07/26/10 Alexandria, Virgina — The US Mint has had trouble keeping up with precious metal coin demand for most of this year, and it now appears the investigation into why that’s the case may also consider the economics of penny and nickel production.
The US House Subcommittee on Domestic Monetary Policy has been looking into why there are backlogs at the Mint, especially with proof and uncirculated coins, and what can be done to improve the production process.
For quite some time it’s been easy to find disclaimers such as this on the US Mint website: “Due to the continued, sustained demand for American Eagle Gold Bullion Coins, 2009-dated American Eagle Gold Proof Coins were not produced.” The bullion coins are made available through authorized dealers and not directly through the Mint.
Mineweb has more details:
“[Director of the U.S. Mint Edmond] Moy told the subcommittee uncertainty surrounding traditional investments and inflation concerns ‘drove investor demand for bullion precious metals in all forms to exceptional highs in 2009.’
“As a result, the agency did not mint and issue what Moy called ‘the very popular’ American Eagle One-Ounce Proof Gold and One-Ounce Proof Silver Coins in 2009.
“Although bullion coin demand seemed to be subsiding earlier this year, in May, the Mint experienced an increase in orders for silver bullion coins to over 3.6 million coins. In fiscal year 2009, bullion coins sales reached an all-time high of $1.7 billion, nearly 80% above the sales of fiscal year 2008.”
The Chairman of the Subcommittee, Congressman Melvin Watt (D-NC), is interested in diverting some of the precious metal coin blanks allocated for bullion coin production to supplement needs for numismatic coin production.
Separately, Director Moy also griped that, “with regard to the one-cent and five-cent coins, never before has the nation spent more to mint and issue a circulating coin than its legal value. This problem is needlessly wasting hundreds of millions of dollars.”
Dr. Ron Paul (R-TX) disagrees with the Watt and Moy perspectives because the Mint should not be gaining any additional power to decide the metal makeup of coins in circulation. Here is his language verbatim, again from the Mineweb article:
“We could not maintain the gold standard nor the silver standard. We could not maintain the copper standard, and now we cannot even maintain the zinc standard,” Paul noted. “Paper money inevitably breeds inflation and destroys the value of currency.”
Moy brings up a valid point. The US is spending more to produce pennies and nickels than they are worth. However, Dr. Paul recognizes the greater problem is the eroding value of US legal tender, one that isn’t showing any signs of abating. You can read more details in Mineweb coverage of bullion and coin dealers calling for an investigation into the US coin blanks supply.
Best,
Rocky Vega,
The Daily Reckoning
Rocky Vega
Rocky Vega is publisher of Agora Financial International, where he advances the growth of Agora Financial publishing enterprises outside of the US. Previously, he was publisher of The Daily Reckoning, and founding publisher of both UrbanTurf and RFID Update -- which he ran from Brazil, Chile, and Puerto Rico -- as well as associate publisher of FierceFinance. Rocky has an honors MS from the Stockholm School of Economics and an honors BA from Harvard University, where he served on the board of directors for Let’s Go Publications, Harvard Student Agencies, and The Harvard Advocate.
The Daily Reckoning is your premier source for making sense of the news Washington and Wall Street generate. Each business day, The Daily Reckoning calls on its stable of world-class writers and thinkers to show you how to get ahead.
Start your 100% FREE subscription to The Daily Reckoning today and you’ll get a free research report, “How to Survive the Fall of Social Security.” Simply enter your email address below to get your free report and join over 495,000 worldwide Daily Reckoning subscribers!
We Respect Your Privacy and We will
Never Share or Sell Your Email Address
Then maintain the paper standard…???
“Then maintain the paper standard…???” Na its all going to be switched to plastic and virtual banks. There will be nothing you can actually hold in your hands.
Ron Paul in 2012 or sooner!
Ron Paul is the only politician I can support. The neocons think less of him that they do liberals. He must be doing something right.
This country has a disease. Ron Paul is the cure.
The crows are cackling from the ramparts.
I am actually trying to a get a movement going to have the legal tender modernization act in place. I think you should read it and I think it is a good soluntion to the problem. There is a link to it on my petition site or it is also in my petition letter. Thank you! http://www.change.org/petitions/stop-the-production-of-costlyuseless-pennies