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Metals Market Report Weekly Archive
 

The Mike Fuljenz Metals Market Report

October 2018 - Week 4 Edition

Notes from My Participation in the Latest U.S. Mint Forum

Last Wednesday, October 17, I attended an all-day U.S. Mint Forum held at the Bureau of Engraving and Printing (BEP) in Washington, D.C.  About 50 prominent members of the numismatic community gathered to listen to, and provide input to a group of very receptive U.S. Mint and BEP staff and leaders.

Here is a summary of the parts that I thought could be of interest to our customers and the coin-buying public.

First, we discussed new items that might help get children involved in coin collecting at an early age. Kids tend to like interactive products, so we discussed on-line links to videos or games with U.S. Mint products, like eye-catching packaging, including a glow-in-the-dark rocket ship design for the upcoming commemorative coinage honoring the 50th anniversary of the 1969 Apollo 11 moon landing. Another suggestion was “Mighty Minters,” graphics with animated characters promoting Mint products to kids. The samples unveiled last week featured a peacock and a fox interacting with a diverse group of children.

Surveys of children ages 7 to 12, along with their parents and guardians, showed that they most liked:

  • Kennedy half dollars
  • Native American dollars
  • $2 bills
  • Blank cents

Next, we discussed cost-cutting, since President Trump has said he wants all government agencies to make 5% or greater cuts from their annual budgets. One suggestion we made was to replace the $1 bill with market-tested dollar coins, but we were told that the vending industry was not on board. At the same time, the Mint has seen a decline in customers coinciding with a decrease in Mint advertising but the Mint plans to once again place more advertising to promote their coin products and numismatics. They hope to collaborate, when the opportunity arises, with organizations like NASA. This is very good news for the coin market that the Mint will soon be strongly promoting numismatic products to the general public.

Next, we discussed product changes. The Mint could change the reverse of the Kennedy half-dollar, as it is over 25 years old. The Mint could also use Privy marks on silver or gold Eagles or other coinage, like the Royal Canadian Mint does. (Imagine a “POTUS-40” Privy for Reagan, who signed the Eagles into law.)

The Mint representatives also brainstormed the possibility of combining different Mint or paper money products in specially-designed packaging. Important upcoming anniversaries that offer possibilities for medals or limited (by law) types of coin products include the Centennial of Armistice Day (November 11, 1918), the 50th anniversary of President Eisenhower’s death (1969) and the centennial of the Morgan and Peace Dollars (1921).  The Mint has a lot of latitude with the making of medals.  The Mint could work with other world Mints for packaging Mint products with other themes, like for the “year of the child.”  The Mint and NASA are also working together to promote the 50th anniversary of the Apollo 11 Landing commemorative coins, with attractive packaging for young and old alike.  A glow-in-the-dark rocket ship is one option. A four nines (.9999) silver one-ounce bullion and proof coin also drew interest by the Mint Director David Ryder and many in attendance when suggested.  Currently, these products are popular, such as the offerings by the Royal Canadian Mint.  The American Silver Eagle is three nines (.999) fine.

The state quarter program was very popular with kids, parents and educators, so we hope the new state innovator series gets a new generation collecting this full set of quarters. The Mint is optimistic about the popularity of the new innovator theme for quarters of all U.S. states and territories to be made over a 15-year period. Each state will work on coming up with their top “innovator,” which is not the same as an inventor.  The process of finding top state innovators was researched with Smithsonian experts.

We also talked about the possibility of a Denver Mint American Silver Eagle and more mintmarks on coins, and we discussed what mintages are conducive to sales, like the recent sellout of the new $25 Palladium proof coin.  The optimum mintage numbers discussed for numismatic coins were 10,000 - 20,000, depending on the cost of the product and some other factors.

Counterfeit coins continue to be a major concern. The U.S. Mint Director discussed his plans to research and ramp up the fight against counterfeit products.  He referred to some new brochures and information to help educate consumers and dealers on what to check for when examining any U.S. Mint bullion coins. He also talked about collaborating with other Mints and leaders in the field of counterfeit deterrence.

When it comes to packaging, the Mint is working to make packaging more attractive, useful and informative for young and old alike. They also wanted to make it clear that in the future all BEP products (including sheets of paper money) would be sold through the Mint website and there would be different postage charges as a result. And finally, the Mint said they may be launching a type of treasure hunt next year, recalling the release of their Sacagawea dollars in 1999, when General Mills seeded 5,500 specially packaged 2000-dated Sacagawea dollars among 10 million boxes of Cheerios to boost sales.  The most exciting news we heard is that the Mint now wants to continue to consult with us on a quarterly basis, not just yearly, which is a positive development, showing that the Mint wants to be in closer touch with its customer and dealer base. Kudos to David Ryder, who is now the full-fledged Director. He and his staff have hit the ground running and want to make a difference.

My Big-Bucks Cost-Cutting Idea – Kill the Penny!

President Trump wants each U.S. Department to cut 5% in costs. Everyone has an idea for cutting small amounts, but we have to think bigger to make a dent in a public debt that is $21 trillion and growing by about $1 trillion each year. When it comes to the U.S. Mint and Bureau of Engraving and Printing (BEP), I have made the most cost-effective suggestion many times over the last five years – kill the penny!

In 2013, I wrote about how the U.S. Mint lost $58 million in 2012 by producing six billion pennies. Each Lincoln cent cost Uncle Sam about two cents in materials, labor and distribution in 2012. The cost varies each year with the price of copper and zinc, but it always costs more than a penny to mint a penny. In 2016, the U.S Mint produced 9.1 billion cents at a cost of 1.5 cents each for a loss of $45 million.  The Treasury has run deficits on penny production every year since 2006, losing a cumulative $600+ million.  By doing so, they can free up resources to pour into more profitable projects. The U.S. Mint and the BEP are two of the most profitable agencies in the U.S. government, contributing to reducing the U.S. deficit.

Cents represent three-quarters of all the coins made by the Mint, so why let the money-loser run the shop?  The public hates them.  Shop owners generally hate them, too. No vending machines take them. It has also been suggested that further savings could be gained by making the nickel out of steel or eliminating it too.  Canada has shown us how to do this painlessly. Faced with the same situation, the Canadian government dumped their one-cent piece coins – a mainstay from that nation’s founding in 1867 until 2012 – and they are doing just fine six years later. Canadians adjusted without difficulty by rounding up or down to the nearest five-cent level. The last time I visited Canada in 2015, everyone loved their penny-less society.

Now if you want to talk some REAL savings, let’s save $13.8 billion over the next 30 years by replacing the $1 bill with $1 coins.  I previously wrote that Senator John McCain co-sponsored a bill to make this happen. Maybe now is the time to pass such a bill in his memory. But I’ll save that argument for after we kill the penny.

Gold Goes Up While Stocks Go Down

Gold is at its highest level since July 17. So far in October, stocks are down 6% and gold is up over 3%. Gold is mostly rising due to rising global tensions, including trade tariffs kicking in, a slowdown in global growth, a rising chance that the Democrats will win control of the House, plus tensions in the Middle East in oil powers like Iran and Saudi Arabia, plus rising inflation and a slowing domestic economy. As a result, our sales to new customers and the U.S. Mint’s sales of American Silver Eagles have increased dramatically in the last month. This has expanded the market dramatically. This is good for the Mint and for the overall coin market.

 

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