US Coins

Treasury inspector general may investigate Mint sales

The American Eagle 2021 One-Tenth Ounce Gold Two-Coin Set Designer Edition sold out of its 5,000-set maximum in about two minutes Aug. 5.

Image courtesy of the United States Mint.

The Treasury Department’s Office of Inspector General has under consideration plans to investigate the United States Mint’s management of commemorative coin programs, its research and development of circulating coin compositions, and its implementation and management of sales of limited-edition numismatic products.

The Treasury OIG has currently undertaken reviews of how the Mint acquires gold bullion, its project management, and its controls over raw materials and coin exchange programs.

The OIG’s plans are detailed in the agency’s Annual Plan Fiscal Year 2021. The fiscal year runs from Oct. 1, 2020, through Sept. 30, 2021.

Future investigation

According to the FY2021 Annual Plan, the Treasury OIG currently contemplates initiating several investigations in future fiscal years:

It plans to assess the Mint’s controls related to the acquisition of silver bullion and other precious metals (such as gold, platinum and palladium). The investigation will include the Mint’s purchasing and responsible sourcing of precious metals.

Concerning the availability of the Mint’s numismatic limited products, the document said, “we plan to determine if the Mint is ensuring the fair and equitable availability of its products to all customers and assess the Mint’s methods for establishing mintage and product limits for certain numismatic products.

Regarding Mint controls over the sales of “limited-production, investment-grade” products, the plan is “to determine if the Mint’s practices adhere to established policies and procedures designed to ensure the broadest and most fair access.” On the same subject, OIG also plans to scrutinize actions taken by the Mint relating to weaknesses identified in prior Treasury OIG checks, to see if actions adequately addressed issues noted.

As reported in Coin World, the U.S. Mint has received sustained customer flak for most of calendar year 2021 over the bureau’s handling of the release and sales of multiple limited-edition numismatic products, all of which have sold out within a matter of minutes from sales launch.

Some Mint collector customers also complain about perceived unfairness in connection with a new dealer initiative. For some specific limited-edition products, the Mint has reserved up to 10% of the maximum authorized mintage to be parted out among 18 qualified dealers who comprise the Mint’s Authorized Bulk Purchase Program, or ABPP.

The ABPP dealers can place orders the week before a scheduled public release and pick up that product from the Mint’s contracted order fulfillment center before sale open to the rest of the public.

The ABPP dealers, who pay the Mint a 5% premium over the public retail price, cannot offer their purchases for sale until the public release.

U.S. Mint officials did not disclose details of the ABPP program until February 2021 when Coin World confirmed its existence with bureau officials.

Since then, Coin World has sought the release of the identities of the 18 ABPP dealers, but so far, U.S. Mint officials refuse to supply that information.

Subsequent to a verbal refusal, Coin World filed a formal Freedom of Information Act request for the release of the information.

In the months since filing the FOIA, Coin World has received confirmation from the Mint’s FOIA disclosure officer of receiving the publication’s inquiry, but so far officials provide no further response.

Coin World has also learned that the Mint notified ABPP participants of Coin World’s FOIA efforts to obtain release of the names of the ABPP participants.

FY2021 OIG reviews

Treasury OIG’s 2021 plans already in progress include:

Determining whether the Mint received illicit gold from its suppliers and if there were weaknesses in the Mint’s controls over the acquisition of gold bullion. According to the OIG, there are laws that specify the allowable sources and specifications for gold that the U.S. Mint acquires for its product lines. The OIG is looking into the Mint’s adherence to those laws and standards.

Assessing the adequacy of the Mint’s physical security policies, procedures and practices, and determining whether the Mint’s Security Modernization Program and related infrastructure upgrades addressed control weaknesses noted during prior Treasury OIG audit work.

Assessing whether Mint management took appropriate corrective action on recommendations the OIG made in the audit Mint Controls Over Raw Materials and Coin Exchange Programs Need Improvement issued Aug. 18, 2020.

Seigniorage and funding

According to the FY2021 Annual Plan, “Circulating coin shipments decreased 8.8 percent from FY2018 to FY2019 which is significantly more than prior years,” and the Mint’s “FY2019 seigniorage for circulating U.S. coins [the profit derived from the difference between face value and the cost to produce each coin] was $318.3 million, a decrease of less than 1 percent from the previous year.”

Unit costs for cent and 5-cent coins were above face value for the 14th consecutive year, with FY2019 costs at 1.99 cents for the cent and 7.62 cents for the 5-cent coin.

The Mint’s Public Enterprise Fund, authorized in 1996, requires the Treasury secretary to determine the balance of funds not needed for Mint operations, and have it forwarded to the Treasury General Fund. In FY2019, the Mint transferred $540 million to the fund, “a significant increase from last Fiscal Year due to improved performance of the Mint’s numismatic program,” according to the OIG annual report.

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