This article was originally printed in the latest issue of Numismatic News.
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People who want to buy the new 5-ounce America the Beautiful silver bullion coin are caught up in a circle of supply and demand.
The demand is there, but the supply of coins is limited and the normal distribution channels are clogged.
Only 33,000 of each of the five designs were minted, far short of the 100,000 mintage originally planned.
“That’s really a big problem,” said Lee Crane of L&C Coins. “I think the Mint didn’t read the market really well. They are creating rarity by the number they are minting. If they wanted everyone to get one, they should have minted more.”
The low mintage is complicated by a distribution plan that puts the coins in the hands of nine “authorized purchasers,” who are limited by the Mint to selling only one five-coin set to a household.
That means dealers can’t place large orders in anticipation of high customer demand.
“We can buy two or three sets using employees, but that’s not enough,” Crane said. “Judging by the number of phone calls we’re getting, we could sell 50 sets the day it comes out.”
In the Mint’s eyes, that’s a fair way to distribute the coins, said Terry Hanlon, CEO of Dillon Gage, one of nine authorized purchasers that will sell the coins directly from the Mint.
“In my opinion, these should just have been sold directly by the U.S. Mint to the public,” Hanlon said. “What’s the point of going through the distribution system of the authorized purchasers with limited mintage coins that probably meet the definition of numismatic coins rather than bullion?”
For dealers, the real sales will occur once the coins hit the secondary market.
“We certainly have a lot of people calling us to buy them, so we want to be active in that market once it’s established,” said Ken Pines of Coast to Coast Coins and Currency. “They are going to be issued one per household, widely disbursed and come back on the market slowly. Then we’ll be aggressive.”
Customers are asking what will be the price of the coin sets, but both Crane and Pines said it’s too early to tell.
“We’re going to have to buy them in the aftermarket, and the market is going to be changing on an hourly or maybe on a minute basis,” Crane said.
Given the Mint’s requirement that the authorized purchasers only sell one set per household, the wide distribution the Mint sought will probably be met, Hanlon said. But that doesn’t mean the coins will get into the hands of collectors.
“All this publicity has attracted quite a few more interested parties, and those people are more interested in making money on this product than collecting,” Hanlon said.
As for delivery of the coins, Hanlon said some of the authorized purchasers will try to deliver the coins by the end of 2010, but Dillon Gage is waiting until it has its packaging and distribution system set up.
Don’t expect these coins to come in pretty boxed sets.
“These are bullion coins and collectors need to be reminded that these were minted as bullion coins, not numismatic coins, even though the mintage was low,” Hanlon said.
The coins will be delivered to the AP’s in tubes. They will be removed from the tubes and transferred to capsules for safe shipping, Hanlon said.
“There is no fancy packaging,” Hanlon said.”
Details of the ordering and shipping process will be listed on the Dillon Gage website, he said.
Crane said customers want to know how much the coins will cost, but the market is too fluid to pin down a cost.
“The after market on the coins is going to be through the roof,” Crane said.
He compared the 5-ounce set to the 1999 silver proof set for which the Mint set a purchase limit.
“That’s a proof set issue that goes up in price tremendously because there is never a concentration of them,” Crane said. “They are spread all over the country.”
Dealers and authorized purchasers are concerned they won’t be able to meet customer demand.
“A reminder to everybody, there is a very limited mintage,” Hanlon said. “We only received 3,000 sets, and we’re selling them only as sets, not individual coins. They’ll go very quickly and we’re aware there will be those who will be very disappointed because they were unable to get in on this limited mintage.”
But a note to collectors. A numismatic version of the coins will be available in February.