This article was originally printed in the latest issue of Numismatic News.
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Jim Hausman of The Gold Center in Springfield, Ill., sold about 600 sets of America the Beautiful 5-ounce silver coins at $975 each on Jan. 3.
That should make him a happy businessman, right? Uh, not so much.
“These coins were supposed to go to collectors, and they went to profiteers,” Hausman said.
And he puts the blame for that right on the U.S. Mint.
“They screwed up,” Hausman said.
The Mint had planned to strike 100,000 of the five-coin sets, but there were problems with the first coins that were struck, so it ended up producing only 33,000 sets.
So the Mint decided to distribute the coins to its 11 authorized purchasers, of which nine decided to participate in the sales, and set limits on the sale price ($975) and quantity (one per household).
“If General Motors or Ford would dictate to their dealers out there and do the same thing the U.S. Mint did to their distributors, all those people from General Motors and Ford would be in jail for price fixing,” Hausman said.
“But the government figures it can do whatever it wants.”
The limited mintage sparked high demand for the coins, in effect turning a bullion coin into a collector coin.
Which is why people started gathering outside The Gold Center the night before the sale was to begin.
“People were pitching tents outside,” Hausman said. “This is a high security facility. No one is allowed here.”
With the help of local law enforcement, the crowd was dispursed, but Hausman estimates about 500 people gathered outside the building the morning of the sale.
But not all of them were collectors he as would find out.
Someone had hired 50 to 60 people from a local employment agency to stand in line and purchase sets, Hausman said. But as soon as he found out about it, he told the group he wouldn’t sell sets to them.
“Then another person put someone at a restaurant three blocks from here paying people $250 apiece to come over here and buy sets,” Hausman said.
“Customers, busboys, waitresses were coming over here, and what can we do about it? The U.S. Mint dictated the policy. I figure they ended up with 50 to 75 sets.”
Hausman said it makes him think twice about handling sales of the 5-ounce silver coins in the future.
“The labor expense in handling these things is unbelievable,” he said, “and now I’m watching people who were here yesterday making $1,500 a set overnight. This is what the Mint didn’t want to happen.”
The day after the sale at The Gold Center coins sets were being offered on eBay for between $2,200 and $2,700 from Illinois sellers in Chicago, Princeton, Springfield and Peoria, among others.
Prices were much higher on the Home Shopping Network where the five-coin sets were offered for $4,799.95, plus $24.95 shipping and handling on Jan. 4. Individual coins could be purchased for $1,199.95 plus $12.95 shipping and handling.
Meanwhile, authorized purchaser American Precious Metals Exchange asked customers to register for an e-mail alert to be sent when the coin sets are in stock and A-Mark Precious Metals noted the coins would be available for sale in mid-January.
Hausman thinks the Mint will have its own sales dilemma when it puts 27,000 “numismatic” 5-ounce silver coin sets on sale.
“They kept 27,000 sets struck with the same dies,” he said. “They are going to sandblast them and sell them directly to the public and call them collector’s editions.
“I can’t wait to see them sell them at 10 percent above bullion.”
If the Mint would have just let those 27,000 sets go to the authorized purchasers, there would have been 60,000 sets for distribution, Hausman noted.
Charles Lancelotta of Lancaster, Pa., wasn’t at The Gold Center sale. He’d already received and sold his five-coin set in the last week of December.
“I was one of 300 to 400 people who pre-ordered the coins from a distributor,” he said. “I ordered two sets of 1,000 available at $1,400-ish per set. When enough people complained to the Mint that the distributor had violated the U.S. Mint’s distribution terms by only offering one-third of their allotted coins for sale and selling bullion at far above the permitted price guidelines, the Mint pulled the coins and issued new guidelines.”
Lancelotta was subsequently allowed to receive one set from the authorized purchaser at Mint-established pricing and his other money was refunded.
He then put the set up for sale on eBay.
“I had no intention of waiting for the price of silver to increase further, nor did I base my sales prices on the current spot price of silver,” he said.
Lancelotta sold his set for $2,800. “From a strictly bullion perspective, I achieved $112 per ounce,” he said.
It may not be as high as the sets are currently selling for, but Lancelotta is happy with his profit. He said he noticed one MS-69 set graded by Numismatic Guaranty Corp. sold for over $6,000.
“I was somewhat surprised that my coins commanded the price they did,” he said. “I expected that the collectible nature of the coins would likely bring a higher price than just the value of bullion, especially given the fact that there were currently only about 400 sets out there, but I still believed that the fact that there should soon be another 29,600 sets released would temper the ceiling.”
From the Jan. 3 activity at The Gold Center, that doesn’t seem to be the case.
Time to raise the roof.