Dear United States Mint,
Not a day goes by that we do not receive angry emails from both collectors and established dealers in the rare coin market about the lineup, marketing, and rollout of the Mint’s numismatic products. It would truly be exhausting to answer them individually, and so we devote most of our time to creating numismatic content that is meant to excite, inform, and benefit the collector.
Therefore, it is unusual for us to form a response to one of these letters. But when, after a week of predictable sell-outs and manipulations takes place in connection with a highly anticipated Mint release and the Director of the Mint feels compelled to write his own letter, we feel that we should respond.
Just to be clear, Director Ryder, the professional numismatic community can be divided into two camps. There is the camp that would like nothing more than to see CoinWeek and other hobby publications grab a paddle and take the United States Mint and its numismatic products behind the woodshed and give it the business. And there is the other camp that looks for ways to take advantage of the U.S. Mint’s customer base by building their own marketing concepts around the Mint’s limited-edition product lineup and injecting themselves into the flow of these coins from the Mint to the collector.
Human nature and “Fear of Missing Out” (FOMO) play a role in all of this, of course. But from where we sit, nothing that happened with the rollout of the Mayflower collector coin and medal sets or the End of WWII privy mark program should have come as a surprise.
Given the high initial cost of U.S. Mint numismatic products, there is often little upside for collectors, most of whom collect out of sheer enjoyment. Many of these collectors understand that there’s no guarantee that they will recover their initial purchase costs when it is time to sell, but they spend their hard-earned money on your website anyway.
They may sometimes hope that they hit a home run and that their purchase will turn a tidy profit in the future, but they know as well as anybody who follows this industry knows that this is not the typical outcome.
The Mint’s limited-edition offerings often follow a different trajectory, however. The profits that come from these offerings happen in the immediate aftermarket, with the repackaging of Mint products by third parties and the sale of these newly repackaged products by telemarketers and promoters. For the most part, these third parties do a better job marketing U.S. Mint material than the Mint does itself. They understand the powerful pull of FOMO and often reap huge profits by setting high prices and riding the tide down.
Now, the Mint has made an effort to reach out to the coin industry for feedback and insights in recent years, holding a number of annual numismatic forums (we assume one would have been held in 2020 were it not for the COVID pandemic). And having attended several of these forums ourselves, we are struck by two things: 1) the Mint expects its industry partners to bear the full cost of attending and giving the Mint what amounts to unpaid marketing insights, and 2) whenever industry stakeholders push them on understanding the Mint’s role as a leader in the industry, Mint officials push back, saying that their hands are tied because they are a government agency and not a business.
Yet at the same time, Mint officials highlight in their annual report the fact that they have “produced over 24 million ounces of bullion and nearly 4 million units of numismatic products” and in the course of doing so have “achieved the status of being a top 100 e-commerce retailer according to Internet Retailer.”
Achieving top 100 e-commerce retailer status is an extraordinary accomplishment given the niche nature of coin collecting, but it also serves as a clear reminder that the United States Mint is the largest coin dealer in the world and that it conducts its numismatic and bullion business completely aware of this fact.
So let’s take a look at the remarks Director Ryder made in connection to the recent sellouts.
He begins his letter by affirming once more the dual nature of the Mint as a federal agency and a retail sales operation. The profits, he says, are transferred to the United States Treasury’s general fund as a way to “pay back” the taxpayer, as it were. Given the profligate spending of the federal government, however, these profits probably don’t make much of an impact on anything. But we digress…
The Director then goes on to say that, during his tenure, he has challenged his staff to come up with new and creative products to energize, excite, and expand the collector community. And to be sure, a fair appraisal of these efforts–given the legal restrictions the Mint has to work around when it comes to creating numismatic products–casts Ryder’s approach in a mostly favorable light. Plus, the Mint has suffered from the lack of a Congressionally approved Mint Director since Edmond Moy left office in 2011 under President Barack Obama.
But where Ryder’s initiative falls short is with the Mint’s apparent and continued lack of insight into how the secondary market for numismatic material works and the easy profits that await those who suck up most of the Mint’s limited-edition products. Admittedly, this situation is not unique to the Mint, as the initial release of many desirable consumer products is often met with scalping and speculation.
Ryder goes on to say that when the Mint develops mintage limits for their products, they try to come up with mintages that they believe will satisfy customer demand. For some products, this may well be the case. But for a product like the 2020-W American Gold Eagle with a “V75” privy mark, a mintage of 1,945 pieces clearly makes this product the key to the series, and a week after its issue, the coins are selling for $15,000 to $20,000 each on eBay.
For the Mint not to predict that automated software “bots” and other means would be employed to scoop up that inventory and shut out other consumers–and respond accordingly–strains credulity.
So too, does the idea that a mintage limit of 1,945 pieces represents anywhere near a correct forecast of demand.
Ryder then says that the Mint’s “solutions” to prevent automated purchases put an immense strain on their website that led to unintended issues for other legitimate purchasers. Here he is attempting to claim credit for trying to stop the bots (through the use of CAPTCHA technology?) and simultaneously dodging the blame for the issues collectors experienced as they struggled to use the Mint’s website to complete their purchases – even though these “issues” are long-standing and have somehow persisted after the Mint’s vaunted redesign of its online ordering system a few years back.
CoinWeek was forced to use CAPTCHAs just to visit the site on Tuesday morning as part of our newsgathering and was ultimately blocked from doing so by the Mint’s countermeasures. So just how many Mint customers were blocked from accessing the Mint’s website due to this and what will the Mint do to ensure that the IP addresses of legitimate visitors and customers are not flagged as suspicious next time?
At any rate, it is telling that Ryder does not supply any supporting details, such as how many automated orders were detected Tuesday or the Mint’s success rate at stopping them.
The Director then closes his remarks by thanking Mint customers for their loyalty and promises that they will do better going forward.
We hope they do. We hope the Mint does a lot of things better going forward.
It needs to understand and accept its role as a leader in the coin industry and stop hiding behind its existence as a government entity whenever it helps them escape accountability to their customers. The Mint shouldn’t be able to get away with this posture while at the same time deploying state-of-the-art technology, google ads, and social media to promote and solicit sales of its products while bragging in its annual report how successful it has been in doing so.
To better give collectors a chance to purchase its limited-edition products, the Mint should investigate the possibility of setting up an annual subscription program, where collectors can opt-in at the silver, gold, and platinum/palladium tiers and have a chance to commit to limited-edition products in advance of their release date, with maximum mintages based on presale demand plus whatever percentage of extra product the Mint can sell to the general public on its website.
The U.S. Mint should also establish a true wholesale program so that coin retailers and marketers can grow the modern coin market by stocking coins and sets in their stores, allowing them to sell these products profitably without needing to double or triple the surcharge.
Finally, and we hope the Mint takes this seriously, the Mint’s commemorative coin program is in serious need of an overhaul. We support limits on the number of programs that the Mint can put out each year but we also think that the current system retards the Mint’s efforts to create interesting and innovative products.