The United States has suspended sales of the 2011 commemorative gold coins. The action comes as the market price of gold briefly moved above $1,800 per ounce, before closing the week at $1,746.30.
The 2011 Army $5 Gold Coins went on sale January 31, 2011 and the 2011 Medal of Honor $5 Gold Coins went on sale February 25, 2011. The prices for the products were published on January 4, 2011 in the Federal Register, which included an introductory price, effective for about the first month of sales, and a regular price, to be effective following the introductory period.
The regular prices $444.95 for each uncirculated coin and $454.95 for each proof coin. The introductory prices were $5 lower. The $5 commemorative gold coins have the same specifications as the classic gold half eagle. The composition if 90% gold and 10% copper with a weight of 8.359 grams, yielding 0.24187 troy ounces of pure gold.
From the date prices were first published until now, the market price of gold has risen by more than $350 per ounce, or more than 25%. As opposed to the US Mint’s other numismatic gold product offerings, a mechanism was not in place to adjust prices incrementally as the market price of gold increased. Because of this situation, I had suggested the possibility of a suspension due to the increasing price of gold. As the coins were still available around mid-week, the US Mint was actually netting less than the market price of gold for uncirculated versions of the coin, taking into account the $35 surcharge included in prices that will be distributed to the beneficiary organizations.
Following the suspension, the US Mint provided this statement:
The United States Mint has suspended sales of commemorative gold coins for re-pricing. Due to the current market volatility, we will be placing these coins on a “pricing grid” similar to the structure we use to price America Eagle, American Buffalo and First Spouse gold coins. A new grid specific to these coins is being developed and will be posted when complete.
Based on my understanding of the situation, in order for the new pricing grid structure to become effective, it must be published in the Federal Register. In the past, this process has sometimes taken several weeks.
The weekly numismatic product sales report, which should be available on Tuesday will certainly be an interesting one to study. Early in the week, most numismatic gold products were available at prices that were nearly the same as their bullion equivalents. For most of the week, the gold commemorative coins were available at an unprecedented bargain price compared to the intrinsic value. How many collectors took this as an opportunity and bought more coins ahead of the suspensions/price increases? Did any would-be bullion buyers opt for numismatic coins, perhaps driving sizable increases in sales?
$1 Coin Stockpile and Legislation
In the last post, I mentioned that I would have some commentary of the six bills recently introduced in Congress to deal with the $1 coin hoard. On Coin Update, I just posted a summary of the various requirements of each of three latest bills. In Friday’s Washington Post, I had an opinion article published- “Stop legislating this buck and kill the dollar bill”. You can read the article online here.