating coins entering commercial channels dropped to $301 million. That stemmed from a fall in circulating coin output, but also from a rapid rise in the costs of base metals (copper, nickel and zinc) going into the coins.
The loss on producing cents and nickels nearly doubled in a year to $42.6 million in 2010 from $22 million the year before.
It now costs the Mint 1.8 cents to produce each cent and 9.2 cents to make each nickel.
Profits are still made from the production of dimes and quarters, but the costs of these coins has now reached more than half of face value. The cost of producing dollar coins has now reached over 31 cents each.
The net benefit to the taxpayer as a result of the Mint’s operations has shrunk. The amount of money transferred by the Mint to the Treasury’s general fund fell 18 percent to $388 million from $475 million the year before.
In comparison, as recently as 2007, this fund transfer totaled $825 million.
If measured by the amount of money generated by gross sales, the Mint is now a 73.5 percent bullion coin business, 15.9 percent circulating coin business and 10.6 percent numismatic business.
With high prices and a high level of investor interest in precious metals, those percentages are not likely to change very much in the coming year. However, rising coin shipments to the Federal Reserve signal increased circulating coin output.
The annual report points out that the Mint has succeeded in increasing the number of ounces of bullion coin blanks from 42 million a year to 51 million, which at this point has been enough to end the chronic shortages of the 2009 and 2010 calendar years.
In its efforts to help improve levels of customer satisfaction, the Mint is now on Facebook and Twitter.