It is New Year’s Eve. One of my new traditions seems to be being contacted by someone somewhere who writes in to complain about cable TV shopping channels offering coins for sale that are about to be released in advance of the actual availability date.
As if on cue, in my morning email was this little message:
“Today is Dec. 31, 2013 and I have just seen that on HSN they are offering a 2014 MS-70 ANACS certified silver Eagle. They have 16,569 for sale for $99.95. I cannot figure out how they and ANACS will know that they will have exactly 16, 569 for sale when the government has not yet released the silver Eagles.”
Is it such a mystery?
Consider that you are owner of a firm that sells coins. You have placed an order with your usual supplier of American Eagles. You have arranged to have them certified by a major grading service.
The supplier tells you what the cost is. The grading service tells you what it will charge to grade the coins. You add in your own profit margin and cost of advertising on cable TV and out of your figuring pops the sales price of $99.95.
What are the risks to the cable TV coin seller of doing this?
The Mint could delay release of the silver Eagles beyond the Jan. 13 official release date, in which case you would have angry customers.
Silver could spike higher in the interval and either the Eagle supplier or the coin firm has to eat the extra cost. But that is what hedging is meant to cover. Coin firms try to keep their positions squared. Commitments to buy and sell are balanced so they always work on their margin.
The Mint could have a huge lapse in quality and few 2014 Eagles reach the MS-70 grade. How likely is that when quality control at the Mint is turning out ever more MS-70 coins?
Those are some of the possible problems.
On the other hand, what are the advantages of offering the coins on New Year’s Eve when a huge audience has time off from work and is watching?
Like the credit card commercial says, that’s priceless.
Buzz blogger Dave Harper is winner of the 2013 Numismatic Literary Guild Award for Best Blog and is editor of the weekly newspaper "Numismatic News."