Third try needed with 5-ounce silver

This article was originally printed in the latest issue of Numismatic News.
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Judging from response to our poll question this week, the U.S. Mint’s decision to sell the 5-ounce America the Beautiful silver bullion coins through its 11 authorized purchasers was the wrong one.

But was there a right choice?

Had the Mint director asked me, I would have told him to sell the 165,000 3-inch coins (33,000 of each of the five designs) directly to collectors through the Mint’s website and phone number.

Yes, I know the coin is called a bullion coin and that’s what the authorized purchaser network is intended to market, but so are the First Spouse gold coins and the Mint sells those directly to collectors.

But rather than just choose the authorized purchasers and let it go at that, the Mint imposed conditions that these businesses are ill equipped to handle. When the Mint resumed the program Dec. 10 after the Dec. 6 sales opening date was suspended, authorized purchasers were mandated to have a mark-up of no more than 10 percent and to limit orders to one of each design per household.

Authorized purchasers are configured as businesses to handle silver coins in bulk, not individually. That’s how over 33 million American Eagle coins have been sold and distributed this year. How will they handle this new responsibility of taking many small orders and policing order limits? It is too early to tell.

The cap the Mint has put on prices is a bad idea. I know collectors put a lot of pressure on the Mint. They are not happy. They want to pay less. But price controls are worse than the complaints. Will the Mint now impose controlled prices on the American Eagles as well? Why not? People complain about those prices, too.

The price control precedent is now set. It is not a good thing. The Mint shouldn’t be a market policeman. Once the Mint ships something, pricing on the secondary market should be left up to the recipient.
But even adherence to this principle is bad business. Letting the authorized purchasers get tagged as price gougers is no way to run a coin distribution network.

It is still not too late for the Mint to take this program in-house in 2011. For the long-term it is the least worst option. If the authorized purchasers are unhappy with the new restrictions on their behavior, how will they like the Mint looking over their shoulders until 2021?

The Mint should man up, as the current saying goes, weather the present complaints and sell all future issues directly to collectors through the Mint.

Terry Hanlon of Dillon Gage was right last week when he said any coin with a limited mintage is a modern day issue rare coin. A limited mintage is the opposite of a bullion coin, it is a collector coin.

It might have been bad luck, bad production breaks, or a combination, but the resulting 33,000 of a design is not a bullion coin. With 56 America the Beautiful designs in store, even if the Mint is able to raise mintages, this series will never trade as bullion coins in the true meaning of that term. The Mint should recognize this and sell them directly to all buyers. It can then set whatever price and limits it wants.