EBay sellers have proven that they can spend $26,100,000 plus shipping and handling charges in a 24-hour span. That?s all the time it took for them to purchase 10,000 American Eagle 20th Anniversary Gold Coin Sets when they went on sale Aug. 30.
Issue price was $2,610 each, which is quite a chunk of change for the average collector. Perhaps I am hasty in attributing the quick sellout to eBay sellers, because as this is written I have no information as to how the orders break down. Let me know if you bought a set or tried to by e-mailing me at the e-mail address at the bottom left corner of the page.
There are sets being offered for sale on eBay for future delivery at prices that range from $3,350 to $4,750 as this is written. If all 10,000 sets were sold a second time on eBay, it would take $33,500,000 to $47,500,000 to buy them all at the suggested prices. For the sellers, with that kind of quick turnover, there hardly seems to be any risk at all.
Risk, though, does exist, but perhaps it takes a different form than simply the possibility of loss to buyers. Last week I wrote about collectors being good sports about Mint sellouts. Most collectors I know have a strong sense of fair play. The possibility of a sellout is a strong motivating factor to buyers and sellers alike. They know it is part of the game.
However, a strong sense of fair play can be corroded over time if there is a perception out there that the Mint is interested only in quick profit hits that the little guy can?t participate in. How many sellouts can the Mint have in a year with large numbers of collectors denied what they would consider a reasonable item sold at a reasonable price?
I don?t have the answer to my own question. I don?t think that this perception exists now, but it could become so over time with too many expensive coin sellouts.
I am sure it seems funny to read that there can be too many sellouts. After all, good Mint management aspires to selling out everything it offers. Bad Mint management would have no sellouts.
The ground between these two points of good management and bad management is where judgment comes in.
I can just see a future marketing meeting. ?Hey, we sold out 10,000 gold sets at $2,610. That brought us a quick $7 million over gold bullion value.?
The hook for buying this set was the reverse proof, where fields are frosted and high points are mirrored, rather than the other way around for standard proof coins. Only 10,000 of these coins will be made, which sounds very low..
Good management will ask Mint employees not only to match that $7 million next year, but add an increment of growth to it. Let?s say they want $8 million next year for the sake of discussion. How do they do it? Do they come up with another reverse proof gold set series and hope to sell another 1,400 sets to achieve that extra $1 million in profit? Do they keep mintage limits at 10,000 and raise prices by another 14 percent more than gold value in the coins? Hiking prices is standard business practice with a hot new product.
There is nothing wrong with this type of thinking and this type of discussion, but it creates a risk to the whole hobby. A quest for new products introduces what I call gimmicks. How many forms of proof do we need? We can have matte proof on one side and reverse proof on the other and then have a coin with regular proof on one side and a matte proof on the other and a third coin that has a reverse proof on one side and a regular proof finish on the other. Wow, another expensive three-coin gold set.
Farfetched? It happened in the sports card field. It has happened with other world mints. One only has to look at the issues of the Royal Canadian Mint to see what could happen to the U.S. Mint product line over time.
Sellouts can contain the seeds of their own destruction. Unfortunately, if and when such an event occurs, it will affect the whole hobby. Many, if not most of us, still think that the Mint has a reasonable product line that we all could buy if we so chose to do so. How many $2,610 set sellouts will it take to put an end to that perception?
Send comments to Dave Harper at e-mail addressdavid.harper@fwpubs.com.
