No sense in trying to convince chris that the mint is not making huge profits. The only suggestion for him I can offer, is simply don't buy direct from the mint and wait until either local dealers or private individuals start to sell these mint products. The Mint actually is even this day not even close to being a profitable entity. Actually, the Mint is close to being completely financially unstable. I do however from time-time make purchase's directly from the Mint , rather than do as I suggested earlier. I do my small part in making some annual purchases , but chris has made it clear, he has a repulsion for doing business with them .
Chris, the price of silver (the price the Mint pays for raw materials) rose from Jan2005 to Jan2008 from less than $7/Oz to over $16/Oz. That's a 128% increase, but the Mint only raised prices (based on your numbers) by 100%. It sounds like someone owes the US Mint an apology...:whistle:
That's a good theory, the only problem with it is, the secondary markets sell newly released products they acquire from the Mint at a mark up, the retail price plus shipping, even though they mostly order in bulk and are charged $4.95 per order and not per item ordered. You'll see this year's proof sets in the secondary markets selling for $36.90 or a little more, and I've seen some dealers set their price at $39.95 for them.
Not when you consider all the effort it takes to produce them. they are not like a coin where you strike it your done with it. The relief on the medals is much higher and it can easily take seven or eight strikes to bring up the relief. And the medal has to be taken out of the press re annealed and cleaned between each strike. Annealing is a slow process so it can take several days to strike each medal. Then after the striking is done the medal has to be trimmed to remove the excess metal. Typically large medals like these are struck without a collar and then trimmed down to size. A final cleaning and sometimes a patina or coating has to be applied. from start to finish it could easily take five to seven days to make one of those medals. Then the cost of the oversize dies has to be allowed for as well. They have to be much more difficult to make than the dies for the smaller medals. With that relief I doubt the dies could be hubbed. More likely each of them has to be cut individually by the reducing machine.
With all the data being presented on how much it costs to produce this or produce that, I just gotta call poo-poo. On each circulating Half Dollar coin, the mint made a .19 cent profit. Then, turns around and charges the collector (their ONLY customer) an additional .15 cents for each coin (by the bag) or an additional .27 cents per coin (by the roll set). On ATB Circulating Quarters alone, the mint made $48,580,000. On Roosevelt dimes, the mint made $44,760,000. On Jefferson nickels, the mint lost $5,052,768 On Zincolns they lost $16,043,320. I think the US Mint makes Plenty on circulating coin production and makes an additional PLENTY on collector coin production. The problem with the US Mint, is that they KNOW the coin collecting community is an easy mark and they are not afraid to exploit that mark. Government or not, their prices are being raised to ridiculous levels and they will lose customers by pricing them out.
This is one reason I think our hobby will always attract those who collect mint sets from circulation. In fact I think so much business is oriented toward this and the premiums the mint must charge help that cause. I mean who buys a $3 coin folder to store and display "direct from the mint" items ? Just a thought.
The question as to whether the mint makes too much profit is not the real point I believe. The mint may not make a dime but still way overcharge for their products, or make a ton of money but have reasonable prices, simply based upon their efficiency. Now, how many government monopolies do you know of that are as efficient as private firms? Its the efficiency and their expenses that should be analyzed. I would lay a bet today that if the mint was privatized the prices they charge for coins would decline. Framing the argument here simply on profit of the mint is completely missing this point, since inefficient operations are frequently money losers, even with a government monopoly as an asset. Chris
I seriously doubt that private mints (of which there are several) actually operate more efficiently than our government ran one. Even today ours manages to process coins for foreign countries. Certainly at lower costs than those countries can manage to find elsewhere. IF private mints could provide the same quality at a lower cost, I am nearly certain this business would go to them. Some things, like mints and the military, our government has done quite well. Privatization does not always mean better. IMHO gary
Who's "ours"? Not the US Mint they gave up the foreign business back in 1984. They also gave up producing their own strip except for cents and nickels in 1964 to private industry. They gave up the cent and nickel strip to private industry in the late 70's and they went to ready made cent planchets in the early 80's And several foreign governments do contract with private mints for the production of their coins. The Franklin Mint used to produce coins for several different countries. And then there is the Pobjoy Mint. They strike coins for many countries.
Not sure what you mean by that comment - do you mean that you don't believe the reported profit figures ? Or do you mean that you think the profit figures are too high ? I would agree on that aspect. Ahhhh - so you think a 12% profit is a rediculous level ? Exactly what percentage do you think would be fair ? In other words, how much is too much ? And by the way, do you also think that the public should be able to dictate how much profit any business should be able to make, or is it just the US Mint that you feel this way about ? Oh, and one more question. Are you perhaps in business for yourself ? And if you were, who exactly is it that gets to tell you how much money you are allowed to make ?
Except that private industry has to make a superior product. The US mint is the only source for US coins, and seignorage is not really mint profit, it is government profit from the ability to mint coins for use in commerce. I have seen what the workers and management in Philadelphia make, and its pretty sizable. Between their pay and government benefits and retirement plan, they are probably averaging between 80k and 100k per employee in Philly at least. Add to this that government isn't exactly known for thier efficiency, and I am simply stating that I believe it is a high cost operation, something that could be done cheaper in the private sector. There is no "proving" it, since the key to the analysis would be production output efficiency, which you cannot prove until run at another facility. However, the point of the Pobjoy mint was a good one. Overall, seignorage is not profit since it has to be attributed to coining authority, not to mint efficiency. Profits on collector coins may be there, but I still would argue they would be higher, and money sent to the charities higher, with a privatized mint. Chris
First off, the US Mint is NOT a business. It's a "service" provided by the US Government. It has not been privatized (like the USPS) and as such any "profits" (which there are many) go back into the general fund for general use by the US Government. Of course, the funds which go there are only AFTER all the US Mint expenses have been paid. Salaries, equipment, buildings, etc. How much is too much profit? For a private business, the door is wide open since it is a free country and businesses can charge whatever the market will bear. Charge too much, and your customers go elsewhere. Who tells me how much "profit" I am allowed to make? Simple. My customers. What I provide can be purchased at any other like business and as such, yes, the public CAN dictate how much profit a private business is allowed to make by simply shopping elsewhere. This is not the case with the US Mint and they know it. I am not adverse to the US Mint in charging appropriately to cover their expense but I do take exception to a government service which shows "profits" as "profits" are what's left over after everything has been paid for and I, for one, do NOT believe that ANY US Government "service", which is required by law, should profit from the citizens they serve.
It seems that the objection you have is one of semantics more than anything else. For since all mint "profits" are returned to the public, they have no "profits". Yes the mint is a govt service, I agree with that. But even government services have to account for where the money goes. So they use standard accounting practices and call "profits" profits. Would you prefer they call them something else ? Or would you prefer that the mint operate on a 0 balance every year and instead have your taxes go up to make up for those lost profits ? For if the money that the mint generates and contributes to the General Fund every year goes away, then that money in the General Fund has to be replaced. And th eonly way to do that is to raise taxes to make up for it. Either way, it's going to cost us, the public, the same amount. This entire discussion started off with the premise that the mint charges too much for their products. But by looking at the annual reports we can see that the percentages that mint charges over and above the costs for their products is quite low, lower even than just about any business. And in the end, the mint does not keep those profits but instead returns the profits to the public by contributing to the General Fund. My point is quite simple. The facts show that the mint does not charge too much for their products. To try and argue otherwise is somewhat pointless. But as I've said many times, people will believe what they want to believe regardless of the truth.
Mint News http://financialservices.house.gov/press/PRArticle.aspx?NewsID=1854 and also read:http://www.usmint.gov/downloads/about/annual_report/2010AnnualReport.pdf Personally, I'm very comfortable with the U.S. Mint's pricing and any recent increases assessed are justifiable . I've been purchasing Coins from the Mint since the 50's. I'm more concerned about the Mint's financial instability rather than any Program Price Increases . With their new IMFS , I believe the Mint will finally be able to implement new cost controls and coin their way back out of virtual insolvency .
