The U.S. Mint was set to begin releasing the 2010 "America the Beautiful" five-ounce silver bullion coins, an eagerly anticipated event in the collecting community.
The Mint accepted orders from its authorized purchasers Monday.
So many in the coin-collecting community were clamoring to get their hands on one of 165,000 of the 0.999-fine silver bullion coins that some dealers were reportedly being offered "double spot value" during the weekend.
The bullion coins sport a symbolic face value of a quarter dollar, a diameter of three inches and bear no mint mark. The value of the bullion coin is based on the commodity it contains.
The large-format coins—so called when coins are five ounces or larger—are the first of their kind for the U.S. government, but others have been struck by countries such as Australia, Canada, China, France and Poland.
United States Mint
The 'large format' coins are a first.
"There really is no precedent for a large-format coinage program that will be issued with the regularity, duration, and scale of the current U.S. Mint America the Beautiful quarters program," said Scott Schechter, vice president, sales and marketing, at Certified Collectibles Group, a group of independent companies dedicated to grading collectibles in Sarasota, Fla.
Making the hefty coins required the U.S. Mint to spend $2.2 million for a coining press made by Graebener in Germany. (The press isn't visible from the visitors' gallery at the Philadelphia Mint.)
Sunshine Minting Inc. in Coeur d'Alene, Idaho, and Gold Corp. in Perth, Australia, supplied the planchets.
This is the first time the U.S. government is issuing a coin larger than one ounce since 1915. Private issuers made $50 gold coins during the California gold rush in the 1850s. In 1915, the government made commemorative $50 gold pieces weighing 2½ ounces for the Panama Pacific Exposition. Between 400 and 500 of each, round and octagonal versions, were issued. These were nicknamed slugs because they were such big pieces of metal. Today, the round pieces are slightly rarer, according to Jeff Garrett, a prominent rare gold coin expert and dealer living in Lexington, Ky. They fetch between $50,000 and $150,000 per coin.
In 1976, the U.S. Mint was authorized to produce 500 gold medals for the nation's bicentennial. Only 423 of the 14.6-ounce medals were struck. The unsold medals were melted. Today, they sell for about $25,000, according to Mr. Garrett.
And while most five-ounce coins are 2¾ inch, these are three inches in diameter—not uniform to the rest of the world.
"The Mint has gone to a new weight, a new size and a new denomination in a nominal sense," said David Ganz, a past president of the American Numismatic Association and a coin collector for more than 50 years.
The 2010 America the Beautiful program was launched earlier this year and is set to continue through 2021 unless extended by the Treasury secretary after nine years. It calls for the creation of 56 coins, one for each state, the District of Columbia and the five U.S. territories, to honor national parks and sites. It follows the Statehood Quarters Program, which attracted 150 million Americans to coin collecting.
The Mint will make 33,000 bullion coins for each of the five coins issued in 2010 in honor of Hot Springs National Park, Yellowstone National Park, Yosemite National Park, Grand Canyon National Park and Mount Hood National Forest.
Coin collectors were anticipating 100,000 bullion coins for each design.
"This went from being a bullion coin to being a limited-edition collectible," said Mr. Garrett.
Each authorized purchaser was to be allocated 3,000 coins of each design. Authorized purchasers would pay the spot price of silver plus a premium of $9.75 per coin, or $1.95 an ounce.
The authorized purchasers' premium is irrelevant for those who want this coin because supply and demand will dictate the value of the coin in the secondary market.
Comex silver for December delivery settled Monday at a new 2010 settlement high, up 46.40 cents a troy ounce, or 1.59%, to 29.7050. Silver is now up 77% this year.
"I expect silver and gold will be substantially higher a year or two from now. What we are seeing is not a bubble. This is a generational trend," said Scott Travers, author of the Coin Collector's Survival Manual.
Mr. Travers cited statistics provided to him by Maurice Rosen, editor and publisher of the Rosen Numismatic Advisory, which said "that as of 2009, gold was only in 0.8% of investment portfolios—and the number of silver was a tiny fraction of that number."
"The biggest drawback for silver as an investment is the bulk and size in relation to the amount invested," said Mr. Garrett.
"Silver makes sense for a small investor but not a large investor," said Mr. Garrett.
The Mint said maximum mintage levels for the 2011 and future bullion coins haven't yet been determined.
The Mint resorts to its authorized purchasers to maximize the availability of coins in retail markets as well as major investment markets. The authorized purchasers are under mandate "to maintain buy and sell premiums for U.S. gold and silver bullion coins with as narrow a spread between buy and sell prices as prudent business judgment permits."
But if you miss out, no worries, you will have a second chance.
The Mint also announced it would make a numismatic version of the 2010 designs—27,000 coins for each of the five 2010 coins—available for purchase directly from the U.S. Mint during the first quarter of 2011. The Mint will strike all of the coins by the end of the year, as required by law.
A Mint spokesman said the numismatic version of the coin "will have a different finish," not a proof finish, and bear the "P" mint mark for the U.S. Mint at Philadelphia.
Both versions, the bullion and numismatic, are investment-grade coins with weight, content and purity guaranteed by the government.
Mr. Travers advises buying the coins as close to the bullion price as possible and either holding them for a few years or getting them certified by a grading service at a high grade.
"Buy from a reputable coin and precious metals dealer," said Mr. Travers, "Do not buy from cable-television show charging a huge premium over the value of silver."
"You have to examine the edges," said Mr. Travers. Coin collectors call the edge the third side of a coin.
Coin continuity programs are profitable for the government because the coins don't circulate. Thus, they get ample support from lawmakers.
Mr. Ganz believes the Mint has made a marketing decision to create an artificial shortage of proof coins since "proofs outsell uncirculated coins by a 3-to-1 ratio."
"They are not marketing these. They are saying the switchboard is open, give us your orders," said Mr. Ganz. "They are missing the directive set by Congress, which wants these items to be sold in quantity," said Mr. Ganz.
"Our production level is a function of the amount of silver blanks we can obtain from suppliers," said U.S. Mint spokesman Michael White. The Mint has ramped up supply to sell 32.9 million ounces of American Eagle bullion coins so far this year. Previous levels were eight million to 10 million ounces annually.
Separately, a depiction of General Washington crossing the Delaware River prior to the Battle of Trenton, not an eagle, will grace the reverse of the quarter dollar when the program concludes. A Mint representative said Director Edmund Moy "must have misspoke" during an interview earlier this year.
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