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The Coin Analyst: Should the U.S. Mint Sell Precious Metal Coins at Face Value?

by Louis Golino for CoinWeek ………

For years collectors and buyers of modern precious metal coins issued by the U.S. Mint have been puzzled and a bit annoyed by the unusually low face values of such coins, both bullion and collectible.

A one-ounce American gold eagle, for example, has a face value of only $50, but is currently worth about $1500 in the bullion version and even more in proof, and a one-ounce American platinum eagle has a face value of only $100 and sells for a little more than a gold eagle in bullion and close to $2,000 in proof.

Probably the most egregious case is the five-ounce America the Beautiful silver coins, which have a face value of only a quarter. As many people have suggested, such a low face value has probably deterred some buyers from purchasing these coins. Whether that is also true of American silver, gold, and platinum eagles is less clear.

At a minimum for the sake of consistency the five-ounce coins should have a face value of $5, but the U.S. Congress, in its infinite wisdom, specified that the coins had to be exactly the same as their quarter counterparts.

For several years now the French Mint  and Royal Canadian Mint  have taken the opposite tack, namely, issuing collectible silver and gold coins with high face values. And the coins are also sold at face value, providing the buyer a degree of protection against falling metal prices, which can be very useful in a market as volatile as precious metals are.

But while the French coins are sold at face values that are closer to their metal content, the Canadian coins have a metal value much lower than their face value. And unless one buys the coins from the respective mints at face value, dealers charge a premium over face value for the coins, though in most cases a small one. That is until the coins sell out and prices then rise on the secondary market.

canada_buffalosThe RCM first started with a series known as the $20 for $20 coins, which are quarter ounce silver coins that have been issued for the last several years, and which depict primarily iconic Canadian images like maple leaves, polar bears, and a hockey player. These coins have a mintage of a quarter million and most have sold out fairly quickly, especially the earlier issues. The coins all sell at a premium on the secondary market, but could be purchased for face value from the Mint when issued.

Earlier this month the RCM issued a $100 face value matte proof coin with three charging bison. The coin is very attractive and has one ounce of silver. Bison are very popular themes on coins. The coins have a mintage of 50,000 and sold out quickly. Since one-ounce numismatic silver coins from the RCM typically cost $100 but have face values of $20, these coins seem like a good deal.

I have read online about people in Canada trying to use the $20 coins for purchases, or even trying to cash them in at banks, and being refused.

This raises an important issue, which is the difference between normal circulating coinage and bullion or collector coins that are known as non-circulating legal tender. In the U.S. it is at the discretion of the merchant as to whether or not they accept such coins for purchases, and the same rule applies in Canada.

Alex Reeves, the communications director for the RCM, told the Star newspaper in Canada on July 5 of last year that banks and businesses are not required to accept such coins and that banks have procedures for converting them to cash, but not all tellers will be familiar with that process, which may require the assistance of a manager. **

It is, of course, far better to take such coins to a coin store in any event, where you can always get at least face value for them.

french_100euro_goldIn France’s case, the classic sower coin (which is believed to have been the major inspiration to Adolph Weinman when he designed the widely-collected Walking Liberty half dollar) was modernized starting in 2008 with an intriguing series of silver and gold coins sold at post offices and through the French Mint.

The sower coins when placed in a row create the impression of a moving figure.

The coins had mintages that ranged from a high of 2 million for the smallest silver coins to a low of 25,000 for the 500 euro gold coin. The higher the face value, the lower the mintage is the general approach of these coins.

In 2010 the French mint issued another face value series since the sower series had been so successful with many coins selling out very quickly. This time another classic French coin was modernized, specifically, the Hercules design.

Again silver and gold coins were issued in a variety of denominations from a 50 euro silver coin in 2010 with a mintage of 100,000 to a 5,000 euro gold coin in 2012 with a mintage of only 2,000.

Despite the extremely high face value that corresponds to about $6500, the coins sold out very quickly. They contain about 2.7 ounces of gold. It is also important to remember that in the European market gold bullion coins sell at higher premiums over melt than they do in the U.S., especially in countries like Greece and Cyprus in the midst of economic crises when common gold coins sold for multiples of their gold content.

In addition, France has been issuing another face value series since 2010, a 10 euro silver series dedicated to the many regions of France which depict famous people from those regions such as Frederic Bartholdi, who created the Statue of Liberty.

On May 21 the French Mint started a new three-year face value series dedicated to the values of the French Republic. The ones highlighted in the 2012 coins are liberty, equality, and fraternity as well as justice, secularism, respect, and peace. The coins display the words themselves in an unusual, post-modern arrangement. Each one has portions of the letters R and F for Republique Francaise, or French Republic.

Three 25 euro coins and three 5 euro coins were made available that day as well as a 250 euro gold coin. In September a 500 euro gold coin will be sold. These coins can be purchased from the mint’s e-shop: http://www.monnaiedeparis.fr/en_US/e-shop

All of this raises the question of whether the U.S. Mint should, provided it receives the appropriate congressional approval, follow in the footsteps of its long-time allies France and Canada and issue precious metal coins with high face values and sell them at those values.

I do think that would be an interesting approach to consider and believe it might help increase sales, especially of numismatic coins, which have been declining in recent years. The RCM’s latest annual report says that the $20 for $20 program brought in 67,000 new customers, half of whom later bought other coins.

In addition, with the major decline in gold and silver prices that occurred recently, buyers are likely to be attracted by higher face values, especially if the coins were also sold at those values.

Since precious metal coins do not circulate, although a number of states have passed laws allowing them to be used in certain transactions such as the payment of taxes, I do not think seigniorage loss would be an issue.

Finally, even if the U.S. Mint did not go as far as issuing high-value coins and selling them at face value, it could raise the denominations currently used on American eagles and other precious metal coins to more realistic levels.

I invite readers of this column to express their views on this idea and whether they would be more likely to buy coins with higher face values.

** Mr. Reeves told CoinWeek that in Canada even the acceptance of circulating legal tender is at the discretion of the recipient.  So there is no difference in Canada in the way circulating and non-circulating legal tender coins are treated. 
Louis Golino is a coin collector and numismatic writer, whose articles on coins have appeared in Coin WorldNumismatic 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 ANAPCGSNGC, 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.

Louis Golino
Louis Golino
Louis Golino is an award-winning numismatic journalist and writer specializing on modern U.S. and world coins. He has been writing a weekly column for CoinWeek since May 2011 called “The Coin Analyst,” which focuses primarily on modern numismatic issues and developments at major world mints. In August 2015 he received the Numismatic Literary Guild’s (NLG) award for Best Website Column for “The Coin Analyst.” He is also a contributor to Coin World, where he wrote a bimonthly feature and weekly blog, and The Numismatist, the American Numismatic Association’s (ANA) monthly publication, where he writes a monthly column on modern world coins. He is also a founding member of the Modern Coin Forum sponsored by Modern Coin Mart. He previously served as a congressional relations specialist and policy analyst at the Congressional Research Service of the Library of Congress and as a syndicated columnist and news analyst on international politics and national security for a wide variety of publications. He has been writing professionally since the early 1980s when he began writing op-ed articles and news analyses.

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  1. A coin with both precious metal and a high face value could serve a dual purpose “money stuffed in the mattress” and precious metal in hand investment. Granted, both fill similar niches, but since cash and precious metals have different followers, this would widen the target audience, as well as help those who want to do both at the same time. It might help me today the way Lego Star Wars would have about thirty years ago!

    • Thanks for your insights, Jonathan. I think such coins would appeal to “hard asset” people and those who think we could or should return to some kind of metal-based currency standard.

  2. This same question has popped in my mind almost every time I look at products offered by the mint. If they will not sell a coin at or even close to it’s face value, then why even bother putting a face value on it at all? There was a time long long ago when a gold coin minted in the U.S. was actually worth its face value (ie. a $20 Gold piece when gold was selling for roughly $20 an ounce). But now we have inflation to thank for changing all that. So I say strike the face value all together, and just indicate the date,the weight and purity of the metal on the coin.

  3. While I think it’s possible for the face values of our precious metal coins to be much closer to reality, in this day and age it’s virtually impossible to put an accurate value on our coins, due to loose monetary policy causing the currencies and values of precious metals to fluctuate wildly. The huge runups and panicky selloffs are not a normal state of affairs.

    That being said, I think “short term” series like $20 for $20 – where the mint puts a face value as close to spot as is reasonable on gold or silver coins – might solid sales. “One-off” coins might be even better. I think it would be a bad move to do this on long term series like the gold or silver eagles, because what do you do if you put a face value of $1600 on the gold eagle and then the spot price of gold drops to $1300?

    • But there is a huge gap between $50 and $1600. Why not change it to say $500 or $1000? I was not suggesting the values have to be anything close to the actual metal content, and neither France nor Canada does that. Plus the coins would still trade at whatever the metal value is at any given time unless we returned to a gold standard, which I think is highly unlikely. And the law could be written in a way that allows the values to change. France changed the value of its 1.5 oz silver Hercules coin from 50 to 100 euros over the course of the series.
      I like Griffin’s suggestion. If they are not going to use denominations that have anything to do with reality, then just get rid of them. Mexico does that. There are no values on Libertad coins.

  4. Louis, I prefer the RCM coins BECAUSE they have higher face values, which theoretically “limit” your losses. A 1oz. silver coin with a legal-tender face value of $25 is much more attractive than one with a $1 face value. I gave up on the U.S. mint. Dull, uninteresting commemoratives, low face values on bullion coins, and high premiums steer me to the Royal Canadian Mint. Why not release HIGH face values that could/would actually CIRCULATE as money? Why not just RELEASE silver eagles at $50FV at banks or release $2500FV gold eagles at banks. Here’s the rub! When the game is to convince average Americans that gold and silver are NOT money (as Ben Bernanke insists), that they are in fact barbarous relics and dangerous “investments” that “you can’t eat”, in order to keep the fiat paper Dollar from collapsing due to debt monetization, one cannot at the same time have the U.S. Mint going about issuing the same gold and silver as “top line” high face value MONEY. Who’d want paper if you could get REAL MONEY???? To reinstitute silver and gold coins into circulation would spell disaster for a U.S. government that’s spending itself into oblivion without the means or the intention to ever pay off its debt. So, we must endure the theory come to life, that REAL money is not real at all, but only suitable for use as quaint numismatic collectibles!

  5. On a completely off-topic note, Louis, has there been any notice taken of the scarcity of 2009 issue nickels and dimes? They’re out there, but in 4 years of searching I’ve only found 2! I only ask because you seem to be on top of those kind of things.

    • Paul,
      Thanks for your interesting comments. To be honest, I have not followed the 2009 nickels and dimes. This is just my view, but the vast majority of recent clad coins do not have much potential for increase with the exception of the “S” quarters the Mint started issuing last year, which already command a nice premium.

      Thanks to everyone for their comments. And thanks to Rob for pointing out the RCM $100 coin can still be purchased from dealers. I have seen this coin in person, and it is a beautiful piece.

      • Louis, I just wanted to say I couldn’t agree more with you and everyone else on this coin, it is simply a stunner. If I wasn’t saving up for a new model “Winchester 73” carbine rifle, which I have to add that their is a waiting period of about 5/6 months to acquire one, from what I am being told by the Winchester folks, I would get at least one of these gorgeous coins. The upside to this has to be enormous. How many designs have come out lately that has a winner design such as this coin. But at the moment, and since I have to constantly read that very old and mundane line, “buy what you like”, and this phrase should only be allowed to be directed at kids, I will concentrate only on my rifle collection. I still think this hobby is going down the drain, as fewer and fewer folks have been getting in, will only bring prices down even further, on most coins that are considered current. Many of the older, classic coins are not fetching what they have, just 5 years ago. I read about this all the time, so it can’t be only my mindset.. Louis, I enjoyed your article, thanks…

        Dave in CT…..rob

        • Thanks a lot, Rob.
          I have a more optimistic view of the future of numismatics based in part on how popular modern American and world coins are, and they are bringing more people into the hobby. Just look at the way many recent RCM winner coins have held their values, though some have gone back to issue price.
          Anyway, enjoy your Memorial Day weekend.

  6. Regarding the RCM $100 silver bison coin, to be clear it is sold out from the RCM but is still available for a premium from some dealers who sell Canadian coins.

  7. Apparently, being knowledgeable about coin collecting does not mean being knowledgeable about money, in general.

    The value of a gold coin never changed. What did change is, the number of promissory or federal reserve notes to acquire one. Of course, the number of notes accepted for one changes almost daily.

    Perhaps it would help those thinking the face value indicated on a coin should change to review a basic business law book, which may be found in book stores, second hand stores and garage sales for modest fees.

    A business law book explains notes and that definition applies to FRN’s too. Clearly, they are just debt instruments used to purchase things or discharge debts via a limited liability discharge.


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