POLL: Are you interested in the remaining U.S. Mint special collectibles?

Not including the regular issues that will be sold by the U.S. Mint, the items left on their schedule is the American Liberty Four Silver Medal Set and the American Palladium Eagle.

American Liberty Four Silver Medal Set will be on sale on October 19, 2017 at Noon ET

I previously discussed the Palladium Eagle. The American Liberty Four Silver Medal Set are four silver medals featuring the gold 225th Anniversary American Liberty Gold design struck in silver and without a denomination. Each medal will contain one troy ounce of silver and consist of one medal from each of the active mints with different finishes:

  • Philadelphia Reverse Proof
  • San Francisco Proof
  • West Point Enhanced Uncirculated
  • Denver Uncirculated

Although the price has not been announced, given the current 225th Anniversary American Liberty Silver Medal $59.95, it is within reason to predict that the four medal silver set with special packaging will cost around $250 (plus-or-minus 15-percent).

The poll question of the day is are you going to buy these items?
 

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Image courtesy of the U.S. Mint.

Palladium Eagles are coming

American Palladium Eagle mockup as presented to the Citizens Coinage Advisory Committee

According to reporting by Coin World, the American Palladium Eagles will be released by the U.S. Mint sometime in September.

As part of the lame duck session following the 2010 midterm elections, Congress passed the American Eagle Palladium Bullion Coin Act of 2010 (Pub. L. 111-303) telling the U.S. Mint strike one-ounce .9995 fine palladium bullion coins as part of the American Eagle Bullion Program. The coin will have a $25 face value and require that “the obverse shall bear a high-relief likeness of the ‘Winged Liberty’ design used on the obverse of the so-called ‘Mercury dime’” making it yet another bullion coin that will feature a design from the early 20th century. For the reverse, the law says that the coin “shall bear a high-relief version of the reverse design of the 1907 American Institute of Architects medal.” Both the Mercury Dime and 1907 AIA medal designed by Adolph A. Weinman, whose Walking Liberty design is used on the American Silver Eagle coins.

The catch to the law was that the U.S. Mint was to perform a feasibility study to determine if there will be market demand. Although the study showed that there is a market for palladium coins, it was not overwhelming. Based on the wording of the law, the U.S. Mint opted not to strike palladium coins.

This did not sit well with Rep. Dennis “Denny” Rehberg (R), Montana’s only member of the House of Representatives since the primary source of palladium in the United States is the Stillwater Mine in Montana. The mines, which also provides the U.S. supply of platinum group metals (PGM), is owned and operated by the Stillwater Mining Company. Rehberg added an amendment to the Fixing America’s Surface Transportation Act or the FAST Act (Public Law 114-94, 129 STAT. 1875, see Title LXXXIII, Sect. 73001) that took away the U.S. Mint’s option and added the word “shall.”

The FAST Act was also the law where the law was changed to allow the U.S. Mint to use better than 90-percent gold and silver in commemorative coins by changing the wording to say “not less than 90 percent….”

Palladium Eagle coins may have roughly the same impact on the market as the Platinum eagles since palladium is about $100 less expensive than platinum, 69-percent of the price of gold, but 53-times the price of silver. Based on the way the U.S. Mint prices precious metal products, the Palladium Eagle should cost within $100 of the platinum coins.

Precious Metals Price Snapshot as of August 4, 2017
(This is a static chart—it does not update)

Although palladium is only the fourth metal to have an official ISO currency code (XPD), it is not readily thought of as a precious metal that is used to hedge against financial disaster. Gold (XAU) and silver (XAG) are usually thought of first. Sometimes, platinum (XPT) is part of the discussion, but not as frequently as gold or silver.

Palladium does have industrial uses. Because of its ability to absorb hydrogen and compounds with hydrogen, like hydrocarbon, its major use is in catalytic converters used in every gasoline powered vehicle. It is also seen as a key element in the potential of cold fusion because of its ability to absorb hydrogen.

It is likely the American Palladium Eagle will be as popular as the Platinum Eagle. Maybe the U.S. Mint will sell more of these coins because they will be slightly cheaper and have a design more appealing to collectors, but neither of these coins will approach the sales totals of the gold or silver version of the American Eagle coins.

It is not a coin I am likely to collect. However, I will probably purchase the 2017 coin to have one from the first year of issue just as I did with the 2007 American Buffalo 24-karat Gold Proof coin.

Palladium Eagle images courtesy of the U.S. Mint via Coin World.

December 2015 Numismatic Legislation

Congress ended the calendar year with a proverbial bang. Aside from actually passing a budget, they passed a comprehensive transportation bill that not only has the possibility of raising our infrastructure grade from a D– to a D (hey… it’s an improvement), but in a few short words will have a big impact on the U.S. Mint.

H.R. 22: Fixing America’s Surface Transportation Act
Sponsor: Sen. Rodney Davis (R-IL)
• Introduced: January 6, 2015
• Passed House of Representatives on January 6, 2015
• Passed Senate with amendments on July 30, 2015
• Conference report presented to Senate on November 5, 2015
• Conference committee convened November 18, 2015
• Conference report agreed on by the House and Senate on December 3, 2015
• Signed by the President on December 4, 2015 to become Public Law 114-94

Read the details of this law at https://www.govtrack.us/congress/bills/114/hr22

If you want to read my analysis of the impact to the U.S. Mint from this law, see the following four-part series:

  1. Transportation drives numismatic changes
  2. Now with more silver
  3. Palladium arcadium
  4. Transportation silver eagles

Palladium arcadium

Our final saga of How the Congress Turns (our stomachs), we will finish looking at the technical changes added to the “Fixing America’s Surface Transportation Act” or the “FAST Act” (H.R. 22) will impact collectors. Back to Title LXXIII, Section 73001 we find:

Title 31, United States Code, is amended —

(1) in section 5112 —
. . .
(C) in subsection (v) —
(i) in paragraph (1), by striking Subject to and all that follows through the Secretary shall and inserting The Secretary shall;
(ii) in paragraph (2)(A), by striking The Secretary and inserting To the greatest extent possible, the Secretary;
(iii) in paragraph (5), by inserting after may issue the following: collectible versions of; and
(iv) by striking paragraph (8);

Remembering that technical changes instructs the Office of the Law Revision Counsel how to correct the law, to understand this change we have to look at the law (31 U.S.C. § 5112(v)) to find that this is a correction to the law about minting palladium bullion coins.

Palladium Nugget

Palladium Nugget

The American Eagle Palladium Bullion Coin Act (Pub. L. 111-303) originally requested that the secretary study the feasibility of striking palladium coins and mint them if the study shows a market demand. Although the study showed that there is a market, it was not overwhelming. Based on the wording of the law, the U.S. Mint opted not to strike palladium coins.

The very first edit is to take away the wording that says to do the study and strike if there is a market to saying that palladium coins will be struck using as much palladium as can be found from United States sources. If there is a higher demand, the U.S. Mint can use sources outside of the U.S. to purchase palladium.

Finally, the last correction not only requires the U.S. Mint to strike palladium bullion coins but to also create collector versions.


 
Palladium is a soft silvery metal like platinum. It is lighter than platinum (atomic number 46 versus 78) and similar to silver (atomic number 47). It has similar uses as silver including in electronics, compounded catalysts, jewelry, and coins. Palladium commands a higher price than silver because it is less available but less expensive than platinum, which is more difficult to mine.

The primary source of palladium in the United States is the Stillwater Mine in Montana. The mines, which also provides the U.S. supply of platinum group metals (PGM), is owned and operated by the Stillwater Mining Company. The American Eagle Palladium Bullion Coin Act was introduced by Rep. Dennis “Denny” Rehberg (R), Montana’s only member in the House of Representatives.

The final entry will discuss how the transportation bill and bad timing will affect American Silver Eagle collectors.

Palladium nugget image courtesy of Wikimedia Commons.
Other images courtesy of the Northwest Territory Mint.

New bullion benchmark begins new era

Last day at the London Fix market

Last day at the London Fix market

Friday was an important day for bullion buyers and buyers of collector coins whose prices are strongly tied to the price of gold. It was the day that the London Bullion Market Association (LBMA) launched its new electronic-based gold benchmark system, London Gold Price, replacing the century old London Gold Fix. It ends an era when the bullion traders and refiners created a market to set the price in 1919. From the beginning, the market was hosted by Nathan Mayer Rothschild & Sons by the members of The London Gold Market Fixing Ltd. The market was moved to Barclays when NM Rothschild exited the bullion market in 2004.

The move to an electronic system followed the revelation that in June 2012 an employee of Barclays Bank manipulated the gold fixing process. Unfortunately, it was not an isolated incident. When Barclays was investigated, it was revealed that there were such system and control failures that members of the bank had been manipulating gold prices since they started hosting the market. In May 2014, the Financial Control Authority, the British equivalent Commodity Futures Trading Commission, fined Barclays £26 million for not properly managing the market.

What made the old system susceptible to manipulation was that it was still widely a human controlled process with bidding arbitrarily controlled behind then scenes. Even as the market moved toward a more technological approach, it was as if the technology was being used as the proxy with a human still doing the arbitration. Think of it as if the computers would provide the bidding but there was still an human auctioneer managing the bids.

The new market is electronically run and monitored in cooperation with the LBMA. Rather than a single source being responsible for all of the benchmark prices, the LBMA Gold price auctions are held twice daily by the ICE Benchmark Administration (IBA) at 10:30 AM and 3:00 PM London time in U.S. dollars. IBA is an independent subsidiary of the Intercontinental Exchange (ICE) responsible for the end-to-end administration of benchmark prices. They do not buy or sell commodities but manage the transactions and setting rates based on market forces.

To further diversify the market, the LBMA Silver price auction is operated by the CME Group, a Chicago-based market maker, and administered by Thompson Reuters. The London Metals Exchange administers the platinum and palladium price market. Silver auctions are held once per day at noon London time.

Proponents of the new market system touts its stronger oversight and detailed audit trail capabilities to support the new regulations as making this market more trustworthy than the previous system. Detractors wonder if the new electronic system could create market inequities that was seen in U.S. markets with programmed trading.

News reports suggest that the new market operated without problems on its opening day. In fact, the market saw a rise in all metals by the afternoon auction.

Snapshot of the bullion market on March 20, 2015 (static image, will not update)

Snapshot of the bullion market on March 20, 2015 (static image, will not update)

Since the U.S. Mint sets its price based on the London market, they sent the following note to Authorized Purchases of bullion products on March 18, 2015:

This is to inform you that on Friday, March 20, 2015 the U.S. Mint will start using the LBMA Gold Price (PM) to price and settle all of its gold bullion coin orders. The new gold price replaces the London Gold Fix and will be managed by the ICE Benchmark Administration (IBA). We do not anticipate any transition issues. Moving forward all gold bullion transactions with the United States Mint will utilize the new LBMA Gold Price (PM) in place of the (PM) London Gold Fix.

While the move will make the markets more transparent and possibly open it to more participants, it is uncertain how this will affect the price of metals in the long term. For that, my crystal ball does not compute!

London Metals Exchange market images courtesy of Mining.com
London gold price snapshot courtesy of Kitco.

Assessing the Lame Duck

On November 6, two weeks ago, the United States held an election and it resulted in basically no change in the political structure. President Barack Obama was re-elected, the House of Representatives is still being lead by the Republicans and the Senate by the Democrats. Leadership in both chambers should not change.

For numismatists, there will be one change in the 113th Congress with the retirement of Ron Paul (R-TX) who is currently Chairman of the Financial Services Subcommittee on Domestic Monetary Policy and Technology, the subcommittee that oversees the U.S. Mint. There will also be a change on the leadership of the Financial Services Committee itself with the retirement of Barney Frank (D-MA), the Democrats will have to select a ranking member. There is no speculation as to who will replace these two retiring representatives.

In retrospect, after worrying about Paul becoming chairman of this subcommittee, the Financial Services Committee was able to maneuver around Paul’s usual intransigence by taking on legislation at the committee level rather than rely on the vetting of the subcommittee. In fact, because of Paul’s attempted run for the presidency, his absence made it easy for the committee to bypass his subcommittee.

There is still work for the 112th congress to do aside from the “fiscal cliff” and sequestration. H.R. 5977, the Collectible Coin Protection Act, still needs to be acted upon. The Collectible Coin Protection Act will allow collectors, dealers, and grading services to bring legal actions that are much more effective, with much stronger remedies than previously existed. It will allow those harmed to work with the Justice Department to bring criminal actions, where appropriate.

Now that congress is in their lame duck session, the only way H.R. 5977 can become law, is to have it considered under suspension of the rules and force an up or down vote. In order for the bill to be considered under suspension of the rules will be to have members of congress co-sponsor the legislation. At the time of this writing, there are 11 co-sponsors from both sides of the aisle. I urge all of my readers to support H.R. 5977 by asking their representative to co-sponsor H.R. 5977. If you can help, read the information I wrote for the posting “ANACS Revelation Shows We Continue to Have Counterfeit Problems” that describes how to contact your member of congress.

Bibiana Boerio was nominate to be the Director of the U.S. Mint.

Another bit of business left for the lame duck Senate is the nomination of Bibiana Boerio to be the 39th Director of the United States Mint. Although there has been no report of problems with her nomination, the partisanship battles in the Senate could cause a senator to threaten a filibuster to put her confirmation on hold. If Boerio is not confirmed by the final adjournment of the 112th Congress, President Obama will have to resubmit her nomination to the 113th Congress after it is seated on January 3rd.

An issue that will probably be deferred to the 113th congress will be the report to congress that is required under the Coin Modernization, Oversight, and Continuity Act of 2010, (Public Law No: 111-302 [Text] [PDF]). The law requires the U.S. Mint to produce a report about the metals used for coinage and alternatives two years from enactment. Since the law was signed by the president on December 14, 2010, the U.S. Mint is required to submit their report by December 14, 2012.

Adolph A. Weinman’s Winged Liberty Head “Mercury” Dime effigy to be used on the new palladium bullion coin.

Another issue that will also probably be deferred to the 113th congress will be the study of the viability of issuing palladium bullion coins. Under the American Eagle Palladium Bullion Coin Act of 2010 (Public Law No: 111-303 [Text] [PDF]), the U.S. Mint is supposed to study whether it is viable to produce palladium coins as specified under the Act. That report is also due to congress on December 14, 2012.

Although there is no report from the U.S. Mint as to the status of either report, it would be reasonably certain that the U.S. Mint will submit both reports by December 14. However, it would also be reasonably certain that the House Financial Services Subcommittee on Domestic Monetary Policy and Technology will leave it for the next congress’s agenda.

Congressional Watch: Two Coin-Related Bills Passed

In a rare move of bipartisanship, the Senate passed two bills coin-related bills by Unanimous Consent on Tuesday that were previously passed by the House of Representatives. Bills passed by Unanimous Consent are agree upon by both party’s leaders and a voice vote is taken on the floor as a formality. No record of the vote is taken.

The first bill that passed is the Coin Modernization, Oversight, and Continuity Act of 2010 (H.R.6166). Introduced by Melvin Watt (D-NC), Chairman of the Subcommittee on Domestic Monetary Policy and Technology following the hearing of “The State of U.S. Coins and Currency” held on July 20, 2010. As passed, the law requires the U.S. Mint to research minting metals used for coining money and to report to congress what changes should be made to prevent coin production from costing more than its face value. One forward thinking aspect of the law is that it requires to U.S. Mint to tie the research to actual production numbers, as opposed to hypothetical figures. The U.S. Mint has two years to complete the research and report back to the subcommittee.

H.R.6166 also includes two technical changes to the law that will affect collectors. One change allows the U.S. Mint to change size of the planchet used for the National Park Bullion Program from 3-inches to a size between 2.5 and 3-inches. This will help the U.S. Mint deal with technical issues that has delayed the issue of the five ounce bullion coins.

For fans of the American Eagle proof programs, a wording change in the law allows the U.S. Mint to divert gold and silver to meet the demand for numismatic collectible coins. The change does not set minimum or maximum limits of coins struck but it will prevent future gaps in our collections.

Speaking of the American Eagle program, the Senate also passed the American Eagle Palladium Bullion Coin Act of 2010 (H.R.6166). The bill was introduced by Rep. Dennis Rehberg (R-MT) in support of the primary support of palladium mining in Montana where 95-percent of all United States palladium deposits are. The new law will add a one-ounce .9995 fine palladium bullion coin to the American Eagle Bullion Program. The coin will have a $25 face value and require that “the obverse shall bear a high-relief likeness of the ‘Winged Liberty’ design used on the obverse of the so-called ‘Mercury dime’” making it yet another bullion coin that will feature a design from the early 20th century. For the reverse, the law says that the coin “shall bear a high-relief version of the reverse design of the 1907 American Institute of Architects medal.” Both the Mercury Dime and 1907 AIA medal were design by Adolph A. Weinman, whose Walking Liberty design is used on the American Silver Eagle coins.

When the same bill passes both houses of congress, the bill is formally enrolled by being printed in the Congressional Record and printed on archival paper before being sent to the White House for the president’s signature. President Obama is expected to sign both bills when the paperwork makes it way down Pennsylvania Avenue.

1938 Mercury Dime image is owned by the author.
Image of the 1907 AIA Medal copied from Architecture: celebrating the past, designing the future by Nancy B. Solomon.

Lame Duck Prognostications

Recently, I met someone familiar with the internal workings of congress. After talking about the election, I asked about the coin-related bills that were still in congress waiting for action in the lame duck session. I passed along the link to my post about Coin Legislation in the 111th Congress and asked if any of the bills passed the House of Representatives and in a Senate committee had the chance of being voted on. I was given the following report:

Bills Passed by the House and Referred to the Senate
Three bills have passed the House and sent to the Senate for their action. These bills are currently waiting for action in the Committee on Banking, Housing, and Urban Affairs. All three bills are expected to pass with the following modifications:

  1. Mother’s Day Centennial Commemorative Coin Act will pass without modification.
  2. American Eagle Palladium Bullion Coin Act of 2010 will be modified to allow the U.S. Mint to begin striking palladium coins in 2012.
  3. Coin Modernization, Oversight, and Continuity Act of 2010 will pass with the possible modification that the report is due to congress within 15 days of the end of the 2012 fiscal year.

Bills that are modified are required to be reconciled by a conference committee or just accepted by the House. It is expected that the House will accept the modifications by unanimous consent and will be signed by the president.

Bills Introduced in the House of Representatives
There are 13 commemorative coin bills waiting for action in the House Subcommittee on Domestic Monetary Policy and Technology. None of the bills are expected to receive attention and will “die in committee” at the adjournment of the 111th Congress.

In addition to the commemorative bills, there are three other bills related to collectors and investors that are likely to see some action:

  1. Free Competition in Currency Act of 2009 was introduced by Ron Paul (R-TX) and referred to the Subcommittee on Commercial and Administrative Law. The basic provisions of this bill calls for the elimination of all taxes on the sale and transfer of bullion and coins. It also changes the law to allow precious metals to be used as coins or a medium of exchange. As the future chairman of the Domestic Monetary Policy and Technology Subcommittee, Paul may not push this bill. Rather, he will wait until the 112th congress to have it assigned to his subcommittee so he can control the outcome. This bill is unlikely to pass in the Democratic-controlled lame duck congress.
  2. Coin and Precious Metal Disclosure Act was introduced by Anthony D. Weiner (D-NY) and referred to the House Committee on Energy and Commerce. This bill is referred to as the Goldline Act since Rep. Weiner has targeted Goldline in his commentary regarding this bill. Because of the controversial nature of this bill and the potential for side effects that could hurt other industries, it is unlikely that this bill will be brought up again in committee.
  3. Small Business Paperwork Mandate Elimination Act was introduced by Dan Lungren (R-CA) and referred to the House Committee on Ways and Means. This is the bill that will remove the requirement to report all goods and services purchased in excess of $600 with an IRS 1099 form beginning in 2012 that was part of the health care reform legislation. Almost everyone in almost every industry is in favor of this bill’s passage. Sen. Mike Johanns (R-NE) has introduced S.3578 as a companion bill in the Senate. Although this bill has bipartisan support and should pass with few issues, there is a concern that more conservative members will create a problem when demanding that revenues lost by this measure be made up elsewhere. Revenue enhancements (read: taxes) will be deferred to the 112th congress allowing this bill to pass. The president is expected to sign this bill into law.

Bills Introduced in the Senate
There are 11 commemorative coin bills waiting for action in the Senate Committee on Banking, Housing, and Urban Affairs. Only the Mother’s Day Centennial Commemorative Coin Act introduced by John D. Rockefeller (D-WV) as S.1012 may receive some consideration. Sources report that this may be done as a favor by outgoing Chairman Christopher Dodd (D-CT) for Sen. Rockefeller. If this bill is voted on by the Senate, it is unlikely to be considered in the House.

No further bills are expected to be introduced.

This will end the 111th Congress. It will certainly make for an interesting study for future historians. But for today, we can only wonder what the 112th Congress will have in store for collectors.

Palladium Eagle May Be Coming

In a rare swift move by the House of Representatives, H.R. 6166, American Eagle Palladium Bullion Coin Act of 2010, was introduced, discharged from the House Committee on Financial Services, considered on the floor, and passed without objection. With its passage in the House, the bill was Engrossed and sent to the Senate for consideration.

In the Senate, the bill was read twice and referred to the Committee on Banking, Housing, and Urban Affairs. Congress has adjourned for the election season.

H.R. 6166 was introduced by Rep. Denny Rehberg (R-MT), the representative at-large from Montana. Montana is home of the Stillwater Mining Company, (NYSE: SWC) the only producer of palladium in the United States. Stillwater also owns platinum mines that supplies the U.S. Mint with platinum for American Eagle Bullion coins. With this bill, Rehberg adds his name to a long line of congressmen who have introduced bills to protect their state’s mining interests by using the U.S. Mint as a primary purchaser.

In the world of metal investing, palladium is behind gold, silver, and platinum in demand. Palladium is not as popular in the United States as it is in other countries. Palladium sells better than silver in Canada and Europe. It is rarer than gold, but a little more abundant than platinum but has the silky look of platinum while being almost as ductile as silver. Artists in Europe and Asia are beginning to use palladium instead of platinum for their higher-end designs.

Since the price of palladium is less than the price of gold and platinum, it is possible that investors could consider palladium as part of a diverse portfolio. Those who believe in “end of the world” scenarios will not be interested because the secondary market is not as strong as it is for gold.

[Most Recent Quotes from www.kitco.com]

The bill requires that “the obverse shall bear a high-relief likeness of the ‘Winged Liberty’ design used on the obverse of the so-called ‘Mercury dime’” making it yet another bullion coins using a design from the early 20th century. For the reverse, the law says that it “shall bear a high-relief version of the reverse design of the 1907 American Institute of Architects medal.” Both the Mercury Dime and 1907 AIA medal were design by Adolph A. Weinman, whose Walking Liberty design is used on the American Silver Eagle coin.

In other words, congress saying that it does not trust the U.S. Mint to create a design suitable for this coin. While some might have an issue with the design of recent coins, it would be nice to unleash the creativity of the U.S. Mint’s artists and allow them to make a design to represent Liberty. Maybe if the artists were less constrained, they can use their talents.

Another provision of the bill is that aside from using palladium from U.S. sources, it allows the U.S. Mint to purchase palladium from other sources. The bill also makes a distinction between proof and bullion coins allowing the U.S. Mint consider minting proofs to meet collector demand… or not depending on whether there is a demand and a supply to meet the demand. In other words, it will be up to the government lawyers to figure out what is meant by the wording in the bill!

If the bill passes the Senate and signed by the President, palladium bullion coins will not be issued until 2012 because it is too late in the year for the U.S. Mint to plan to issue this coin.

1938 Mercury Dime image is owned by the author.
Image of the 1907 AIA Medal copied from Architecture: celebrating the past, designing the future by Nancy B. Solomon.

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