December 2009

MINT DELAYS SALES OF 2010 GOLD AND SILVER EAGLES

In late November the United States Mint issued a series of announcements indicating that it had suspended sales of 2009 American Eagle gold and silver bullion coins through its network of authorized purchasers and that it would not begin production of 2010 American Eagles until an unspecified date in January. While by law the Mint cannot issue coins with dates in the future, it typically begins striking new American Eagles in advance to be available for shipment on the first business day of the new year.

The halt in shipments of new coins has reduced the availability of bullion coins and widened premiums over the value of the precious metal they contain. We anticipate that it will be weeks or months after sales of 2010 coins begin before supplies satisfy pent up demand.

2009 - A BRIEF NUMISMATIC REVIEW

Our Did You Know series takes a break this month, as we instead look back at some of the major numismatic developments in the U.S. during 2009.

Amid the deepest economic downturn in 70 years, a relentless demand for precious metal bullion coins took center stage in the coin market and helped drive the price of gold to a series of records. Gold began the year at about $875 per ounce and in early December rose above $1200 for the first time ever. While far below its all time record high, the price of silver scored an even more impressive 70% gain during the year, topping $19 per ounce in early December. After more than a year of rationing, the U.S. Mint finally secured a sufficient supply of blanks to strike gold and silver American Eagle bullion coins to meet record demand (at least until the suspension of sales cited above). Elevated premiums for bullion coins subsequently eased back closer to historical levels for several months. But after a long delay in producing popular collector versions of gold and silver eagles, the Mint announced that it would not issue any this year.

Meanwhile the market for collector quality coins and paper money has been mixed. Prices for bullion sensitive coins have been driven higher by rising spot prices. Prices in much of the market have been flat, but in a few segments, such as early U.S. type coins, significant appreciation has occurred. Prices for a broad range of collectable U.S. paper money have tumbled dramatically, although there have been some signs of a bottoming out during the latter part of the year.

In accordance with various laws previously enacted, the United States Mint produced four different Lincoln cent designs commemorating the 200th anniversary of the birth of Abraham Lincoln, six quarters for the District of Columbia and five U.S. territories, the 9th through 12th coins in the Presidential dollar series, and the first of a series of one year only reverse designs for the Sacagawea (now called Native American) dollar coin.

In contrast to the abundance of different coin designs, mintages for some denominations are lower than seen in decades. The weak economy has led to decreased demand for new coins, in part because accumulations of coins are being returned to circulation. The Mint announced in April that it had discontinued production of nickels and dimes for the remainder of the year. While it later struck another 7.4 million nickels anyway, we've yet to see any 2009 nickels or dimes outside collector coin sets. Collectors are finding it increasingly difficult to obtain new quarters and Presidential dollars from banks, and it's a challenge for dealers to obtain enough for their customers. In some cases mintages have been fewer than one coin for every three citizens of the United States.

With less than 3.5 billion coins of all circulating denominations struck through October, the total mintage for 2009 will likely come in at about 1/2 of the 10.14 billion coins struck during 2008 and 1/3 of the 14.44 billion coins struck during 2007.

-----