Acting US Mint Director at Subcommittee Hearing

Today, November 29, 2012 at 2:00 PM, the House Subcommittee on Domestic Monetary Policy and Technology will hold a hearing entitled “The Future of Money: Dollars and Sense”.

The hearing includes prepared statements  and question & answer sessions from six different witnesses on two different panels. The Acting Director of the United States Mint Richard Peterson will be one of the witnesses at the hearing and has already provided a written statement. (You can view the complete witness list and copies of their statements here.)

I will have coverage of the overall hearing after it occurs, for now I wanted to highlight some specific points of interest from the Acting Mint Director’s written statement.

Alternative Coinage Materials

Under the provisions of the “Coinage Modernization, Oversight, and Continuity Act of 2010″, the Mint established and staffed a research and development laboratory at Philadelphia to explore possible metallic alternatives for coinage. Peterson’s statement indicates that the Mint has “conducted two sets of trial strikes on a variety of metallic compositions and evaluated them for attributes such as hardness, ductility, corrosion and wear resistance, electromagnetic signature, availability of raw materials, and cost.”

There is no further information provided about the results, which will be provided to Congress in the first biennial report due in December.

Circulating Coin Production

For the 2012 fiscal year, circulating coin production was up 24% to 9.2 billion units. Peterson cites a reduction in non-metal costs of $58.8 million achieved by improving capacity utilization and reducing expenses.

The cost to manufacture and distribute the penny and nickel once again exceeded their face values.

Overall seigniorage was positive in fiscal year 2012, although a specific figure is not provided. Last year, seigniorage was $348.8 million with $382.8 million contributed by the shipment of $1 coins.

Bullion Program

Lower sales volumes and pricing resulted in 57% decrease in net income from the bullion program.

The Mint held roundtable discussions with Authorized Purchasers in November 2011 and October 2012. These meetings are held to “identify market trends and bullion demand trends”.

I believe at the 2011 meeting, the Authorized Purchasers had recommended that the offering of platinum bullion coins in one ounce size should be resumed. However, this did not occur in 2012.

There is no indication of any of the specific discussions at the 2012 meeting.

Numismatic Program

Following exceptional results for the numismatic program in 2011, “demand weakened across the board” for the 2012 fiscal year. Peterson cited moderating silver prices, only one American Eagle Silver Proof Coin release, and a later than usual sales date for recurring sets.

For the current fiscal year, revenue decreased by approximately $241 million. Compared to last year, this would make for a decrease of about 33%.

From Peterson’s statement: “We are developing a comprehensive marketing strategy to increase the numismatic customer base and to incorporate new technologies and products.”

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Comments

  1. Fosnock says

    Lower sales volumes on bullion – well it was record last year but if they are truly concerned maybe they could lower the price back to $1.50 above spot or sell directly to the public

  2. Smiledon says

    Wish that the ASE coin could be the UHR with each mint mark set.
    That way, the Mint could save money be having early ordering of this set to fill demand. One proof set of the ASE would make me happy. Gold and Platium are out of my price range. Also, I would hate to see the penny go by the way side. We the people would pay higher wages in the long one if you want to pay in cash.

  3. kevin says

    LOL – the mint had 2 GREAT CHANCES the past few months to create truly unique, low mintage, interesting, exciting collectible coin sets with unique ASEs is them – AND TWICE THEY JUST REPACKAGED THE SAME OLD PROOF ASE…… and they can’t figure out why we aren’t interested, but plan to do so in the future?!?!? HAHAHAAHA we are in for more BS from the mint as usual sounds like……

  4. kevin says

    If the mint focused on making rare, unique, interesting COINS instead of rare PACKAGING we would all be happier I bet, but that is too radical of an idea for a coin minting organization to go for!!

  5. old folkie says

    Please get rid of the worthless penny and the worthless nickel and give us coinage worth using. We didn’t need coins with the buying power of 1/10 0f a cent in the 60s, or a 1/2 cent which is what the buying power of todays penny and nickel have. Give us coins worth using for something more than filling an old gallon jar. For a country with money problems this is a joke. $1, $2, or $5 coins make more sense.
    We still have the same coins we had when a pop was a dime and a Big Mac was 32 cents, only in America is this acceptable. Either make coins that have value and are useable or get rid of them completely (which I am against completely). But no, we let the vending industry lobbyists and a bunch of stuck in the past idealogues decide what our coins should be. And don’t forget the cotton industry lobbyists that keeps our dinosaur dollar bills around.

  6. Louis says

    “only one American eagle proof silver coin release”? But there are two 2012 proof silver eagles, the W and the S coin? Any idea what he meant by that? Besides, there is normally only one release of proof silver eagles.

  7. posterhunter says

    The mint needs to get into gold/silver bimetallic coins, and change the American Eagle series to new designs.

  8. VABEACHBUM says

    @ Louis. Glad I’m not the only one who caught that piece of mis-information. I was actually thinking that since the ASE “S” was issued with the REV PR coin in the SF Anny Set and w/ that Coin and Currency set, we actually could say that their were 3 unique PR / REV PR collector ASE coins, as well as the UNC “W” ASE coin. Four unique collector ASE coins in multiple packaging formats.

    The only caveat I can come up with is the fact that the manufacturing and shipping of some of these FY-12 products crossed over into FY-13, and they may not have closed the books. Then again, some of those 2011 products remain on sale until 12/31. At this point, who knows what this week’s accounting rules might be!!

    I also note with interest the “later than usual sales date for recurring sets” comment. I thought most of those went on sale at or near the same times they did in 2011.

  9. G says

    I would imagine Apmex and the other big companies are lobbying like crazy right now to prevent bullion sale direct to the public.

  10. maui1 says

    I agree……get rid of the penny and nickel.

    We need a dime (same size) with everything rounded up or down to a dime.
    We need a quarter the size of our present penny.
    We need a dollar coin that is the size of our present nickel, but it MUST be done with getting rid of the paper 1 dollar and 2 dollar bills
    We need a 2 dollar coin, that is a little smaller that size of our present quarter
    (the above coins sizes will now make sense- or ‘cents’)

    Granted, it will take some individual adjustment and will require some costs, but the long term benefits, should far out way any adjustments needed, not to mention the long term cash savings to our country.

  11. Dave says

    I wish the mint would market all their collectable coins in the fashion used for the two ASE set of 2012. Open a window of ordering, such as 2 months. Count up the number of unit orders; produce the “ordered quantity”, plus 1% overage to handle complaints / returns; then step away. This would prevent over production of items that are not wanted by the consumers plus create more interest in what the mint is doing..

    I wish the mint could find a way to avoid marking coins with ridiculous values, such $50 gold pieces for something valued at $2K. Mark it $2K! Or make the 5oz ATB valued at $209 and $229. Use the selling price as the value, thus there might be two or more coins with the same mint mark / year but marked with a different values.

  12. Gary says

    I keep hearing people talking about the Mint producing low minted products!
    They tried that last year.REMEMBER… All the complaining and whining that happened over that i am sure we wont ever see a product intentionally produced with a low mintage! Future winners will be for example the MAH set or the 2012 Limited Silver Set which didnt get a lot of interest and then 15 years down the road people realize whoa “that only has a 42k mintage” and then bam its a hit!
    Anyway….that was just an example and my opinion only!! Thanks for listening!!

  13. Eric says

    If the US Mint wants future collectors, then they need to look to the future.
    All this exclusive buyer programs that exclude the public just drives away people.
    Open the doors so the public can directly buy coins (especially at the local bank)
    I deal with 4 different banks and all of them are saying that they can no longer order coins from the Fed (I am talking about new coins to be circulated). When a kid can not go into his local bank and get one coin to fill his book you have lost them. I have lost count of the times I have seen kids turned away from the bank when they wanted a new penny, nickel, dime, or quarter to fill a book.
    Once you loose a young collector it is almost impossible to get them back.

  14. Ikaika says

    I wish the US mint would focus more on coins that collectors are interested in instead of the number of products for sale. It makes me dizzy just going over the list of products each year. Most of them no one cares about.

  15. Micro says

    I’m with old folkie. I don’t have anything against the cent and the nickel, but their economic value is miniscule. Many people won’t even bother bending over to pick up a penny from the ground. And the money that the mint loses on making them is ultimately our tax money that is wasted. The mint’s resources could be better utilized making coins we would all enjoy using and collecting.

  16. VA Bob says

    Change the cent back to it’s pre 1982 copper composition. Make them and the five cent available only in proof and mint sets (still legal tender, they will stop circulating in a year or two on there own). Get rid of the $1 dollar, $2 dollar, and possibly the $5 dollar bill. Make a $2 dollar coin of 95% copper the size of the halve dollar. Possible $5 coin if the bill is pulled (which is doubtful). No junk metals. Just my 10¢ (since 1¢ and 5¢ will be for collectors).

  17. Tom says

    Of coarse mint sales are down.
    The price of metals is so high.
    I’m not buying anymore.

    The ’06 SF 1/4 commem was $240
    The SSB is like double that at $510.

  18. karl meyer says

    @ VA Bob
    What is a junk metal? All metals have different uses for which we assign value too. Metals with the most uses would be the most valuable except for scarcity issues. Some of the most abundant metals have the most uses.Some of the least useful metals are the least abundant. Metals value change with time and technology. The point on the Washington Monument was made of the rarest and most valuable metal of the time, I believe it was the largest object of that metal at the time. Money is only a medium of exchange in a civilization and has been made of all types of things to represent value.

  19. vaughnster says

    Karl–

    Just as an FYI, the Washington Monument is completely made of stone, with no metal structure at all. At 555 feet, it was at one point the tallest structure in the world. It still holds the record as the world’s tallest free standing stone building.

  20. Fosnock says

    @Gary – clevelandrocks got your point, the issue was not the low mintage but the household limit, everyone here knew it would be a dog fight to get one of the sets but somehow the mint did not think about lowering the household limit. As far as the 2012 Limited Silver Set it reminds me of all the (silly in my opinion) special slabs that PCGS, and NGC comes up with for just about every modern coin known to man. Also its hard to collect packaging when the mint starts new packaging in the middle of a series or it simply disappears for a few years like the United States Mint Annual Uncirculated Dollar Coin Set. Another example is are S circulation quality quarters, it comes out as a special one year adventure, but now it looks like it is permanent fixture but it started 3 years into the program so you can’t have a complete set, and the novelty will wear of in few years as the market gets saturated with S circulation quality quarters

  21. Kraw says

    @vaughn

    Actually the cap of the washington monument is a solid pyramid of aluminum, one of the most valuable metals at the time, because electricity had not been invented yet, which was critical to the refinement of aluminum.

  22. Samuel says

    i just ordered one limited set, because, i did not buy any proof ASE (except SF set) and annual proof set this yr.

  23. Smiledon says

    Kraw, that post about the penny is so true for people today.
    I go walking in the early AM, and I have a route that I use to pick up the loose change. I gave my wife the amount after one year for her birthday. She had enough for a used Blackberry. She did not believe it was that much in loose change. Now, when I go walking, I tell her I hope I find enough to make her birthday money. She now laughs about it, but @ first, she gave me that look.

  24. Eddie says

    So if the mint is going to keep minting the S quarters does that mean the 2013 sets will have these included in the mint sets? Or will they do like they did this year and exclude them.

  25. Gary says

    Sometimes it is the packaging….for example The Lincoln Coin and Chronicles Set……..
    Here is another example…..the 2000 Cheerios Sac. Dollar…i think it was 2000…but anyway..those carry a heavy premium and why do they when there were well over 7 million 2000 Sacagawea produced that year…The short answer..THE PACKAGING!!
    I know there are people who dont want to except the TPG package designation but unfortunately alot of others do…and that is a proven fact given the prices people pay for such designations.
    I am sure i could dig up more examples if i took a little time…hell even the Goodacre Sac dollar from the same year carries a nice premium,.

    I guess what i am saying is..just because you or some people dont like it or dont want to believe in it…doesnt mean it doesnt exist. Because it is easy to see that it does exist!

  26. Smiledon says

    Gary, is that why we never seem to get rid of the crap in DC? Different package?
    (had to laugh about what you said. Sad, but true.)

  27. fosnock says

    @ Gary – the 2000 Cheerios Sac. Dollar or Cheerios Dollars” are the “Reverse of 1999″ pattern. It had nothing to do with the packaging, but you are right about the The Lincoln Coin and Chronicles Set, but that mintage was limited and the coin was already sold out before the sets were made available.

  28. Gary says

    Not all of the cheerios dollars had the enhanced tail feathers but all carry a premium that were packaged in cheerios…

  29. fosnock says

    @ Gary – But would the packaging be famous if they did not have the possibility of containing an error coin?

  30. says

    Small Potatoes, I saw that article too. I feel like this time might be different in terms of overhauling our money, but I’m operating more on a gut instinct than anything else. I’m convinced the zinc penny and nickel nickel is going at least have a composition change soon and I think there might be a real chance to eliminate the paper dollar for good.

    What will be interesting is what they do to replace the dollar bill if it happens. Will they continue using the current presidential dollar coin program? Will they step up production of the Native American dollar? Could be interesting.

  31. Gary says

    I am just saying sometimes packaging can yeild a winner coin..thats it…my opinion only!!!! i am not saying the MAH Coin and currency set or the limited edition silver set will be winners. I just used those for an exampe! Like i said before, there wont be anymore intentional low minted coins coming out of the Mint..just coins or sets that get overlooked that might not get alot of attention today but maybe in 15 years they will command a premium?? Again..my opinion only!!

  32. Ikaika says

    The BEP will be releasing the 150th Anniversary Currency Set that contains a $5 and $2 notes on Dec. 11 for $49.95. That supports the idea that the MAH set was sold to unload the leftover ASE proofs produced for the 75th Anniversary San Francisco two coin set.

  33. hi ho silver says

    Ikaika: The BEP seems to be playing the Mint game. I purchased a $2 note celebrating this back in July for $7.95 with a 10,000 limit , it sold out last month.Seems like these guys are printing and minting first and selling later.

  34. Ikaika says

    @ hi ho silver
    That sure seems to be the case. Perhaps in the case of precious metals is the Mint striking enough to avoid buying PM at a higher price later?

  35. oldfolkie says

    What in the world could they possibly make a penny out of that would actually make it worth more than it’s production costs. Plastic? Steel? Aluminum? It is hardly worth the effort, it is a worthless coin in today’s world. Why make it at all?

    As a coin collector for 50 years plus I find it appalling and pathetic that our coins are not used because they are worthless and can’t buy regularly bought small items. It’s a sad state of affairs when our coinage is truly unable to buy anything that quite factually a dime would buy in the 60s. So….we still need pennies and nickels? For What? What the heck is wrong with ending a coins run? Are we in this for simply nostalgia.

    Maybe new collectors would be attracted to collecting if they didn’t face the prospect of decades of coins that are no longer in circulation. Us old folks should just wind down our collections, upgrade and enjoy. And, I find it kind of crazy we make collector coins like the half dollar—-enough all ready, I remember when the Kennedy Half came out and what a thrill it was to hold the first one. Did I ever think it would still be around in 50 years? Hardly. Time goes on, and changes must take place. I think our coinage is truly sad as it is, Teddy Roosevelt would not be happy. Our coins are nothing but a reflection of the past, not the present, and certainly not the future.

  36. VA Bob says

    @ karl meyer. What is a junk metal? Well first, my comment is in the context of US coinage and collecting, not the merits of the various metals in their numerous applications. IMO poor choices for coinage would be, for one, steel. Of course I realize the US made steel (zinc plated) cents. But imagine if you will, if our countrymen used steal 100 plus years ago. How many nice examples would be in existence today? Certainly none for todays metal detecting treasure hunters. Image looking over your prized proof or mint sets 50 years from now, and discovering rust spots where a tiny blemish in the plating let the base metal oxidize. of course all metals oxidize to some extent, but not with the same results. IMO tiny pieces of steel are not conducive to long term collecting. They might be great for 20 or 30 years of circulation, but not much more.

    I’m also not very fond of zinc or aluminum, but for different reasons. Have you ever held an aluminum coin? Not feels more like play money than an aluminum coin. Zinc is a relatively cheap pot metal, why do we insist on continuing to cheapen our coins? If you get rid of the cent and the nickel all coins currently made have a face value above their metal content. If the Dime gets too expensive, remove the the metal that costs the most from it, that would either be copper or nickel, and use the cheaper of the two exclusively. If we get to the point where we are considering plastic as an alternative, then let’s just use plastic (AKA credit cards) and be done with coins altogether.

  37. hi ho silver says

    I just think BEP is trying to pass on old $2 bills from series 2003 and 2009. My bill is from Kansas City and the new set has the bill from New York. Did you read the lottery drawling if you purchase the set in the 1st month?? Its stupid but funny. I’m not paying $50 for $7

  38. stephen m. says

    Sure a penny & nickel has more copper than face value of each but they last a long time. I mean it’s not like each one is replaced every year. I don’t know how to do it but if you break the cost down to a yearly average based on the life of the coin i would think it’s not a bad deal for the taxpayer. I bet Bob Dylan would have the answer. Anyone here personally know him to ask?

  39. Davo says

    If you don’t stop, bend over and pick up pennies then you are not a coin collector. I will never forget the joy of picking up a penny and find out it is a wheat penny. I love collecting coins. I don’t care about making money. I have over paid for some coins too. But when I pass them on to my son, he will not pay a cent. He will get the joy of keeping them or he can sell them. But they will be free to him so it won’t matter if I overpaid. I enjoy the coins when I have them. Coin collecting for me is fun. It’s not about making money or anything else but fun and enjoyment. I just purchased a ’06 20th Anny SAE set for $300. I have already gotten $500 of enjoyment from looking at the coins. I think I will go look at the set again because when I do, I get excited and smile and become enthusiastic about coins and collecting. And for that I will never over pay for because that is priceless.

  40. Davo says

    what ever happened to collecting coins just for fun? Not for ROI, or to change the government or the world or politics or coin composition. What happened to searching pocket change for a nice shiny coin? I still enjoy collecting coins that I like. I enjoy coin collecting and my joy is my return. It is about the coins but not about the money.

    When I began collecting about 15 years ago, everything I read started with “collect coins for fun” and that’s what I do.

    Have fun!

  41. says

    I collect coins in both catagories…1) Those I collect for fun and enjoyment…my circulated and worn buffalo nickels, mercury dimes, wheat cents, walkers, Morgan & Peace dollars, etc. and 2) High quality coins for investment purposes…along with bullion gold, silver, platinum, and palladium.

    I would venture to quess that most of us on this sight collect coins for both purposes… those for pure fun and enjoyment…and those for investments.

  42. Silver Surfing Scott says

    It does’nt matter what comosition or size they deside to make are coins in the future. If the government does,nt stop printing and spending more money than it takes in, then all coins will be only worth metal value, and paper money will be worthless. Were at 16 Trillion dollars and counting. I believe we may see this come about with this current administration. Obama is asking for another 2 Trillion in spending this next year, and I don’t believe the Chinese have a chance in hell of ever getting their money back. A lot of people are betting that this will happen in the next 4 years. I’m taking this bet because the odds are good. And believe me, I don’t make bets unless I have a good chance of winning. Good luck with that $20 penny coin! ? !

  43. simon says

    Davo,

    As a coin collector I truly appreciate all your comments. I too always pick up cents when I see them on the ground. I have too much respect for “every cent” of this great nation to leave that shiny gem lying on the floor. I either keep the coin if it is pristine or add it to my deposit in my bank. Just a few days ago I lay my 2011 and 2012 anniversary sets side-by-side. What a sight to behold! I prefer all my coins in OGP which is the best mint or proof state. I dislike TPG caskets but do own some graded coins. I can’t think of a better way to exemplify pride in this great nation than collecting and honoring its coins, particularly the cent which is the fundamental unit of our commerce. At the same time I enjoy the art, the culture, the history, and the technology that each coin represents. Thanks for your comments !

  44. Hidalgo says

    Change of subject – has anyone noticed that the proof $5 gold Star Spangled Banner commemorate is now more rare than the uncirculated version? That might speak well for its long-term appreciation (compared to the uncirculated version).

    Just goes to show you that it’s dangerous to speculate on coin mintages/sales. It ain’t over until it’s over. LOL.

  45. Robertson says

    @Hidalgo: You are forgetting to include the 11,357 proof $5 gold coins that have been included and sold in the 2-coin set, making the current total of proof gold to be 17,211.

  46. Stevedoc22 says

    In answer to Davo, about collecting for fun. For me, the fact that current coins are made of base metals that corrode and wear badly makes it less appealing to collect circulating coins. Also, the multiple offerings (ie, ATB quarters) seem to emphasize quantity over quality. That’s why I stick with PMs and older coins.

  47. karl meyer says

    I am enjoying this discussion on coinage and collecting and letting me put my two cents in. The penny and the nickel we can’t get rid of for tax reasons. When you go to the convenience store or the coffee shop or any other small retailer most of us pay with cash of some sorts most do not pay digitally. The retailer would gladly make all of their products available in multiples of 10 cents if their was no pennies or nickels but with sales taxes being what it is they need pennies and nickels to give correct change. Customers will not tolerate rounding up and why must the small business have to pay the tax in rounding down. We need pennies and nickels. Now if it is only the metals cost that is driving the price to make these things then use half the metals by putting a big hole in the middle and you reduce the metal content by half. There are coins out there like this but they are usually buttugly no space to make pretty designs, not that a bunch of dead men are my idea of pretty. Aluminum may not make a heavy coin and they may feel like play money but maybe they could be made the size of the original penny with a new pretty design of lady liberty. they don’t go in vending machines so they are not going to fuss with that lobby and Las Vegas will adapt their slots. I don’t collect dates, mints, packaging and all examples. I like pretty shiny things and I always pick up change and look at it. My coin collection is small but I can use it to tell history lessons to any one that will listen.

  48. oldfolkie says

    Gas has been priced at the tenth of a cent in the past and no one cared, or even noticed it. Round it down, round it up…it’s not much difference in the long run. Again when coins actually had value we did just fine. It costs everyone to use, count, handout, store, and roll those worthless pennies, not to mention the tax money we throw away on them.

  49. drsanto says

    Along with the Scriptures, the Coinage Act of 1792 required that the value of the metals in the coin be at least equal to or greater than the face value of the coin. The purpose of requiring an “equal weight and balance” is to prevent theft by artificial inflation.

    Sad, sad testimony that so few recognize the significance of only the nickel and some of the pennies being ***actually*** worth their weight in metal.

    DRS

  50. oldfolkie says

    Sad, their “actual” value in weight still won’t buy squat. In terms of usefulness it is purely for historic reference. Absolutely no different than the half cent, the large cent, the two cent piece, and the three cent pieces (nickel or silver}. It’s time to move on if we actually want to keep using coins at all.

  51. RSF says

    Well said old(wise)folkie. I posted a year ago that with the magnitude of the budgetary cuts that are staring Congress in the face, that eliminating the paper dollar and the cent would and should be an easy choice. Even if it ‘only’ saves $700 million here or $4.2 billion over 30 years there, that should be a no-brainer compared to the hard choices ahead.
    We can’t keep postponing the inevitable for reasons of nostalgia or convienence.

  52. Stevedoc22 says

    I’d agree with oldfolkie. People throw pennies away all the time and don’t bother to pick them up. I don’t mind picking up a penny to see if it’s a wheatie and I always check my change – I found a 1936 Buffalo nickel (in VG condition) in my change over the summer. I probably got more of a thrill out of that little find than is explainable to a non-collector.

  53. Fosnock says

    @ Gary – No argument packaging can definitely make or break a coin. The issue presented was that if sales are suffering then maybe the strategy of repacking old coins is not working, and maybe they should come out with new designs.

    @Davo – Collecting is dying because nobody is using money, everything is a debit or credit transaction. Then add that the coins were not changing designs, then when they change designs (with low mintages) nobody can find them. So you can collect the State Quarters which can be done with ease, but then what is the point of showing them off if everyone and their dog has one, or you can attempt to collect the Park Quarters, but good luck finding them or even getting them from a bank.

    Also any “collector” series already has a markup on it so any casual collector has to think twice about it or at least ask if it will go up in price. Just imagine the interest if they sold any of the commemorative dollars for close to spot price or announced a new circulating silver dollar to be sold with bullion at close to spot price, or even circulating quality silver quarters at or close to spot price…instead we get circulating quality clad S quarters. My 2 cents anyway.

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