Dealers object to Mint price hikes
October 26, 2017
A year ago, the U.S. Mint held its first Numismatic Forum in Philadelphia, with perhaps 55 invited guests in attendance. Mint staff reached out to solicit ideas and suggestions from outside of their own sphere, and the attendees responded with enthusiasm.
You can read my description of last year’s Forum and my list of suggestions to the U.S. Mint at http://www.numismaticnews.net/article/mint-holds-forum.
Late at last year’s event, the question was raised whether future such events would be worthwhile. The consensus was yes, with a plurality suggesting it be an annual Forum.
On Oct. 17, the Mint hosted approximately 85 invited people, once again including me, at its Washington, D.C., headquarters for the second Numismatic Forum. The stated theme this year was “The Road Ahead.”
As it turned out, I don’t think the program’s theme was accurate. What happened was more of a description of how the U.S. Mint’s numismatic programs operate, including a description of some near future plans already made, but there was an overall lack of solicitation for ideas and suggestions from the attendees.
The program was certainly informative. Jon Cameron, the U.S. Mint’s Associate Director of Numismatic, Bullion and Coin Studies, was again the master of ceremonies. After welcoming remarks by U.S. Treasurer Jovita Carranza and Acting Deputy Mint Director David Motl, the morning presentations were by the directors or managers from the Legislative and Intergovernmental Affairs Office, Office of Design Management, and the Design and Engraving Office. After the presentations, the speakers took questions from the audience.
During lunch, American Numismatic Association President Gary Adkins presented “Education and its Role in Developing the Future of the Hobby.”
The afternoon program was delivered by the heads of various departments to discuss the 2018 seasonal schedule, the 2018 commemorative program, a recap of the 225th Anniversary issues, new 2018 numismatic products, the evolution of the Mint’s e-commerce and marketing activities, a discussion of the upcoming changes in the U.S. Mint’s bulk sales program and bulk packaging options, and a review of the Mint’s trade show policies. There were opportunities for asking questions, or making comments, interspersed among the presentations.
It became evident through the course of the presentations that the Mint’s staff had incorporated more suggestions from the 2016 Forum than had been evident at first. The Mint had experimented, for instance, with varying early order limits, or not having limits, on some of the 2017 numismatic offerings. Ideally, the Mint would like to be able for everyone who wants to buy from them to have the opportunity to do so while at the same time serving dealers seeking bulk quantities. In practice, limiting early order quantities risks depressing total sales, and those products with no order limits might sell out so fast that collectors looking for one or a few sets or specimens have little chance of placing an order.
Perhaps the one issue that raised the strongest objections from some attendees was the upcoming changes to the bulk sales program. In the question period, Mint personnel said that the bulk sales program was consistently running about 22 percent of total numismatic sales over the past few years. This is impressive given the limited selection of products available for bulk sales. It is possible that dealer bulk purchases of the proof sets, mint sets, and proof Eagles may account for one-third to 40 percent of sales of those products.
At the beginning of 2018, the bulk sales program will change from a 4 percent discount off the retail price to a sliding scale from 3 percent to 5 percent, depending on a dealer’s cumulative bulk program purchases year-to-date through the end of the previous calendar quarter. Thus, in the first quarter of 2018, all bulk sales prices will be discounted 3 percent. In the following quarter, companies that had ordered at least $50,000 would then get a 4 percent discount on future purchases, or a 4.5 percent discount if they had spent at least $250,000, or a 5 percent discount if they bought at least $1 million. At the end of each quarter, the year-to-date purchases would be updated to determine if a higher discount would apply to subsequent purchases that year. Each year, all dealers would start all over at a 3 percent discount.
Reducing the discount from 4 percent to 3 percent is an effective price hike to bulk purchasers, which led to the objections that were voiced. When asked if the larger bulk buyers could get a retroactive credit to reflect the total annual purchases made, the Mint’s response was that it was not planned but might be considered.
But generally, as in the morning sessions, there was not really an opportunity to brainstorm ideas and suggestions for the U.S. Mint.
Ahead of this year’s Numismatic Forum, I solicited ideas from collectors and dealers. I received several thoughtful comments. Perhaps the most common point I received was that the U.S. Mint is charging excessive prices for many of its numismatic products, making it difficult for many people to afford a full range of the issued coins and sets. Close behind this suggestion was the thought that, because the Mint charges such high prices relative to long-term value, many coins and sets are destined to fall in price in the aftermarket – a development that discourages people from buying from the U.S. Mint. When I passed along these ideas, the Mint’s response was that they are more focused on their cost analyses in setting prices and not considering the perceived value to potential customers.
In response to a question about the possibility of issuing commemorative coins or medals struck from metal obtained from specific domestic mining areas (Alaska or Nevada gold mines, Montana, Idaho, or Colorado silver mines, etc.), the response was that the Mint does not know the origin of the precious metals they use in order to make such products.
I then pointed out that some in the public are under the impression that the US Mint’s bullion products are manufactured 100 percent from U.S.-sourced metals, which is not true, and asked for an accurate explanation of the origin of the Mint’s raw materials. Jon Cameron stated he did not have the information to answer that question but promised to provide it after some research.
When asked about the possibility of free shipping for U.S. Mint numismatic orders, it was revealed that the Mint may explore some options in the next year. Mint personnel explained that they are aware that some online buyers refuse to make purchases from sellers who do not offer free shipping. One possibility is to eliminate postage charges for repeat buyers on their fourth and subsequent orders during a calendar year. Another option might be to eliminate shipping charges to customers who enroll in their subscription programs. This is a subject that is under consideration now, with no decision yet made.
The one area where input was solicited was on what kind of coin series themes could be initiated once the America the Beautiful Quarter program ends. I will share the online address where you can submit your ideas on this once I receive it from the Mint.
At the conclusion of the event, I asked Jon Cameron about an issue a couple of people had brought up to me. They had called the Mint’s toll-free line with questions about upcoming product availability rather than to place orders. The operators refused to answer questions unless the callers provided their names, addresses and account numbers. Both people thought they should not have to go through such bureaucracy in order to get simple questions answered.
Cameron was thoughtful in his response. He explained that the operators tend to be lower-earning people who are working from a script and who are not general founts of knowledge about the Mint and its operations and products. He acknowledged that it should be possible for customers to get such questions answered quickly, but did not know how to modify the scripts without risking the operators getting outside their sphere of competence.
I will be submitting my own list of ideas and suggestions to the U.S. Mint, which I will share in next week’s e-newsletter column. Also, it was my honor after the conclusion of last week’s Numismatic Forum to join eight of the 11 members of the Citizen’s Coinage Advisory Committee at dinner. Look for my experiences and observations from that gathering next week as well.