Don't Mint Everything to Demand
In the November 23 issue two items caught my interest: an open letter to the Mint from numismatist Bill Fivaz, and a guest commentary by Alan Hepler on the Mint’s “bewildering practices.”
Regarding Mr. Fivaz’s letter, I heartily agree with his suggestion for an advisory panel of dealers and advanced collectors, and I would suggest including more than two representatives from each group.
As for his other suggestion to “produce to demand” all products the Mint issues, I do not think this would be appropriate for everything the Mint produces.
Many products are already handled this way, and that works well for those items. Even many coins and sets that technically have maximum mintages are in practice produced in batches based on estimated demand such as the $10 First Spouse gold coins.
But minting everything to demand would likely destroy the secondary value of many Mint products, especially those made of precious metals. This has already largely happened for modern commemorative coins, which in many cases can be purchased less expensively than their release price after they are no longer available from the Mint.
In 2012 and 2013 the Mint used this approach with the San Francisco and West Point Mint anniversary sets. It did ensure a wide distribution of the coins, which is helpful, but apart from high grade examples, these coins have not done well in the aftermarket. They are still nice sets, to be sure, but many collectors indicated afterwards that they wanted to see limited issue coins again and that in these cases the approach did not work well because of extensive shipping delays. Many buyers saw dealers with large supplies of graded coins long before their orders shipped even if they ordered early.
And even though they ended up with final mintages that were lower than the 2006 20th anniversary Silver eagle set, which had a limited mintage of 250,000 sets and a household limit of 10 sets, the 2006 set has performed much better than the 2012 and 2013 sets. That may be partly because the 2006 set had the first reverse proof coin in the series, but the limited mintage was certainly important too. And collectors had ample opportunity to purchase the 2006 set, a month in fact.
To be clear, the Mint was not created to enable individuals and dealers to enrich themselves from modern low mintage coins, but if there were no limited mintage issues, this would harm the overall coin market and hobby and drive people away from this important segment of numismatics.
It’s not that buyers expect everything they buy to be a secondary market winner because of limited mintages and high demand. Rather, collectors of modern coins, like all collectors, mainly don’t want everything they buy to be so common than it decreases in value.In fact, the appeal of low fixed mintage coins is one of the reasons many U.S. collectors have become more interested in products from world mints, which are not shy about using mintages as a marketing tool.
And as I will discuss in part two, ordering these low mintage/high demand items in recent years has not been nearly as bad as it is often portrayed based on my own experiences and that of many collectors I know.