US Coins

Fiscal 2015 U.S. Mint revenue up in two categories

The U.S. Mint's 2015 Annual Report indicates that for the 10th year in a row, production and related costs for the Lincoln cent exceed the denomination's face value, but revenue from sales of circulating coins to the Federal Reserve Banks was still up by 42.3 percent.

Cent images by Coin World; background image courtesy of U.S. Mint.

The absence of a break-out numismatic product in Fiscal Year 2015 and a decline in the Mint’s customer base contributed to a decline in numismatic revenue for the year compared to the previous fiscal period, according to the just released 2015 Annual Report of the Director of the Mint.

In contrast, the Mint’s two other sources of revenue — sales of circulating coinage to the Federal Reserve Bank and sales of bullion coins to its authorized purchasers — both registered sizeable gains over Fiscal Year 2014 sales.

Numismatic product revenues dropped 10.2 percent in FY2015 to $453.2 million. The $51.3 million decrease included a $40.2 million decrease in sales of gold and platinum coin products.

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The Mint’s principal deputy director, Matthew Rhett Jeppson, offered an explanation, stating, “We believe the decline in revenue and unit sales is primarily driven by the absence of some of last year’s most popular products, such as the Baseball Hall of Fame commemorative coins, and the shrinking customer base of numismatic hobbyists.”

The report, released Feb. 2, covers the federal Fiscal Year 2015, which ran from Oct. 1, 2014, through Sept. 30, 2015.

While the Mint did offer collectors and dealers a distinctive product in FY2015, the sales generated were slightly below those of a different distinctive product offered in fiscal 2014.

The 2015 American Liberty High Relief gold $100 coin, a coin only available during calendar 2015, did not generate as much revenue as the 1964–2014 Kennedy 50th Anniversary gold half dollar. The Kennedy gold half dollar generated $76.2 million in revenue, compared to $62.6 million for the 2015 American Liberty gold coin.

In marked contrast, an increase in revenue generated by the sale of circulating coins to the Federal Reserve Banks was noted, with the total reaching $1,114,000,000 in 2015, 42.3 percent higher than 2014. The increase was driven by a $240.3 million increase (or 57 percent) in quarter dollar revenue and $65 million increase (or 29.2 percent) in dime revenues over 2014.

2015 circulating coin shipments to the FRB increased to 16.2 billion coins, 3.2 billion coins more than 2014 shipments.

The resulting overall seigniorage per dollar value issued was 49 cents, exceeding the 37 cents per dollar value return in 2014 and even the 2011 level of 45 cents (before the Dec. 13, 2011, suspension of dollar coin production for circulation).

Seigniorage represents the profit derived from the difference between coins' face value, and the total costs to produce and distribute them.

Higher revenue was also registered in the third triad of revenue sources for the Mint. The Mint’s revenue generated from bullion product sales totaled $2,126,100,000 in FY2015, up 17.2 percent from $1,814,400,000 in FY2014.

Net income from bullion sales increased 117.9 percent in FY2015, to $61 million, from $28 million. The increase was generated by record American Eagle silver bullion coin sales.

Lower production costs for circulation

Production and distribution costs at the U.S. Mint for the Lincoln cent and Jefferson 5-cent coin for circulation dropped for the fourth year in a row, but the total costs for the two denominations remained over face value for the 10th consecutive year.

The report also indicates production and associated costs dropped for the fourth straight year for the Roosevelt dime and America the Beautiful quarter dollars. 

Part of the reduction in production costs is tied to lower prices for copper, nickel and zinc.

During FY2015, average spot prices, per ton, for nickel decreased 18.2 percent from 2014 levels, to $13,405.34. Average copper prices fell 15.2 percent, to $5,930.29 per ton, while average zinc prices dropped 0.2 percent, to $2,085.21 per ton over the same period, according to the report.

Production costs

The Lincoln cent is composed of copper-plated zinc. The Jefferson 5-cent coin is made of 75 percent copper and 25 percent nickel. The Roosevelt dime and the America the Beautiful quarter dollars are made from a copper-nickel clad composition, constituting outer layers of 75 percent copper and 25 percent nickel bonded to a core of pure copper.

Production and distribution costs for the cent were 1.43 cents in FY2015, 1.66 cents in FY2014 and 1.83 cents in FY2013. Earlier annual reports indicate per unit costs of 1.79 cents for the cent in FY2010, 2.41 cents in FY2011 and 2 cents in FY2012.

For the 5-cent denomination, the combined costs were 7.44 cents in FY2015, 8.09 cents in FY2014 and 9.41 cents in FY2013.

The costs per coin for the 5-cent denomination were 9.22 cents in FY2010, 11.18 cents in FY2011 and 10.09 cents in FY2012.

For the dime, costs were 3.54 cents in FY2015, 3.91 cents in FY2014 and 4.56 cents in FY2013. Additionally, 5.69 cents in FY2010, 5.65 cents in FY2011 and 4.99 cents in FY2012.

For the quarter dollar, costs were 8.44 cents in FY2015, 8.95 cents in FY2014 and 10.5 cents in FY2013. Additionally, costs were 12.78 cents in FY2010, 11.14 cents in FY2011 and 11.3 cents in FY2012.

The U.S. Mint is in its sixth straight year of research and development, authorized by Congress, seeking alternative metals and alloys to substitute for the current compositions.

Results so far indicate that, although alternatives exist for the cent, none would drop the cent’s production costs below face value.

Research also indicates that plated steel alloys would offer considerable savings for the remaining denominations, except the quarter dollar.

A recent Government Accountability Office report suggests plated steel alternatives are not viable for the quarter dollar because of the threat of fraud.

The U.S. Mint’s next biennial report to Congress on alternative metals research is due in mid-December 2016.

Asset protection

The 2015 Annual Report notes that the Mint is responsible for the protection of the nation’s gold and silver bullion reserves, and the extent of the gold reserves, where they are stored and their value can be viewed online.

The Mint is also responsible for protecting what are referred to as its “heritage assets.”

The “heritages assets” are “any property, plant, or equipment that are retained by the Mint for their historic, natural, cultural, educational, or artistic value, or significant architectural characteristics.”

These artifacts include examples of furniture and equipment used in the Mint’s facilities over the years; also included are examples of items used in the coin manufacturing process, such as plasters, galvanos, dies, punches, and actual finished coins.

“The coin collections include examples of the various coins produced by the Mint over the years, separated into collections of pattern pieces/prototypes, coin specimens, quality samples, and exotic metal coin samples,” according to the Mint’s 2015 Annual Report.

Additionally, the report notes, “The buildings housing the Mint’s facilities at Denver, West Point, San Francisco, and Fort Knox are all considered multi-use heritage assets. The Mint generally does not place a value on heritage assets, even though some of the coins and artifacts are priceless. However, the assets are accounted for, and controlled for, protection and conservation purposes.”

Potential losses

The 2015 Annual Report briefly addresses the Langbord v. United States lawsuit, which, if upheld in favor of the Langbord family, could result in the return of 10 1933 Saint-Gaudens gold $20 double eagles currently held by the Mint at the Fort Knox Gold Bullion Depository or compensation of $40 million.

Any such financial judgments against the Mint would be paid out of the Public Enterprise Fund, which reflects the profits from the Mint’s product sales.

The complete 2015 Annual Report can be accessed online.  

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