CoinWeek Podcast #44:The 2016 Centennial Gold Coin Program – An Analysis

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CoinWeek editor Charles Morgan takes a look at the 2016 Centennial Gold Coin Program from the United States Mint and offers his insights as to the success of the coins in the primary and secondary markets and what the long-term prospects are for the coins, for the collectors who bought them, and for the future of the modern coin minting industry in the United States.


The following is a transcript of Charles’ commentary:

What does the future hold for the 2016 Centennial Gold Coins

In January of this year, CoinWeek contributor Louis Golino wrote that the Liberty Centennial Gold Coins will be, “without question, the major highlights of the United States Mint’s numismatic offerings in 2016.” Lou’s statement certainly turned out to be true, and I say that despite the fact that 2016 also marked the 30th Anniversary of the launch of the American Silver and Gold Eagle Bullion coin programs, which are two programs that the Mint has shown a real willingness to mine in recent years. You will recall the 20th and 25th Anniversary sets? This year, however, the Mint has offered a real limp commemoration – edge lettering on the Proof and nothing to speak of with the gold coins. Pathetic.

So that leaves the 2016 Gold Centennial Bullion Coins – the Winged Liberty dime, the Standing Liberty quarter, and the Walking Liberty half dollar as the de facto winners of this year’s U.S. Mint Numismatic Offerings contest.

What, you expected us to pick the Mark Twain half dollar? Please.

So how will the 2016 Centennial program play out through the rest of the year?

Let’s take it one coin at a time:

The 2016 gold dime went on sale on April 21st. It had a product limit of 125,000 pieces. This was a maximum mintage established not by law but by the United States Mint. The dime was struck at the West Point Mint and carried the “W” mintmark.

I remember asking a U.S. Mint official at the World Mint Director’s Conference in Bangkok over the summer, why the Mint didn’t find a way to produce or in air quotes produce the dime at the Denver Mint. The look I got in return made it seem like I had made some crazy suggestion.

Crazy like a fox, I say.

But getting back to the actual coin – and not the coin that should have been made – collector and industry interest was immediate, with nearly the entire 125,000-coin allotment accounted for in the first day of release. Technically speaking, the coin did not sell out, but the Mint has not provided a satisfactory answer as to what will happen to the very slight remainder of coins unsold. One could speculate that some percentage of the struck mintage ultimately failed to meet the Mint’s quality standards. And that it simply isn’t worth the Mint’s time and money to restrike replacements – but here’s an idea for them If they do. Counterstamp a star on them and issue them without much fanfare. In fact, do that for every program that would sell out of its authorized mintage were it not for quality issues.

We have seen first hand a number of badly struck coins. None have full split bands. And others have, well… problems.

Check out CoinWeek’s video on a major reverse strike-through provided to us for review by dealer Russ Augustin to see one example.

Despite the grousing that the coin is not the right size or weight (or for some, that the alterations to the design were too severe), a secondary market for the coin has developed – but it is slight, with recent eBay prices realized being within 10 to 15% of original cost of $210. These prices are for certified coins – SP70 brings on the upper end.

In the long term, this will be a popular coin. It has the novelty of a classic design struck off of its traditional metal. At current pricing levels it remains affordable, and the large available mintage allows for continuous promotion. And that’s the key word here. The only thing that will provide numismatic value to coins like these… is promotion.

Because of this, expect to see a wide range of prices for this coin. Do your homework and exercise a degree of self discipline and you should do all right.

The gold Standing Liberty quarter went on sale on September 8, 2016. The coin is not quite an exact re-rendering of sculptor Hermon A. MacNeil’s design of 1916. While beautiful and iconic, the design was ultimately a failure, requiring a number of revisions before the Mint gladly abandoned it by adopting the commemorative Washington design of 1932 as the standard type for the denomination.

As was the case with the gold dime not being struck on dime-sized planchets, the gold quarter was not struck on quarter-sized planchets. And while the gold dime essentially sold out in its first hour, the gold quarter has seen sales of only 78,000 pieces after a month and a half. The maximum mintage for this piece, as specified on the US Mint’s website, is set at 100,000.

On eBay, SP70 prices realized have averaged between $550 and $560, or about 15% more than the $472 that the coin currently sells for on the US Mint’s website.

The potential upside of this design lies with the fact that many modern coin collectors do not own a Mint State Type 1 Standing Liberty quarter – and the main reason for this is affordability. A common Type 1 Standing Liberty quarter starts at about $400-$450. A lot of collectors are priced out of the coin. And the gold tribute version of 2016 costs even more.

Again, we look at this as a fun-to-have coin – but not something that you’ll see double digit returns on.

The final coin of the series, the Walking Liberty gold coin will go on sale on November 17. If bullion prices stay at the current level, between 1,250 and 1,299 dollars, the coin will launch at a price of $890 and have a mintage limit of 70,000 pieces.

Compare that to the issue price of the Kennedy Gold Proof, which went on sale on August 5, 2014, when gold was $1,290 an ounce. That coin launched at $1,240, and after a short lived and heavily manufactured bubble fell from several thousand dollars to its current price range of between $1,250 and $1,300.

It’s actually amazing that it’s that high.

As a three-coin set, it seems that the Mint set out to offer collectors something they wanted – in a metal composition that they were allowed to work in. Did the program go over as well as it could have? No, but again, we live in a world of what is, not what could have been. I would have liked to see the “D” mintmark used instead. And to see the coins in their proper size and weight. I’d also like to see the Mint and the Treasury start the process of untethering the Mint’s numismatic division from Congress.

The global minting industry has moved on from this model – and the constraints the Mint has to deal with are choking not growing its business in the U.S.

I’d also like to see the Mint use numismatists and work with the coin industry more directly, so that it can create programs that help grow the market – not take money out of the businesses that it relies on to buy these products back when collectors grow tired of last year’s Mint release.

Rhett Jeppson, if you are listening, you have my number.

 

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The CoinWeek Podcast is brought to you by PCGS – the Standard for the Rare Coin Industry. PCGS is offering its 30th Anniversary Retro Holder for a special price – visit www.pcgs.com to learn more.

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3 COMMENTS

  1. Why not do 4 coin sets with a limited mintage like they did with Kennedy 50C? Standing lib 25C in proof, rev proof, and enhanced unc would be pretty sweet! On another note, Remember that the mint is also a retail biz. They don’t care about the secondary market. They want the highest possible minted with a sellout. Maybe it’d be a good idea to lower the mintage and have a limit of coin/set per household, thus preventing telemarketers from price gouging.
    Just a few random thoughts.

  2. Without dissenting from a single factual element of your commentary, Charles, I have to brand the entire 2016 Centennial Gold Coin program an abject failure and an embarrassment. I can’t find a single reason to ever want one of these monstrosities. The execution is poor, the overuse of the “sandblaster” (the thing that causes the ultra-frost on the devices and text recent proofs generally) is/was just wrong, and ruined key details of both the “dime” and “quarter” (yes, that one too), and the lies during the marketing run-up before the “dime” release (I can’t even bear to call it a dime without quotation marks.) are unforgivable, ESPECIALLY since I warned Mint officials about the size issue at Rosemont at the Mint bulk dealer’s forum, where I was photographing that event. They insisted on marketing them as “same size” initially and much later “similar size”, and basically lied.

    I can’t find any redeeming value in this ridiculous program.

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