Could the United States Mint have produced 2009 collector Gold and Silver Eagles and remained within their legal obligation to produce bullion coins in quantities sufficient to meet public demand?
The United States Mint will not produce collectible proof American Gold and Silver Eagle coins for the first time since the series introduction in 1986. The more recently introduced collectible uncirculated Gold and Silver Eagles also will not be produced. This has led to a continuing outpouring of disappointment from collectors.
The Mint has attributed their failure to produce the collector coins to their legal requirement to produce bullion coins in quantities sufficient to meet the public demand. In the face of ongoing unprecedented demand for the bullion coins, the Mint has been sourcing all incoming 22 karat gold and silver blanks to the production of bullion coins. Collector coins, which are not legally mandated, have not been produced.
The situation as described by the US Mint makes it seem that even if they wanted to produce collector coins, it would be illegal for them to do so. I am a strong believer in the proverb, “Where there’s a will, there’s a way,” so I decided to take a look at the laws covering the production of bullion coins. As a disclaimer, I am not a lawyer and do not have a legal background. I am interpreting what I have found to the best of my ability.
As the US Mint has stated on many occasions, the production of Gold and Silver Eagle bullion coins is mandated under Public Law 99-185 and Public Law 99-61*, respectively. In addition to authorizing the bullion coins, the laws also describe the denominations, specifications, designs, inscriptions, minting and issuance of coins, pricing, and precious metals sourcing.
The section of Public Law 98-185 now often quoted by the Mint is the following:
Notwithstanding section 5111 (a)(1) of this title, the Secretary shall mint and issue the gold coins described in paragraphs (7), (8,) (9), and (10) of subsection (a) of this section, in quantities sufficient to meet public demand
This is the source of the US Mint’s claim that they are legally required to source all incoming 22 karat gold and silver blanks to the production of bullion coins, until such a time as they are able to meet the full public demand.
I would like to highlight the following additional section of the law:
The Secretary shall acquire gold for the coins issued under section 5112(i) of this title by purchase of gold mined from natural deposits in the United States, or in a territory or possession of the United States, within one year after the month in which the ore from which it is derived was mined. The Secretary shall pay not more than the average world price for the gold.
This section describes some very specific rules for the sourcing of precious metals for the production of the bullion coins. The metal must be (1) from natural deposits in the United States; (2) mined within the past year; and (3) acquired for not more than the average world price. The US Mint presumably works with their suppliers to ensure these stipulations are met.
Notably, Public Law 99-185 and Public Law 99-61 only authorize and describe bullion coins. The collectible proof and uncircualted versions of the coins are not authorized, described, or mentioned anywhere in these laws. As the US Mint has said, these coins are “not mandated by law.” While this means that there is no requirement to mint and issue collector coins (in quantities sufficient to meet public demand), it should also mean that the stringent sourcing requirements for precious metals do not apply to the collector coins.
Putting this together, the US Mint has a loophole by which they could have produced coins for collectors and continued to fulfill their legal obligation to produce bullion coins.
All they would have to do is purchase gold and silver blanks that were either not mined from domestic sources, not mined within the past year, or purchased for more than the average world price of gold. By law, it would be illegal to use their blanks to produce bullion coins. The US Mint would be free and clear to legally use these blanks for the production of collector coins.
I posed two questions to the US Mint to help solidify the validity of this situation. By the time of posting, I have not receive a response. Any response will be posted upon receipt. My questions were the following (updated at 11:48 AM with US Mint responses and links added. I will examine the responses more closely, but it seems to leave open the possibility that at least the 2009 Proof Silver Eagles could have been legally produced.) :
1.) Under what authority does the United States Mint produce collectible proof and uncirculated American Gold and Silver Eagles? ( I realize that the bullion coins are covered under Public Law 99-185 and Public Law 99-61, but these laws do not seem to contain authorization for proof or other collectible coins.)
All collectible proof and uncirculated American Gold and Silver Eagles are produced under the United States Mint’s general numismatic authority at 31 U.S.C. § 5111(a)(3). Over the years Congress has supplemented this general authority with additional specific authority to produce proof gold coins having specifications that are different than the 22-karat American Eagle Gold coins (31 U.S.C. § 5112 (i)(4)(C)) and proof platinum coins (31 U.S.C. § 5112 (k)).
2.) Corollary to question 1, are the collectible proof and uncirculated American Gold and Silver Eagles legally bound to the same precious metals sourcing rules as the bullion coins? (i.e. gold mined from natural deposits of the United States, within one year after the month the ore was mined, at not more than the prevailing price of gold)
All gold coins that the United States Mint currently produces must comply with this requirement. The requirement to purchase gold mined from natural deposits of the United States at 31 U.S.C. § 5116 addresses coins issued under § 5112(i) . The First Spouse and American Buffalo Gold coins have identical provisions at 31 U.S.C. §§ 5112(o)(7)(A) and 5112(q)(4)(A), respectively. These requirement apply to all coins, regardless of their quality–bullion, uncirculated, or proof. Section 5116 is more flexible concerning the purchase of silver, especially when obtaining newly-mined domestic silver is not economically feasible.
* I could not find the full text of this law available online, but based on summaries, I believe the language regarding production quantities and sourcing is the same as the law concerning Gold Eagle coins.
Very informative; until recent events, it did not occur to me that there was a difference between ‘uncirculated’ silver eagles and ‘bullion’ silver eagles, since the bullion coins are not circulated like other coins. I greatly appreciate the glimpse into the inner workings of the Mint. Thanks.
Does any law anywhere state that the “collector” versions of these coins can not be counted as part of the coins being produced to meet public demand? Since they are made of precicesly the same materials, why not simply consider them as part of the minting required under the laws. Do the laws require all such coins to be sold through dealer channels? Is not the demand of collectors part of the public demand that the mint is required to meet? Aren’t the distinctions between bullion and collector coins totally artificial? That is aren’t all such coins, no matter what finish is applied to them and no matter how they are packaged and sold still bullion coins? The wording of the laws is as vauge in the requirement to meet public demand as it is specific in the sourcing of gold. The mint could have easily produced collector coins and now could just as easily sell bullion coins direct to the public at or near spot.
Maybe some of this would be easier to stomach if the mint had ever been truthful to it’s customers at any time this year. Maybe if it had even once said “we screwed up” we could understand some of this. The fact that they were able to think ahead enough to get blanks for the UHR (in what are now unlimited quantities, in terms of ordering anyway) shows us that they simply chose not to do the same for SAEs and GAEs. This inability (or more properly, refusal) to produce collector coins is the direct result of poor choices at the mint, not the result of any market conditions.
I would like to point out one other important aspect of the mint’s interpretation of the laws governing bullion production. Where does anything state that dealer orders are to be understood as reflecting public demand in any way? The laws do not require the mint to meet dealer demand, they require it to meet public demand. Therefore, if the mint is going to sell only to a very small set of dealers, it must also take steps to ensure that those coins get into the hands of the public in a timely and cost effective manner. If the mint allows dealers to hoard and/or engage in spot price speculation, it is failing to meet public demand for the coins. The only way for the mint to truly meet public demand is to sell only directly to the public, with dealers shut out as long as the public is still ordering coins.
The U.S. is the 2nd or 3rd largest producer of gold in the world after China and Australia (depending upon one’s time horizon). It thus seems odd that the Mint has been unable to obtain enough supply of gold blanks one of the largest producers of gold blanks for bullion coins.
I doubt that the restrictions placed on the Mint’s supply chain are to blame, given U.S. output. This ensures a ready market for U.S. gold, silver and platinum, and as such is an inducement to develop U.S. resources. Perhaps Congress could ease up on the production dates for precious metals – does it really matter if it was mined within the past 12 months – but the U.S. sourcing requirement should remain.
The real question should be: why hasn’t the Mint anticipated the demand for bullion coins – it’s not like this is a recent trend – and improved it’s supply chain. For instance, doesn’t the U.S. Mint actually obtain its some/all of its gold blanks from Western Australia, albeit, the gold was mined in the U.S.? And, if pricing is a problem, has the Mint hedged its requirements prudently, as some airlins hedged their fuel costs to ride out high prices in the past few years?
Then there is the matter of the much ballyhooed, over-hyped UHR gold coin. An interesting design? Maybe. Unique? Hardly – St. Gaudens same basic design is used on nearly every bullion coin produced by the U.S. Instead of an open-ended sale of the UHR, why couldn’t the Mint have limited production to, say, 50,000 coins, and used its capacity to produce other collector coins, such as the Proof Gold Eagle (22kt)? The Mint could have increased demand for the UHR by limiting supply, and produced a limited number of proof Gold Eagles, thereby enhancing their value.
Perhaps the most egregious example of the Mint’s misplaced priorities are the 4 x Lincoln commemorative pennies, which are at best an anachronism. The Mint loses money on a regular penny each time one is made. I have no issue with commemorating Abe Lincoln, one of our greatest Presidents. But surely the commemorative silver dollar would have been sufficient! There were other significant anniversaries this year, too, such as the 400th anniversary of the founding of Sante Fe, NM. Rather than commemorating it, with say, a gold coin such as the one that honored Jamestown, VA, the Mint released only one gold commemorative coin – the UHR.
My point in citing the above examples is that the Mint misses many opportunities to commemorate significant U.S. events, has its priorities backward, fails to secure its supply chain despite abundant U.S. supplies and in short, does itself and collectors a huge disservice. I suggest that the coin programs of the Royal Canadian Mint and Perth, Australia Mint are much more innovative and enhance collector value by limiting supply while commemorating a broader range of subjects and events. This is the model I wish the U.S. Mint would follow, instead of the same ho hum designs and subjects. And collectors wouldn’t wind up on the short end of the stick when proof coins such as the Silver and Gold Eagles aren’t produced.
Question:
Does the law state that coins have to be minted in the year that is struck on the coin? Can the mint “back produce” 2009 versions in 2010? In some cases, they clearly mint coins in the year prior to the mint date.
If they can backdate, they could fill the collection hole next year.
The mint did, in fact mint many 2008 Silver Eagle Proof coins in late 2007. My 2008 SAE Proof coin was shipped from the fulfillment center on the 6th of January of 2008 so it was clearly minted in 2007. Since this year is claimed to be an anonally, the folks at the mint should not have any problem asking congress for permission to either back mint as Curious suggests or for permission to go ahead with normal collector mintage despite their new reading of a 20 year old law (something they should have done in January). Unfortunately either of these fixes would require the mint to admit that it made a mistake, something which it seems unable to do.
The mint appears to have overhauled their business and marketing strategy when they were burned by the volitility of prices for metals in the 2007-2008 roller coaster. They linked their collector coin prices to a coin pricing grid and they decided to sell the majority of their output to dealers at a smaller, but guaranteed profit.
I agree with Michael and Claire that mint management needs to reconsider its interpretation of the law, change its “bottom line only” mindset, or toddle off into retirement and give us our Mint back!
All Moy really had to do was ask congress to pass a one time exemption to the law at the start of the year, when he knew full well that he was not going to be able to mint the collector SAEs (and GAEs). If he had done that, we would have had our coins long ago, but again, that would involve admitting that he was unable to handle things on his own and we all know that he is infallable (a true legend in his own mind).
It really is a sad commentary on the US Mint that they took the easy way out and cancelled the proof silver and golds eagles for 2009.
I agree wholeheartedly that where theres a will theres a way. Mr. edmund c. Moy testified before the Senate on his confirmation in 12006 on how he wanted American coinage to be the best and how he would support the collector. Yeh, anything to get confirmed, but another trail of broken promises. I have writeen my Congressman and Senators with my outrage at the non support of the US Mint for collectors. Any true businessman would have jumped at the opportunity to mint these proofs for the collectors and made a profit in the balance.
The analysis provided by Michael and others on here shows it was and still is possible to produce the 2009 proofs. All it takes is a requested variance, whioh I know would be granted.
I had called the Mint on numerous occasions over the last couple of months and they assured me that we would be seeing proofs. Huh, a lot they knew. When I called on the cancellation their recommendation was to write Customer service in Plaindfield, Indiana. Now that would be a waste of time and energy as if they would or could do anything about it. Mr. Moy isolates himself from getting involved as you couldn’t get to him if you wanted to.
Their are alot of things going wrong in the US these days, this didn’t and doesn’t have to be one of them. I plan on passing some of the thoughts I’ve seen posted to my Congressman. Twenty-two years of the proof and we as collectors are supposed to be interested in what the US Mint comes out with next. Bah Humbug.
The Mint has an advisory council, I truly wonder what they could be advising Mr. Moy et al on. A truly sad day for collectors and shame on the US MInt for what I consider an act of cowrdice!
Respectfully Submitted,
Art Schuetze
I believe that Public Law 99-61 dated July 9, 1985 and known as The Liberty Coin Act of July 9, 1985 is also known as 99 Stat. 115 and 31 USC 5112)which you did, in fact, link to.
does Public Law 99-61 dated July 9 1985 specify “when” the production or mintage of the Silver Eagle would discontinue?
Hell I’ll buy a bullion, where can I get one of those ?
Plus I agree totally with the statements about public demand
Clair Alan Hardesty stated earlier.
Hell I’ll buy a bullion, where can I get one of those ?
Plus I agree totally with the statements about public demand
Clair Alan Hardesty stated earlier.