May 2008
CHANGES AHEAD FOR ONE AND FIVE CENT
U.S. COINS?
With higher prices for copper, nickel and zinc driving the cost of
manufacturing the two lowest denomination U.S. coins well above their
face value, Congress is now considering legislation that would change
their metallic composition. According to the U.S. Mint, the cost of
striking each one cent coin recently reached 1.67 cents and each five
cent coin 9.53 cents, costing U.S. taxpayers about $100 million
annually.
H.R. 5512, titled the "Coin Modernization and Taxpayer Savings Act of
2008" was passed by a voice vote in the House of Representatives on May
8. If also passed by the Senate and signed by the President, the U.S
Mint would be required to strike pennies made primarily of steel with a
copper color imparted (such as by copper plating) within 270 days. The
five cent coin would change to nickel coated steel within 2 years,
unless production costs for the current copper-nickel alloy drop below
the coin's face value. Provisions are included for the two coins
to be made of metal alloys other than steel under certain
circumstances. Each coin would remain its current size, and the new
five cent coin is required to work with existing vending machines and
coin counting equipment. The bill would also authorize the Secretary of
the Treasury to conduct research on alternative metallic materials for
coinage.
Other countries already mint lower denomination coins from steel.
Canada has struck a steel 1 cent coin with an outer copper layer for
several years at a significantly lower cost than the comparable U.S.
coin. The U.S. previously struck zinc plated steel cents in 1943, in
response to the demand for copper during WWII.
SILVER EAGLE CRUNCH ABATES
The inability of the U.S. Mint to meet strong demand for silver eagle
bullion coins has resulted in two suspensions of sales to its
authorized purchasers this year and high premiums for available coins
above the value of the silver they contain. From December 27, 2007
through March 19, 2008, the Mint sold more than 6.5 million silver
eagles. During a comparable period a year earlier, sales were
about 3.5 million pieces.
Silver, gold and platinum American Eagles were
originally conceived as bullion coins, meaning their prices are based
on the value of the precious metal they contain. Silver eagles, and to
a lesser extent their gold and platinum counterparts, are in fact
purchased by some for personal collections and as gifts for occasions
such as births, weddings, graduations, etc. Only a small number of
distributors who meet stringent requirements are authorized to purchase
American Eagle bullion coins from the U.S. Mint (collector versions of
the coins may be purchased directly from the Mint by anyone, albeit at
a considerably higher premium to their precious metal value).
The Mint suspended silver eagle sales February 4. Sales resumed about a
month later but were again halted on March 19. At a coin show in late
March, we observed one dealer offering 2008 silver eagles at $25 each.
With spot silver being about $18 per ounce at the time, that's about
double the typical premium over spot for current year silver eagles
(each silver eagle contains one troy ounce of fine silver). The Mint's
price to authorized distributors is $1.25 per coin over spot silver,
and when supplies were plentiful some distributors were re-selling the
coins to dealers at 15-20 cents more in quantities of 500+.
Restricted sales from the Mint to authorized purchasers resumed April
21. We understand that these restrictions have since been lifted.
Premiums over spot silver are returning to near historical levels. With
silver prices having retreated about 20% from the multi-decade highs
set in mid-March, 2008 silver eagles
are currently priced at their most affordable levels since early this
year.
CURRENT SPECIAL
The 2009 (62nd) edition of
A Guide Book of United States Coins
is now in stock, and for just a few more days it's on sale at 30% off
the suggested retail price. Popularly known as the Red Book, it's
loaded with information on regular
U.S. coinage, colonials and territorial issues, including typical
retail prices in several grades. Every collector of U.S. coins
should have this handy reference in his or her personal library.
This sale ends May 18. More info is
available on our
Current
Special page.
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Telesphere Numismatics
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