A Modest Proposal for the U.S. Mint
October 31, 2019
Last week Thursday into Friday morning, the U.S. Mint conducted its fourth Numismatic Forum. The location was at the Federal Reserve Bank of Philadelphia, the site where the first such event was held in 2016.
Attendance was by invitation only. In years past there have been perhaps 55-65 guests. At one point, one of the speakers mentioned that 44 guests attended this year, with about 1/3 of them only participating on Thursday.
The impression I gained from the first Numismatic Forum was that it was an event to see and be seen for those influential in the numismatic community. This year’s attendance was whittled down. For instance, I did not see any attendees representing the American Numismatic Association or Industry Council for Tangible Assets, as happened at prior events. There were fewer representatives this year from the numismatic media. The one category of attendee that seemed to be well represented last week was the top tier U.S. Mint customers in the bulk purchasing program. The Royal Canadian Mint also sent representatives for the first time.
The U.S. Mint is responsible for producing the circulating coinage for America (coins, sets, and medals sold to collectors, and bullion coinage.) The products it manufactures are specified by legislation passed by Congress and signed into law by the president. Thus, the U.S. Mint has limited ability to take the initiative on what it produces. For circulating coinage, the Mint produces quantities requested by the Federal Reserve Bank, a process that further limits the flexibility of the Mint.
U.S. Mint Director David Ryder welcomed the audience, then promptly gave a future outlook for planned issues. Among the plans (some of which would require legislation in order to occur) are:
- In 2020, the Mint is planning to offer a coin and medal set honoring the 400thAnniversary of the Mayflower landing, a product to be issued in conjunction with the British Royal Mint.
- In 2021 there will be new designs for Gold and Silver Eagle coinage to incorporate more anti-counterfeiting features.
- A second round of America The Beautiful Quarters is not planned, even though the original legislation for the series authorized a second set of issues.
- Instead, from 2022-2025 the Mint would like to issue a 20-coin series of quarters featuring American animals
- Also from 2022-2025, the Mint would like to issue half dollars featuring endangered species.
- In 2026, the intention would be to issue one-year circulating commemoratives of the cent through $1.00 coins to honor the 250thAnniversary of American Independence, an idea similar to the Bicentennial quarters, halves, and dollars that came out for 1976.
- Beginning in 2027, the Mint hopes to issue a 20-quarter series over four years depicting sports popular with youth. The Mint would poll children and numismatists to identify which 20 sports would be depicted. These coins would have some ties with the 2028 Summer Olympics that will be held in Los Angeles, California. In addition, there would be half dollars issued for the Paralympics happening at the same time.
- Discussions are taking place at the Bureau of Engraving and Printing to change the reverse of the $2.00 Federal Reserve Note for 2026.
After Ryder’s introduction, attendees walked over to the Philadelphia Mint a short distance away to meet new Superintendent Rob Kurzyna and Chief Engraver Joe Menna. After a presentation on the U.S. Mint’s history, we were given a tour right on the production floor, an opportunity not extended to the general public.
After we returned to the Federal Reserve Bank, U.S. Mint Chief Assayer Jeannette Grogan, who works at the West Point Mint where bullion Eagles are struck, described her duties. When gold is received to be used for striking coins, the incoming metal is checked for 13 potential impurities. In the case of platinum that is received, a total of 24 potential impurities are analyzed. In response to a question she received about why “copper spots” could develop on a .999 fine 1-Ounce Gold Buffalo, she explained that the metal is not completely pure. When such spots appear, they almost always are a gold-silver sulfide impurity that makes up less than 1/10 of one percent of the metal.
It was disclosed that the U.S. Mint is becoming more pro-active at working with coin legislation in Congress. In the past, the Mint usually testified before a committee in the second chamber after a bill had already passed out of the first chamber. Once a bill reached the second chamber, it was almost impossible to incorporate revisions that would improve the Mint’s ability to adjust details such as mintage limits. Now the Mint’s liaisons with Congress are trying to work with those preparing the original draft of coin legislation to better meet Mint production capabilities and the likely public demand for issues.
Next was a review of the joint marketing of Mint and Bureau of Engraving and Printing products. It was explained that the American Innovation Dollar program allows each coin to feature either an innovator or an innovation, with the 2019 issues representing both options. Also, because these coins are never authorized to be put into circulation, they will not be included in the annual proof and mint sets. Instead, there will be a separate American Innovation Dollar Proof Set issued each year.
The Mint is looking to continue the program of randomly inserting limited mintages of W-mintmarked quarters into circulation but may revise the process in how they are dispersed.
When the Mint is directed to issue specific coins, there is often some flexibility in being able to strike coins with different finishes such as reverse proofs and enhanced reverse proofs. However, there is the risk that if there are too many such limited-mintage special finishes issued, it could destroy the long-term value of all special issues.
To appeal to the youth market, the Mint offered a 2019 Rocket Ship set around the time of the 50th Anniversary of the 1969 First Moon Landing. The timing contributed to the strong sales of this set, which is not something that can be counted on to boost sales of future youth issues.
On Nov. 14, the Mint will put on sale the 2019-S Enhanced Reverse Proof Silver Eagle Dollar with a mintage of 30,000 coins. The issue price will be $65.95. Attendees and the Forum anticipate this will sell out almost instantly, in part because the certificate of authenticity coming with the coin will have an individual serial number. Mint officials made it clear several times that a low serial number on the certificate would have no relation as to whether the accompanying coin was one of the first to be struck. Attendees were of mixed sentiment about the value of putting serial numbers on certificates of authenticity.
During this segment of the program, Mint Director Ryder projected that the America the Beautiful Quarters would generate a $10 billion profit, although a good amount of this would have been generated by the annual production of quarters for circulation purposes.
In terms of sales, the fiscal year 2019 (ended Sept. 30, 2019) volume was up 20% from 2018. International bulk dealer sales more than doubled, partly in response to the U.S. Mint exhibiting at the huge Berlin, Germany international coin show in February for the first time since 2008. Purchases by dealers in the bulk sales program were up 16% from the previous fiscal year. Tier Four bulk purchasers, those who spend at least $1,000,000 annually with the Mint, account for 84% of all bulk sales volume. Bulk sales account for 30% of the U.S. Mint’s sales volume of numismatic products. Over 80% of all sales of FY 2019 were shipped the same day.
An area of improvement for the Mint is that it has reduced customer returns and has become more accurate at projecting demand so as to minimize over-production. There was a problem this year where the U.S. Mint was not able to fulfill all would-be purchasers of the Apollo 11 5-Ounce Proof Silver Dollars because of difficulties sourcing the blanks. Current sales of this coin are in the mid-sixty thousands, with Mint Director Ryder projecting ultimate sales of 90,000 coins out of the mintage limit of 100,000.
Another area of improvement has been enhancements in worker safety. The Mint’s experience rate for time lost due to injuries at work is only about one-quarter that of its industrial peer group.
The Mint has also improved its turnaround time to put a coin into production. Where it used to take 18-24 months after a coin design was approved to begin striking it, it now only takes as little as six months.
The Mint has also acquired an expensive Pico-2 Laser for evaluation. The use of this machine could make it possible to strike coins with super fine details. The resulting issues would have greater beauty as well as being more difficult to counterfeit.
Discussion followed on Thursday afternoon and into Friday morning on potential refinements to the bulk sales program. One potential change could be to ship forthcoming coins and sets in the bulk sales program to purchasers before the release date under an embargo agreement so that such sellers would be able to provide products immediately on the initial release date.
At the end of the program, there was a general question and answer session, which included all four Mint Superintendents. One point raised was to return the dates and mintmarks to the obverse or reverse of coins where formerly-produced Presidential dollars or the current American Innovation Dollars have this information on the edge. Unfortunately, the authorizing legislation for these coins specified that the dates and mintmarks be placed on the edge. Therefore, the Mint does not have the option to relocate these characters.
One question I asked was if the 2021 Commemorative Morgan and Peace Silver Dollars program becomes law, (where the Mint is considering striking some CC-mintmarked coins at the old Carson City Mint,) would it also be possible to strike some O-mintmarked coins at the old New Orleans Mint? These were two former mints that struck Morgan Dollars.
Director Ryder explained that there is significant competition for which two commemorative programs would be issued in 2021, and he is not sure that there is enough public support for this to be one of them. However, if it does, he thinks these commemoratives will be among the most popular ever issued by the U.S. Mint. It would cost $1.8 million to arrange the striking of coins at the Carson City Mint, which he expects would be covered by public demand for the CC-mintmarked dollars.
My modest proposal.
I also made a modest proposal to two Mint officials that both liked the idea and thought it intriguing. When the Kennedy Half Dollars were struck for circulation in the last two decades up to 2001, annual circulating mintages ranged from almost 20 million to over 50 million. From 2002 through 2018, the Mint has not released any Kennedy halves into circulation, only selling them to collectors for more than face value, a premium they have maintained. Since 2002, annual mintages have averaged less than 5.25 million.
Since the Mint is already authorized to strike Kennedy halves and to put them into circulation, I suggest that the Mint resume doing so, though only a few million each year. With such a small mintage of a circulating coin, these will most likely trade for more than face value. As a result, the public will likely contact their banks and credit unions hoping to acquire such coins, which would lead the financial institutions to contact the Federal Reserve to obtain them. Consequently, the Fed would direct the Mint to strike such coins. However, if the Fed chose not to order such coins, the Mint could perhaps set up a program where banks and credit unions could order $500 or $1,000 face value bags direct from the Mint. After all, the Mint would make a high percentage profit even if it absorbed shipping costs to charge only face value delivered.
Then, should this program succeed in growing the number of funds that the Mint turns in to the U.S. Treasury, perhaps this result could prompt passage of an amendment to the legislation for the American Innovation Dollars to allow small quantities to be issued into circulation. Current requirements are that four million of each design be struck but not placed into circulation. When the Presidential Dollars through 2011 were still being put into circulation, mintages were all above 70 million per president. If the Mint could then put a few million of each American Innovation Dollar into circulation, that would almost certainly result in the public asking their banks and credit unions for these coins, prompting financial institutions to ask the Federal Reserve to supply them, which would then ask the Mint to strike them. Alternatively, the Mint could again bypass the Fed to deliver them directly to banks and credit unions at face value.
With low mintages of these halves and possibly dollars put into circulation, the Mint would increase the profits it transfers to the U.S. Treasury each year. The other result would be an almost-certain increase in the number of coin collectors.
Decades ago, it was possible to search through loose change in hopes of finding coins worth more than face value. Many of those who perused the coins in their pockets went on to become numismatists. Today, it is almost impossible to find premium coins in circulation.
Should the Mint expand its program of putting limited quantities of W-mintmarked quarters into circulation by also issuing modest mintages of Kennedy Half Dollars and even American Innovation Dollars, the public would again have an incentive to “check their change” for coins that would be worth more than face value. If adopted, this proposal could help fund the U.S. government and spark an increase in the number of coin collectors at the same time. What’s not to like?