By Charles Morgan and Hubert Walker for CoinWeek …..
On October 13, 2016, the United States Mint hosted a daylong forum with industry stakeholders at the Federal Reserve Bank of Philadelphia. The purpose of the forum was to open a dialogue between the Mint and the industry in order to find ways to improve the quality of its products and services with the goal of increasing enthusiasm for coin collecting.
About 80 industry leaders and members of the collecting public were in attendance. Participants included representatives from the American Numismatic Association (ANA), the Smithsonian Institution and executives from the two largest coin grading services: Professional Coin Grading Service (PCGS) and Numismatic Guaranty Corporation (NGC).
Representing the hobby’s publishing and media sector were CoinWeek, Coin World, and Whitman Publishing.
The Mint’s own presence at the event was robust. Principal Deputy Director Rhett Jeppson was on hand, as well as Acting Associate Director of the Numismatic and Bullion Division Jon Cameron, Philadelphia Plant Manager Marc Landry, Director of the Office of Corporate Communications Tom Jurkowsky, U.S. Mint Curator Dr. Robert I. Gohler and Sculptor-Engraver Don Everhart.
Curator of the National Numismatic Collection Dr. Ellen Feingold gave an important update on the conservation and cataloging efforts ongoing at the Smithsonian. CoinWeek joined Dr. Feingold and Jeff Garrett in Washington, D.C. last week to film an upcoming segment about the collection.
The morning’s events wrapped up with a panel discussion with industry leaders, led by Garrett. The topic was “Invigorating the Coin Collecting Hobby”.
Those in attendance had many ideas concerning the growth of the hobby and outreach beyond the coin collecting community. Mass market coin collecting starter kits were proposed, as was an idea to seed new circulating coinage using classic designs like the Buffalo nickel and Winged Liberty dime into bags of current mint product for kids (and collectors) to discover. Another idea involved the ANA and Whitman teaming up to donate Red Books to public schools in the communities that host ANA conventions.
After lunch, the Mint split the attendees up into seven working groups. Each group was assigned to deliberate on a particular issue. The topics were: Packaging; Mintage/Household Order Limits; Medals; Who is our Customer of the Future/Customer Engagement; Working with Youth; Historic Design Reproduction; and America the Beautiful (AtB) Follow-on.
Working Group Observations and Recommendations
Charles was a member of group one.
The Packaging team acknowledged that the U.S. Mint would benefit from a renewed focus on the quality and design of its packaging. Having attended the marketing sessions at the World Mint Director’s Conference in Bangkok earlier this year, Charles recognized that the U.S. Mint has lagged behind the world mints when it comes to packaging concepts. He advocated for and got consensus on two key points:
- The U.S. Mint should market itself as a lifestyle brand, especially for its higher-end products.
- As a lifestyle brand, the Mint’s packaging should be architecturally elegant and enhance the beauty of the coin–not merely serve as a shipping container. Charles used the marketing model of the Monnaie de Paris as one that the Mint could emulate.
The group also found widespread agreement on a three-tiered packaging model for Mint products.
The need for multiple packaging options becomes evident when one considers the user base for modern mint products.
In the group’s three-tiered proposal, collectors could choose between ordering coins in full-concept mint packaging or in IRA-compliant flat card plastic holders. The third tier would allow wholesalers to place volume orders for numismatic products in a simple storage medium that allowed for its safe conveyance.
The idea here is that many of these coins would be sent to the grading services for certification. It is estimated that unpackaging U.S. Mint products in their current packaging costs each service in excess of half a million dollars in labor per year.
Under this wholesale packaging plan, the Mint could also benefit from a cost and materials savings.
2.) Mintage / Household Ordering Limits
It seems to us that there are three completely opposed constituencies at play.
On the industry side, you have coin marketers, wholesalers, and dealers. These entities don’t seem to have much problem at all acquiring the latest “hot” Mint products. They are usually represented at the major coin shows when new issues are released, and after-market advantages are made available to them via the grading services.
These parties can also circumvent household ordering limits by using their vast customer lists to acquire coins for a slight premium over issue price and then resell them to eager collectors at a profit.
Nevertheless, it is incredibly difficult for coin marketers, wholesalers, and dealers to profitably compete directly with the U.S. Mint when new products are released. It can be done only when demand far outstrips supply.
On the collector side, you have two groups.
The first group consists of flippers. These collectors are not far removed from coin dealers, except that the size and professionalism of their operation is much smaller. They buy products with the intention of immediately reselling the coins at a profit. And while flipping coins can be an effective strategy in subsiding the cost of collecting modern mint products, it can be highly risky as well.
The final group consists of collectors.
When we think of the Mint’s primary customer, we think of collectors. They are, ultimately, the end user of modern coin products. In this supply chain, coin flippers and marketers are simply third-parties that serve as toll collectors for coins as they pass from the Mint to the collector.
As we have seen with many recent highly-publicized releases, collectors can often feel used when they find themselves unable to buy collector coins from the Mint and are instead forced to pay premiums to flippers or dealers after a program sells out.
The resulting aggravation is completely understandable. And the Mint is well aware of the situation. One senior Mint official, who spoke with CoinWeek off the record, said that the Mint has implemented strategies to curb the most egregious abuses of their household limit system.
Whatever these methods are, the problem persists.
The working group was split when it came to limits. The dealers in the group felt that the Mint should have higher mintages but agreed to the possibility of lower household ordering limits (this would not necessarily stop the flow of coins to the marketers). Collectors in the group stridently called for an end to mintage limits, arguing that the Mint should allow the market to determine how many coins are issued for any given release.
A third way, proposed by Charles in the full-group discussion that followed the working groups, called for a mintage limit set by a short order window. This approach would seem to satisfy the need of collectors without completely shutting out the ability of market makers to increase the visibility of these coins through their sales channels.
It’s an admittedly challenging suggestion, as it would introduce many variable costs to the production of limited-edition numismatic items. In the end, it may be too much for the Mint to deal with.
Pleasantly surprised by the success of the 2016 American Liberty High Relief Silver Medal earlier this year, the Mint tasked the medals working group with examining the possible reasons for this success and how the Mint could capitalize on this success with future medal releases. The group identified several factors that, when combined, presented the Mint with something approaching a formula for collectibility:
- The medal consists of 31.072 grams of 99.9% (.999) fine silver;
- The low mintage limit of 25,000 total production;
- The beauty of the design;
- The design’s execution;
- The fact that the medal was available from two branch mints (West Point and San Francisco);
- The low price point ($34.95 retail);
- The fact that the design was the same as the one on the popular 2016 American Liberty High Relief 24-karat gold coin;
- That the medal was an official issue from the Mint; and
- The medal’s high relief.
As for future medal releases, the group offered several important suggestions as to how the Mint can increase their collectibility. Settling a specific question, the working group was clear in its preference for silver medals over bronze issues. They also recommended keeping the high relief and placing a date and mint mark on the edge of upcoming offerings. This last point would help grow an aftermarket for the medals that is currently not in place.
4.) Who is our Customer of the Future / Customer Engagement
The Mint revealed a few data points that might come as a surprise to some readers but are already familiar to many industry leaders.
The average age of collectors in the market is increasing. According to statistics provided by the United States Mint (CoinWeek has not had the opportunity to independently confirm them), 52% of the Mint’s customers in 2015 were aged 65 and up. In 2011, the Mint reported that number to be 30%. The Mint also reported a decline from 14% to 8% of the total number of their customers in the 18 to 44-year-old demographic.
The overwhelming majority of these customers are white males.
The group called for the Mint to reach out to collectors for their insights on what could be done to further engage the collecting community, but how can the Mint reach out to those who are not already collectors? It enjoys “high brand awareness” within the hobby, but few on the outside are aware of the Mint’s products since it ended its general advertising program in 2007-2008. The Mint does not support numismatic publications like CoinWeek and, outside of coin launches and coin show attendance, does very little to promote its brand or products to the general public.
But getting back to Charles’ suggestions for packaging, the Mint would do well to follow the lead of the Royal Canadian Mint, the Royal Mint, Monnaie de Paris and the Austrian Mint – four world mints that have all established an excellent core message of culture, luxury, and tradition.
5.) Working with Youth
Much of the discussion – in and out of working groups – concerned how to get more children interested in coins and coin collecting. Early in the panel discussion, an interesting idea was proposed that involved placing each of the letters of the alphabet on a special series of changing reverse that would be educational for very young children. Leaving aside the possibility and liability of a choking hazard, the idea shows that the industry is most certainly a fertile source of ideas for the Mint.
But the general theme for this and the many other ideas proffered by forum participants seemed to be “planting the seed”. Few collectors start collecting as children and keep collecting non-stop. Most of us discover other interests and distractions to occupy our time (school, video games, boyfriends and girlfriends, etc.) as we grow up, but eventually life settles down and we find our way back to the coin shop. If the Mint can “plant the seed” for more collectors–and engineer more and more opportunities for planting–then it follows that the hobby would continue to grow and develop as a robust market for Mint products.
Besides the starter kit mentioned earlier, other recommendations for engaging young people included children’s books, the creation of multi-year, multi-coin programs of a shorter duration (three to five years) and the utilization of technology with new coin products–involving either mobile apps (another suggestion that came up with some frequency) or physically incorporating technological elements on or in the coins themselves (QR codes, RFID chips, et al.).
6.) Historic Design Reproduction
Hubert was a member of group six.
The question on hand was “How do we leverage historic designs?” Since 1986, the U.S. Mint has leveraged its historic coin designs to stunning effect. The designs of Adolph Weinman and Augustus Saint-Gaudens, dominate the bullion coin market.
A palladium coin bearing the likeness of Weinman’s Winged Liberty has been under consideration for some time now, and the Mint’s 100th anniversary gold coin releases of 2016 illustrate the thinking that collectors want new versions of classic coins.
One suggestion the group made would require Congressional authorization. They called for the development of a historical design program to circulate alongside contemporary coins. As an example, the Mint would strike a limited number of Indian Head or Flying Eagle cents in the current date to circulate side-by-side with Lincoln “Shield” cents.
Given that our nation’s circulating coin designs have become an incongruent mess, adding more design concepts may not have much of an effect.
But the idea is not without merit. In fact, we like the idea of a historical coin set struck for collectors – to the standards of the originals – with the current date – being offered in limited numbers or for a limited time – as a legal tender collectible.
In other words, let’s bring back the half cent, the two-cent piece, the trime, and the twenty-cent piece as collector coins. How much fun would that be? The Mint could even expand this kind of program to include pattern coins and experimental designs like annular cents and the World War II experimental cent patterns struck on glass.
7.) America the Beautiful Follow-On
Believe it or not, the United States Mint is authorized to begin a new round of America the Beautiful quarters after the initial program expires in 2021 with the release of the Tuskegee Airmen National Historic Site (Alabama) quarter. But the Mint knows that the America the Beautiful Quarters series is no 50 State Quarters program, and as such is open to suggestions about what to do next.
The Heraldic Eagle will always have its diehards, and the forum was no different. Some wished for a return to the old Washington quarter eagle reverse (1932-1998), but as was quickly pointed out the Mint is not authorized to do so (a design featuring Washington crossing the Delaware is the mandated replacement).
Many themes were bandied about, including the American innovators series. The group, however, said that it would be better to avoid a double-headed coin and focus on inventions, not the inventors. We believe that this unduly narrows the scope of the original bill, which left the designs open to the portrayal of any kind of innovation, not just technological.
But the most interesting proposal had less to do with what would go on the coins than on what coin the designs would go on. The AtB follow-up working group recommended using the Kennedy half dollar for a future multi-year, multi-coin changing reverse series. A circulating commemorative half dollar would rekindle interest in the coin and might even help restore it to a more prominent role in our nation’s coinage, the group suggested. They also pointed out the glorious possibilities available to the Mint’s master artists and technicians on a larger planchet.
As the session came to a close, Principal Deputy Director Rhett Jeppson thanked the audience for taking the time and spending their own resources to come to the event, which he called the first in a series of interactions that the Mint would have with industry leaders. He asked those of us in attendance how often we should have these meetings and whether it made sense to expand the forum to a two-day event.
There seemed to be some consensus that the additional day might be viable but that in order to cut participation costs future forums should coincide with major coin shows.
Given that the Mint is so limited when it comes to implementing some of the big changes it could make to compete with the world mints, Charles recommended that future sessions include staff from the Congressional committees that oversee our nation’s coinage issues. That way, we could make the case for reform to the people who are in the best position to actually affect that change.
We were heartened by the level of enthusiasm shared by many of the forum participants–dealers, third-party graders, collectors and media alike. Despite its challenges, the hobby has many bright years ahead of it and from what we could see, it is supported by an enthusiastic and highly engaged industry.
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