Ron Paul: We Cannot Even Maintain the Zinc Standard
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.