US Mint Mark-Up On Silver

Thought it might be interesting to open a discussion on the price (mark-up over spot) of silver products from the US Mint.

In 2011, on April 28 to be exact, silver spot hit a 31 year high of $48.58 per troy ounce. At that exact same time, you could purchase a 90% silver proof US Army commemorative dollar from the Mint for $59.95...a markup of $11.37, or 23.4% over spot.

Today, with silver spot at $15.97 per troy ounce, a 2014 Civil Rights Act commemorative dollar (with exactly the same silver content) will cost $54.95...a markup of $38.98, or 244% over spot.

Current markups on silver products from the Australian, British and Canadian Mints are in pretty much the same ballpark, or even higher, for limited commemorative type coins.

Any thoughts?

 

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Yeah. It sure seems unreasonable. On the other hand, if you don't like the price, don't buy it.

 

Silver's gone down, but the price of advertising, shipping, and making all those high-quality presentation packages has not.

In 2011, there were times when the price of silver was rising so quickly it nearly overtook the Mint's premiums. I know; I bought during one of those times. So, yes, during 2011 premiums were at unusually low levels.

Today, with silver plummeting almost as rapidly, premiums are at unusually high levels. Will they drop? Probably. Will they drop proportionately to the drop in silver? Certainly not.

 

So...

2011 comm = $48.58 silver + $2.94 silver markup*** + $8.94 advert, shipping, packaging

2014 comm = $15.97 silver + $0.80 silver markup*** + $38.18 advert, shipping, packaging

***let's assume 5% markup on silver for arguments sake in both cases (a decent but not exorbitant amount of profit).

So in 3 years the advertisement, shipping and packaging costs have gone from $8.94 to $38.18 - a 427% increase. Doubtful.

 

No, in 2011 the rapidly-rising price of silver ate into the margins. During the brief period when silver was above $45, the Mint was probably losing money on each set after factoring in those other costs. (And, if I recall correctly, there were periods where the Mint had not yet adjusted its prices, and was suddenly "unable" to fulfill orders for certain silver items.)

Today, the Mint hasn't dropped prices proportionately to the drop in silver, because they're a business, and they don't mind taking in some extra money.

Does the Mint spend $38.18 in overhead for each unit? I certainly hope not. Does it spend less than $8.94? I doubt that as well. The true figure is surely somewhere in the middle.

 

Actually, Silver has gone down but the silver used to produce that Civil Rights coin was purchased at the higher price.

The US Mint is in the business of selling coins. They are not a bullion dealer subject to the spot prices of metals per say.

 

Assuming, of course, your 2014 comparison is based upon the fact that the US Mint runs out and buys a 90% Silver Blank just to mint each Commemorative!

The reality is that the US Mint contracts for and buys the silver for their commemorative coins many months in advance of them ever being produced.

And again, if they were in the bullion market it would be one thing, but they are not.

Packaging costs are contracted.
Shipping costs to the fulfillment center are contracted.
The fulfillment center itself is contracted.
Shipping to the customer from the fulfillment center is contracted and is contracted at a rate lower than what it actually costs.

Perhaps in 6-12 months, when the price of silver settles down and new contracts can be negotiated, the price of certain coins will start fdropping.

BTW, do you remember when Silver Eagles were $5.00 each?

 

BTW, do you remember when Silver Eagles were $5.00 each?

nope!

 

I still don't understand the school of thought that believes non-bullion coins and medals should correlate with silver prices. They are specialty items and, as such, are priced on their own merit. Therefore, their price can be arbitrarily set by the Mint. It would definitely be nice if they were made less expensive, but that is not happening and I understand why.

When I begin to feel badly about the Mint's markup, I look at what the Royal Mint, Royal Canadian Mint, Perth Mint, China Mint and Mexican Mint charge for various specialty coins and medals and my spirits are immediately lifted because I realize things are not so bad in the good ole U. S.

 

I think that if someone thinks they the mint price is too high I would advise them to wait for the secondary market and buy theme there. Many mint issues drop after release.

 

Just as a test, is anyone willing to take the new 4 coin Kennedy half 90% silver set (current Mint price = $99.95) to a dealer and ask what he's willing to pay? My guess is the best offer you'll get is around $25 to $30.

Here's the math: Silver Kennedy weight is 12.5 grams X 0.9 = 11.25 grams of silver X 4 coins = 45 total grams of silver = 1.4467836 troy ounces of silver X $15.30 per ounce (11/5/14 price) = $22.14

BTW, I just saw a 4 coin Kennedy set grading MS70 in NGC holders, priced at $400. That's a (400 / 22.14 = 18.07) markup of 1,807% over spot, for a set of coins that are not rare, and probably never will be...just my humble opinion.

 

So, according to this "logic" the coin below was 27,416% over "Spot"?



Just so we're clear.

 

That's some nice MS65 bullion ya have there!

 

I think that Morgan would be one of one, versus one of hundreds of thousands for the silver Kennedy halves. Not exactly apples to apples.

 

Why? Both coins are 90% Silver.

 

Okay, then, 1909-S VDB cents. 484,000 minted, far more than the total number of Kennedy sets to be made. Even though the cents are so much more common, I'll happily trade you my remaining Kennedy set for your 1909-S VDB, straight up. Just think -- you get $22 or so worth of silver, plus a nifty presentation box, and all I get is two cents worth of copper!

 

Well, I do remember buying silver eagles as presents for the groomsmen at my wedding in 1988. I think I paid about $8 for them.

 

If they charge $53.00 or whatever for a 2015 proof and people pay it the price will stay the same. Gold Kennedy coins are dropping as the price of gold drops but I am sure it has a lot to do with stagnant sales. The Mint doesn't make the market the consumer does to a large degree. They will get every cent the market will bear and rightfully so. We will either pay as little as possible or pay an inflated price based upon a want or perceived need. It isn't complicated.

 

Damn! Evertime I read the title of this thread, my brain see's US MintMark and not Mark Up!

 

The price of the Gold Kennedy is solely based upon the spot price of "gold" as it specifically states that its ".9999 Fine Gold" on the reverse of the coin.

The 90% Silver coins are not under the same constraints as the gold "bullion" piece.

Yes, we as consumers can decide to NOT buy a Proof Coin priced at $53 but then that price is not determined by the price of silver per se.

I have yet to see the US Mint "drop" the price of a product during its sale year due to lack luster sales as doing so would open the door to complaints from folks that paid the original full price.

We have become a spoiled lot in that, there was a time when you ordered your proof or uncirculated sets or commemorative coins at a predesignated time mind you, and then you waited six months for them to be delivered. Production was a direct result of actual orders not a guesstimate of orders.

BTW, did anybody get a discount on the GSA Dollars when they failed to sell? From what I understand, even the Girl Scouts of America didn't get their per coin commissions.