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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