Coin collectors didn’t exactly go on a buyer’s strike last year, but the Mint’s fiscal year 2016 annual report shows a sharp drop in collector purchases.
Sales of collector coins dropped 22.7 percent to $413 million. In consequence, profits dropped by 48.4 percent to $34.5 million.
This reduced profit would be even smaller except the Mint did not subtract its security expenses (called protection) from the profit figure, according to the report.
Profit margin on collector coins fell to 8.4 percent from 14.7 percent the year before.
Put another way, despite what collectors perceive as high issue prices, if the Mint reduced prices across the board by its profit margin of 8.4 percent, it would be operating these programs at break even.
Such a reduction applied to a clad proof set would reduce the price from $31.95 to $29.27. Applied to the silver proof Eagle, the reduction would take the price from $53.95 to $49.42.
Would either make a difference to the collector perception of high prices?
The proof silver Eagle would still cost more than double silver bullion value.
Small profit margins in numismatics are reduced to almost minuscule levels when it comes to the bullion program.
Sales totaled $2,085,300,000, which looks like a huge sum, but the Mint only keeps 2.7 cents on the dollar, or $55.3 million.
Both are down from a year earlier. Gross sales declined 1.9 percent and income fell 9.3 percent.
The largest contributor to the negative trend was the decline in silver Eagle bullion coin sales, which were down 11.9 percent in revenue terms.
Where the Mint still makes a bundle is in its circulating coin production.
It collected $578.7 million in seigniorage, that is the difference between face value of coins produced and the cost to the Mint to make them.
In fiscal 2016, this cost was 48 cents per dollar face value, leaving a profit of 52 cents. This is up from a profit of 49 cents per dollar produced the year before.
The Mint transferred $550 million of this to the Treasury, which reduced the Treasury’s borrowing requirement by an identical $550 million.
Cost of making each one-cent coin rose in fiscal year 2016 while the costs of the other circulating denominations declined.
The cost of each cent was 1.5 cents, up from 1.43 cents the year before.
On the other hand, the cost of making each nickel declined from 7.44 cents to 6.32 cents.
A dime cost 3.08 cents compared to 3.54 cents the year before. A quarter cost 7.63 cents compared to 8.44 cents.
Lower metal prices and improved Mint efficiency brought these costs down.
The Mint’s fiscal year covered by the report began Oct. 1, 2015, and ended Sept. 30, 2016.
This article was originally printed in Numismatic News Express. >> Subscribe today
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