By Louis Golino for CoinWeek ….
The America the Beautiful Quarters five-ounce silver bullion and numismatic program has faced problems since before the first coins were even released. And in the one and a half years since then, the Mint’s management of the program has continued to raise questions from collectors, dealers, and analysts.
Officials from the United States Mint never advertised the coins outside of coin publications, which substantially limited the market for bullion coins which were designed as an alternative to American Silver Eagles. And many of their decisions about mintages, pricing, and release schedules have struck many people as curious.
Now, at a time when interest in the series is probably at an all-time low, the Mint has stated that it will continue selling bullion coins from one year for an indefinite period. That was revealed in a response to an inquiry from Michael Zielinski of Coin Update. This action is likely to further erode collector and investor demand for the coins.
Meanwhile, on February 9 the Mint releases the last 2011-dated numismatic version of the coins, which honors Chickasaw National Park in Oklahoma. The coins are priced at $205 each, which is very similar to the price bullion and coin dealers are charging for the bullion versions. The numismatic coins have a maximum authorized mintage of 35,000 units, while the bullion coins have a maximum limit of 126,700.
When the Mint prepared to roll out the 2010 bullion coins, which are distributed through the Mint’s network of Authorized Purchasers (AP), collectors discovered that the APs were intent on gauging them by charging exorbitant prices.
The Mint forced the APs’ hands and required them sell the 2010 coins at a small premium over melt, but the authorized purchasers dragged their feet and took forever to distribute the coins. Many collectors grew so frustrated that they vastly overpaid for the coins on the secondary market, only to later see values plummet dramatically.
However, those who had their 2010 bullion sets graded and who lucked out with high-grade MS 69 PL and especially MS 69 DMPL coins have done well. Some of those coins are worth about the same amount as a five-coin set because they have low populations. Their values in some cases have held steady, while the raw and lower graded coins have declined substantially.
Then the Mint began releasing the 2010 numismatic coins but not until 2011. There was so much pent-up interest that the first issue, the Hot Springs coin, sold out in about two weeks. The 2010 numismatic releases were limited to 27,000 units per coin, although one issue, the Grand Canyon coin, was declared sold out with only 26,019 pieces sold. The final 2010 collector issue took six months to sell out.
For the 2011 numismatic versions, the Mint raised the mintage limit to 35,000, which is odd since the coins have been selling so slowly. One would think that after seeing the decline in interest for the 2010 coins after the Hot Springs release, the Mint would have lowered, not raised the mintages.
Ever since then sales have slowed, and interest in the series has declined. In fact, the decline has been so significant that the 2011 bullion releases went from selling 126,700 for the first two issues to only 27,400 for the last 2011 release.
A major problem with this coin program is that the Mint released far too many coins in a short period of time, which over saturated the market and dampened collector and investor demand. In addition, as silver prices rose then fell, collectors worried that they had overpaid for their coins and decided to cut back or sell.
By law the Mint normally cannot sell bullion coins from one year into the next year, although it can and does do that with numismatic products. The AP’s are free to sell them whenever they want to, but up to this point the numismatic community has been working under the assumption that bullion coins were subject to legal provisions governing their sale by the Mint to the APs. In this case, that would be Public Law 110-456, which created the America the Beautiful quarters and five-ounce silver coins
Well, it turns out that the Mint has decided to interpret the law differently, as we have just learned that the Mint is still selling 2011-dated bullion coins to its network of AP’s. So far in 2012, the Mint has sold an additional 5,700 2011 coins to its distributors, and presumably the Mint will continue selling them at least until its existing inventory is exhausted, whenever that occurs.
There is no public information about how many coins are still available, or which coins are involved. However, we do know the first two issues, Gettysburg and Glacier Parks, sold their congressionally authorized maximum mintages of 126,700, so the ongoing sales are presumably of the other three 2011 releases (Olympic, Vicksburg, and Chickasaw). It is possible that the Mint produced 126,700 of the other three coins too.
For those who thought the Vicksburg and Chickasaw bullion coins would be low mintage pieces with the potential to increase beyond melt value, and who were buying extra coins as a result, we now have no idea what the final numbers will be. If you loaded up, I would wait for higher silver prices before selling.
In fact, based on information provided by the US Mint’s legal department and made available by Mint spokesman Michael White, it may even be the case that the Mint is still striking 2011-dated coins this year. I believe that such actions would violate the intent of the laws governing these coins
Michael Zielinski, editor of Coin Update, recently questioned the Mint’s interpretation of the laws on this issue. “Even if this is a valid interpretation,” he said, “it is arguable that this was not truly the intention of the authorizing legislation. The United States Mint generally does have the authority to issue coins across multiple years, unless there is a specific requirement otherwise.”
If it turns out that the Mint is indeed not just selling 2011 bullion coins this year, but is also still producing 2011 coins, I think this sets a bad precedent.
Many collectors will recall that in 2009 the Mint decided not to issue collector versions of American silver eagles because of a law that requires the Mint to give priority to bullion coins. At the time there were problems sourcing sufficient silver blanks. But even after those problems were resolved, the Mint was not willing to divert some of the blanks to make collector eagles because of a concern that some collectors might be shut out. Yet that was not a factor when it came to deciding to limit the 25th anniversary set to 100,000 units.
The remaining collectors of the America the Beautiful five-ounce silver series have been eagerly awaiting information about 2012 releases in both bullion and numismatic formats.
The U.S. Mint’s Acting Deputy Director Richard Peterson told Numismatic News in a recent interview that for 2012 the Mint is slashing the maximum mintage to a tentative level of 45,000 for the bullion program, and 25,000 for the numismatic series.
I think most collectors interested in building a complete set will pick either the bullion or numismatic coins. Both series are likely to see lower and lower mintages in the coming years. If purchased at a low markup over melt, the bullion coins are a good way to add silver to one’s holdings. They will likely eventually carry a decent premium given the far low numbers produced compared to American silver eagles.
I still think the numismatic coins are also interesting, and overall I prefer this version of the coins provided that the Mint keeps their production numbers lower than the bullion coins and sells them at competitive prices. The matte finish that they have because of vapor blasting of the surfaces eliminates virtually all imperfections and creates an attractive finish. And with mintages being lowered to 25,000, these coins are worth buying in my view.
The numismatic versions are currently attractively priced at $205 rather than $230-280, as they were previously. But with rising silver prices, I doubt they will remain available for $205 for very long.
Louis Golino is a coin collector and numismatic writer, whose articles on coins have appeared in Coin World, Numismatic News, and a number of different coin web sites. His column for CoinWeek, “The Coin Analyst,” covers U.S. and world coins and precious metals. He collects U.S. and European coins and is a member of the ANA, PCGS, NGC, and CAC. He has also worked for the U.S. Library of Congress and has been a syndicated columnist and news analyst on international affairs for a wide variety of newspapers and web sites.
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