The Coin Analyst: U.S. Mint Raises Prices on Some 2013 Silver Coin Products

by Louis Golino for CoinWeek ………

On January 15 the U.S. Mint published a notice in the Federal Register announcing new, higher prices for some 2013 silver coin products, including the five-ounce America the Beautiful silver coins, which will now be $244.95 instead of $229.95. The increase amounts to $3 per ounce of silver.

The notice indicates that these are for 2013-dated coins, but I would not be surprised if the Mint also increases prices for the 2012-dated coins later. The 2011 coins sold out at the end of December during the Mint’s “last chance” sale.

In addition to the 2013 AtB coins, the 2013 American silver eagle proof coin, which releases on January 25, will be $62.95, or $3 higher than last year’s coin, and the 2013 burnished uncirculated coin with a “W” mintmark, which will be released in May, will be $53.95, also $3 higher than the 2012 coin.

The notice also mentions two new, previously unannounced products for 2013, a Happy Birthday set, and a Congratulations set, which appear to be similar to the Birth sets, that were just released for the second year, and which are aimed mainly at non-collectors and those giving gifts for various occasions.

The decision to raise prices on the 5 ounce coins is curious one that the Mint may regret later. In the past few days silver prices have started to move past $31 for the first time in many months, but even with silver at $32, the melt value of these coins is only $160. $245 would amount to more than a 50% mark-up over silver value.

Moreover, for most of last year, when silver hovered around $30 an ounce, the coins were priced at $200, and they still sold rather sluggishly.

Meanwhile, the bullion version of these coins, which last year in some cases were issued in even smaller numbers than the collector versions, are a much better value at under $200. At the moment, for example, Provident Metals has some of the 2012 coins in stock for about $172, and the American Precious Metals Exchange has the coins for about $183.

There is little doubt that a lot of collectors and silver buyers will either shift to the bullion coins, or stop buying the numismatic versions, with such a huge mark-up. Sales at the Mint of these coins were already running lower each consecutive year since the first coins were released in 2011 (but dated 2010), and this price rise seems certain to curtail sales even further.

Some people will continue buying to keep their sets updated, but many will likely not do so, especially with collector budgets strained by the broader economy.

Sales of the collector silver eagles (proof and uncirculated) may also decline due to the price increases, but those coins have a much larger collector and buyer base, and more people buy multiples of them than of the five-ounce coins.

This move may be an effort by the Mint to try to increase its declining numismatic revenue with higher price-points. But as anyone who has run or worked for a large business knows, most retailers make their money from volume, and high prices tend to decrease, not increase revenue.

I asked the Mint’s Office of Public Affairs about why silver prices were being increased at a time when silver prices were hovering in the $30 range, and not advancing substantially, and this is the response I received on January 7:

“When pricing was established based on a given spot price for silver, US Mint silver numismatic products reflected those higher prices. However, as has been the practice over the last couple of years, we will continue to adjust prices from time to time to reflect the changing price of silver.”

I found that response hard to understand given that silver prices were not increasing at the time I received it and have not advanced by that much since then.

It is true that a lot of experts, including myself, are predicting higher silver prices this year, but U.S. Mint pricing of silver products is not generally done in anticipation of higher prices, but rather is usually done in reaction to higher prices. Perhaps Mint officials are convinced silver will increase by several dollars an ounce in the near future, and do not want to have to suspend sales of these items while new prices are posted in the Federal Register, a process that can take a couple weeks, though recently it has been done more quickly.

Finally, it should be noted that not all silver products have been increased. The 2013 silver AtB quarter proof sets that were just released remain at last year’s price of $41.95 and include new, colorful packaging. The sets already sold almost 50,000 units during the first week of sales.

The Mint could also be facing higher non-metal production costs, and may be seeking to recoup some of that. But until silver reaches $35 or more an ounce, I think the 5 ounce coins should have been kept at the $230 level rather than increased to $245.

Louis Golino is a coin collector and numismatic writer, whose articles on coins have appeared in Coin World, Numismatic News, and a number of different coin web sites. His column for CoinWeek, “The Coin Analyst,” covers U.S. and world coins and precious metals. He collects U.S. and European coins and is a member of the ANA, PCGS, NGC, and CAC. He has also worked for the U.S. Library of Congress and has been a syndicated columnist and news analyst on international affairs for a wide variety of newspapers and web sites.