Flooding the Market with Coins

If a product proves popular with consumers, suppliers are encouraged to provide more of it. This has often happened with coins and currency sold to collectors.

A notable example of that happened in America in the 1930s. In 1936, the U.S. Mint struck 33 different commemorative silver half dollars among 19 different themes and different mintmarks. There were a number of other proposed commemoratives for that year that never went into production. In reaction to this plethora, future issues dwindled. After 1939 there were only issues in 1946 for Iowa’s Centennial, from 1946-1951 for Booker T. Washington, and from 1951-1954 for George Washington Carver and Booker T. Washington.

After that, there was a 28-year gap before the Mint again stuck commemoratives – in 1982 to honor the 250th anniversary of the birth of George Washington. Since then, the variety of themes has been relatively limited each year, though the Mint has multiplied the number of finishes with uncirculated, burnished, proof and reverse proof versions of some issues.

In the 1960s, an Ohio company came up with the concept of issuing proof sets for Panama, a Latin American country with close ties to the U.S. (such as the balboa was tied at par to the U.S. dollar, Panamanian coin issues were struck at the U.S. Mint, and the only currency that circulated in the country was U.S. dollars). These original sets included multiple silver coins, at a time when the spot price of silver was starting to rise. As a consequence, the original 1966 Panama proof set rose in price in the secondary market. This result sparked even more initial demand for the 1967 and subsequent Panama proof sets.

The success with marketing the Panama proof set to American collectors encouraged this company to sign agreements with other nations to market their proof sets. Liberia, a one-time U.S. colony on the west coast of Africa, and Sudan joined in as did a wide swath of Caribbean and other small nations. Since some of these proof sets included silver coins, at least to start, rising silver prices encouraged public demand – for a while.

There was a further surge in demand from American collectors for foreign gold coins once it was again legal for Americans to own gold after Dec. 31, 1974.

However, so many countries were trying to market proof sets and commemorative coins to American collectors that toward the end of the 1970s, the market was flooded. The gold and silver price boom that peaked in January 1980 brought significant liquidation of the silver coins in these sets. The higher prices for the newest releases also discouraged continuing demand. Several countries halted these programs

When the marketing companies had trouble selling sufficient volume of these proof sets and coins, they discontinued most of these coin programs.

The Royal Canadian Mint in recent years has built on their success at marketing commemorative coins to where I believe it now produces more than 300 different issues each year. These coins come in many different kinds of packaging, which makes it impossible to assemble and store complete collections of all these issues in a limited space. As a consequence, I think that most coins coming out in recent years have lower mintages than did the coins from 20 years ago.

For the year 2000, some marketing companies paid to have colorful decals melted onto silver Eagle dollars or even had these coins individually enameled. They sold so well to the public that it led to an explosion of other years of silver Eagles being colorized. Also, the relatively new Statehood Quarters program was proving so popular with collectors that marketers started colorizing those coins, or gold-, silver- or platinum-plating such coins.

The temporary popularity of privately coating coins eventually diminished, right as the global mints caught on to the idea themselves of making colorized coins or striking them in unusual shapes such as animals, automobiles, motorcycles, guitars or with embedded items such as stones or gems, or even in three-dimensional form.

There are also commemoratives being marketed for almost any theme that a marketing company can think of. For example, the United Kingdom’s Royal Mint is selling a 1-ounce .9999 pure gold coin to honor the 2022 60th anniversary of the Rolling Stones rock-and-roll band.

So many of these “special” coins are now flooding the market, often commissioned by a marketer that wants to be able to sell them as an “exclusive provider,” that the overall novelty of any one issue is diminishing.

I am regularly asked by customers who are being offered one of these interesting pieces at prices that are a substantial markup from precious metals value whether they would be a “good investment.” My standard response is to only purchase it if you really would like to own it and don’t care if it ever appreciates in price, or even holds at the price you pay.

If necessary, I tell them a story from about 30 years ago where my company was offered 32 lovely specimens of a Papua New Guinea 100-kina gold coin with a mintage of just 100 coins. A great rarity, right? Well, who is a collector of coins from that country and why would they have to own a coin that has a mintage of 100 pieces each year. Our company offered the owner 99.5% of gold value. He sold them to us as he said he had checked around and the most he was offered elsewhere was 99% of gold value.

When a market is flooded with a wide supply of “instant rarities,” they may not turn out to be so rare and desirable when you want to sell them.