The United States Mint was scheduled to launch the new America the Beautiful Silver Bullion Coins series earlier this week on December 6, 2010. Following complaints from consumers about unreasonable premiums being charged by authorized purchasers, the US Mint halted the program while they worked to determine an appropriate course of action. In a memo sent to authorized purchasers today, the US Mint outlined revised terms and conditions for the relaunch of the program tomorrow December 10, 2010.
The silver bullion program was authorized under Public Law 110-456, which provides for a series of 5 ounce silver bullion coins featuring duplicate designs of the America the Beautiful Quarters. Likely as a result of the challenging specifications of the new series, such as the 3 inch diameter and incused edge lettering, the US Mint was only able to produce and make available 33,000 coins for each of the five designs to be released in 2010.
The limited number of coins were to be distributed through the US Mint’s authorized purchaser network, which is used for other bullion programs and required under the authorizing legislation. A small group of 11 primary distributors would be allowed to purchase the coins directly from the US Mint based on the market price of silver plus a $9.75 mark up for each coin. Prior to the official release of the coins, one of the primary distributors began accepting orders from the public at a price that equivalent to a mark up of around $130 per coin.
When the program relaunches, the primary distributors who place orders for their allocation of the coins will be bound by newly established terms and conditions. Under the authorized purchaser agreement, the Mint has the right to alter the terms and conditions “if, in the judgment of the United States Mint, the best interests of the U.S. Government and the U.S. bullion coin programs so indicate.”
As a pre-requisite to participate in the purchase and distribution of the America the Beautiful Silver Bullion coins:
1. Authorized Purchasers shall make available for sale to the public all 2010 America the Beautiful Silver Bullion Coins that they acquire. The intention of this condition is to ensure that all 2010 America the Beautiful Silver Bullion Coins minted and issued by the United States Mint are sold to the public.
2. Authorized Purchasers may charge to their customers a price no higher than ten percent above the price at which the Authorized Purchasers acquire 2010 America the Beautiful Silver Bullion Coins from the United States Mint. Authorized Purchasers may charge their customers a reasonable shipping and handling fee; however, Authorized Purchasers may not charge any other fee, premium, or other expense to their customers to circumvent this ten-percent markup limitation. The intention of this condition is to ensure that members of the public can obtain these coins at a reasonable and affordable purchase price.
3. Authorized Purchasers must establish and enforce an order limit of one coin of each design for each household. A household is defined as all persons of a family, or living as a family, at a single mailing address. The intention of this condition is to ensure the broadest and fairest public accessibility to 2010 America the Beautiful Silver Bullion Coins, which are limited-mintage United States Mint products.
4. Authorized Purchasers may not sell, either directly or indirectly, 2010 America the Beautiful Silver Bullion Coins to their officers or employees. The intention of this condition is to ensure that 2010 America the Beautiful Silver Bullion Coins are available to the public and that Authorized Purchaser officers and employees do not have an unfair advantage over members of the public.
Under these terms, the price that the authorized purchasers could charge their customers would be approximately $170 per coin. This would result in a total cost of about $850 for a complete set of all five designs.
Prior to the establishment of these rules, one of the primary distributors had sold out of 1,000 sets priced at $1,395 per set in less than 24 hours. Prices recently realized at a well known online marketplace for “pre-sales” of complete 5 coin sets have been $2,500 or higher.
Most of the US Mint’s primary distributors have not traditionally sold bullion coins to the public in small quantities. Therefore it is possible that some will not purchase their allocation since they are not set up for retail level transactions. In the event that an authorized purchaser does not order their allotment, any excess coins will be available on an allocated basis to remaining active sellers on Monday, December 20, 2010.
For authorized purchasers who acknowledge and agree to the terms of distribution for the America the Beautiful Silver Bullion Coins, the US Mint has reserved the right “to examine and audit all of the Authorized Purchaser’s books, records, documents, and other data to ensure that they have complied with the terms and conditions herein. Violation of any one of the above outlined terms and conditions may be grounds for suspension or permanent removal from the United States Mint’s Authorized Purchaser distribution network.”