The US mint does not distribute its bullion products directly to the public, but rather uses a network of 11 “Primary Distributors” who purchase the coins from the US Mint at $9.75 over the spot price of silver, and then in turn mostly wholesale these out to retail dealers. Few of these Primary Distributors have retail facilities.

Here is a list of the Primary Distributors:

• A-Mark Precious Metals
• Coins ‘N Things Inc.
• MTB
• Scotia Mocatta
• Dillon Gage of Dallas
• Prudential Securities Inc.
• The Gold Center
• American Precious Metals Exchange, Inc. (APMEX)
• Commerzbank International (Luxembourg)
• Deutsche Bank A.G. (Germany)
• Tanaka Kikinzoku Kogyo K.K. (Japan)

As part of the December 1st announcement, the Mint surprisingly drastically reduced the mintage’s for the much anticipated 5 oz  America the Beautiful Bullion coins from an anticipated 100,000 coin  (for each of the 5 designs this year), to a mere 33,000.

After the announcement, APMEX decided to offer the 2010 5 coin set to customers and allow them to pre-order the coins from their website. Apmex is one of the few Primary Distributors that maintains a retail presence  through their website (which is excellent by the way). The 5 coin set was being offered at $1,395.

Obviously with such limited supplies, the large (3 inches in diameter) bullion coins were expected to be in hot demand .

However within hours of this pre-launch offering, complaints started to be registered with the US Mint because Apmex, responding to the anticipated demand and low mintages, had placed a $130.00 premium per coin on the set.

Apmex customers didn’t seem to mind the hefty premiums too much because within 19 hours after the posted  pre-launch offer, they had sold 1000 sets. But the US Mint did mind. In fact they halted the release of the new 5 oz coins to review the situation.

In a statement released by the US Mint, and posted on CoinUpdate the Mint made the following statements:

The United States Mint is aware of reports of concern by many consumers about the high prices and premiums being charged in the market for the newly released America the Beautiful Silver Bullion Coins.  We are evaluating these reports and collecting information in order to assess the appropriate course of action to make certain that our customers are best served in the distribution of the coins, and to ensure the widest possible availability, accessibility and affordability of these coins.

The same day, the US Mint sent the following memo to primary distributors:

The United States Mint issued a press release on December 1, 2010, announcing the December 6, 2010, availability of the 2010 America the Beautiful Ounce Silver Bullion Coins through the established network of Authorized Purchasers who, in turn, would make them available on the secondary market.   Due to the limited availability of the 2010 America the Beautiful Silver Bullion Coin coins, public anticipation has been extremely strong.  Since the press release was issued, the United States Mint has received numerous calls and inquiries from the public regarding premiums being charged for these coins.  As a result, we are delaying the launch of this program.  No America the Beautiful Ounce Silver Bullion Coins orders will be confirmed today.

New Terms and Conditions for Primary Distributors

1.  Authorized Purchasers shall make available for sale to the public all 2010 America the Beautiful Silver Bullion Coins that they acquire.  The intention of this condition is to ensure that all 2010 America the Beautiful Silver Bullion Coins minted and issued by the United States Mint are sold to the public.

2.  Authorized Purchasers may charge to their customers a price no higher than ten percent above the price at which the Authorized Purchasers acquire 2010 America the Beautiful Silver Bullion Coins from the United States Mint.  Authorized Purchasers may charge their customers a reasonable shipping and handling fee; however, Authorized Purchasers may not charge any other fee, premium, or other expense to their customers to circumvent this ten-percent markup limitation.  The intention of this condition is to ensure that members of the public can obtain these coins at a reasonable and affordable purchase price.

3.  Authorized Purchasers must establish and enforce an order limit of one coin of each design for each household.  A household is defined as all persons of a family, or living as a family, at a single mailing address.  The intention of this condition is to ensure the broadest and fairest public accessibility to 2010 America the Beautiful Silver Bullion Coins, which are limited-mintage United States Mint products.

4.  Authorized Purchasers may not sell, either directly or indirectly, 2010 America the Beautiful Silver Bullion Coins to their officers or employees.  The intention of this condition is to ensure that 2010 America the Beautiful Silver Bullion Coins are available to the public and that Authorized Purchaser officers and employees do not have an unfair advantage over members of the public.

Bottom Line: The New America the Beautiful 5 oz Bullion coins are supposed to be released today, December 10th. The Primary Distributors have been restricted to charge no more than a 10% premium for the coins. Those Primary Distributors who do not agree with the New Terms and Conditions issued by the US Mint and/or do not purchase their allocation, with have the coins allocated to them re-distributed to other Primary Distributor no latter than December 20th.

All in all an interesting situation, and one that raises many questions that I am sure will be discussed for months to come. We will be doing a follow-up article on this in the near future.

Related posts:

1. US Mint to Start production of 5 oz Bullion Coin with “America the Beautiful Quarter” Designs
2. US Mint Unveils First Five Coins in America the Beautiful Quarters Program
3. The Story of America’s Most Beautiful Coin

The U.S. Mint’s Dec. 1 announcement that it is placing tighter than expected mintage limits on the new 2010 America the Beautiful 5-ounce .999 fine silver bullion quarter dollars may result in the creation of some new modern rarities.

The large (3 inches in diameter) and undoubtedly impressive coins will surely be in hot demand, especially with such limited supplies.

The bullion issues are made available to authorized dealers who then resell the coins to the market. The mintages are strictly limited to not more than 33,000 of each design – a sharp decline from the 100,000 previously announced. The Mint will charge its distributors $9.75 per coin above the price of silver.

Uncirculated examples will be offered for sale directly to collectors during the first quarter of 2011. With mintage limits of 27,000 per coin, the 2010 issues seem destined to be modern classics, as the coins relate to circulating coins, are likely affordable to many collectors, and are simply big and flashy.

Of course, the long-term demand is largely dependent on whether collectors take to the large silver coins and seek to build sets.

Time will tell about the long-term popularity of these coins, but in the meantime, the lower-than-expected mintages should provide great action for speculators and spectators alike.

The American Eagle silver bullion coins provide a comparison point, having as key to the series the Proof 1995-W American Eagle with a mintage of 30,125 pieces. Examples of that issue regularly sell for $3,000.

Collectors’ difficulties in acquiring Proof 2010-W American Eagle silver bullion coins, with strict 100-coin per household ordering limits, have already created a robust aftermarket for these coins.

On eBay, ready-to-ship examples have been regularly selling for $55.

At least one major market-maker is offering $49 a coin for 100-coin confirmed orders of Proof 2010-W American Eagle silver coins. At an issue price of $45.95, this allows a profit of nearly $300 for dealers, and provides the market-maker a large group of coins to market during the holidays.

Related posts:

1. United States Mint Moves Forward to Create a Modern Ultra-High Relief Double Eagle Gold Coin
2. Coin Rarities & Related Topics: Collecting Modern Coins
3. Mintages not always good clue to rarity of different coins

While bullion markets continue their wild fluctuations, demand for American Eagle 1-ounce silver bullion coins remains vibrant.

In October, the United States Mint increased the premium charged to its authorized purchasers for American Eagle silver bullion coins from $1.50 to $2 per coin. The premium was increased in 2009 from $1.40 to $1.50 per coin and in 2008 from $1.25 to $1.40 per coin.

While Proof American Eagle silver coins may be purchased directly from the Mint, the Mint sells the silver bullion coins only to dealers in minimum 25,000-coin shipments.

However, the premium increase seems to have had no noticeable impact on demand, as the Mint has sold more than 30 million silver American Eagles thus far in 2010, eclipsing 2009’s sales record of 28,766,500 pieces.

Surely silver hitting 30-year highs including a flirtation with $29 earlier in November has helped keep demand for the attractive and easily portable silver American Eagles robust. Demand for the coins throughout the holiday gift-giving season will mean that 2010 sales figures will continue to climb.

Proof 2010-W American Eagle silver coins went on sale Nov. 19, priced at $45.95, with a 100-coin household limit.

The Mint’s Web site already warns customers of possible ordering delays on Nov. 19, due to the deluge of customers who are likely to order in light of “unusually high demand.”

Until Proof 2010-W coins enter the marketplace, wholesalers are paying up to $57 for earlier Proof American Eagle silver coins in original Mint packaging.

Grading service population reports show that 2010 American Eagle silver bullion coins are extremely well-produced. Of the 44,160 graded by Professional Coin Grading Service so far this year, a whopping 36,470 pieces have received Mint State 70 grades. Currently PCGS MS-70 2010 silver American Eagles are selling in online auctions for $60 to $100, while certified MS-69 representatives can be found for around $35 and uncertified examples are seen at $30.

In large quantities, 2010 American Eagle silver bullion coins are available from wholesale dealers at silver spot price plus $2.60 per coin.

Related posts:

1. American Silver Eagle Supply and Demand
2. Rationing of American Gold and Silver Eagle Bullion Coins A Thing of the Past. Again.
3. 2008 American Eagle Silver Uncirculated Coins Available March 17

Gold’s holding pattern is a gift to bargain hunters

Gold prices stood near the $1,350 range today on news that China’s central bank acted to slow inflation but fell short of raising interest rates outright. Gold’s holding pattern is a gift to bargain hunters because gold “should continue to remain well supported too, both by the growing debt crisis in the euro-zone peripherals, which could spill over to other countries at any time, and the expansion of liquidity on the back of renewed quantitative easing of U.S. monetary policy,” Commerzbank analysts said. Richcomm Global Services’ Pradeep Unni agreed, saying a weak dollar and a firmer euro “will continue to provide a bullish bias to the metal.”

The trend is “back up again”

Gold prices surged back Thursday as the euro rose against the dollar on optimism of a bailout for Ireland. “Having held $1,330, and with the dollar a bit weaker … we are just following the trend back up again,” the Bank of Nova Scotia’s Simon Weeks said. VTB Capital’s Andrey Kryuchenkov noted: “Should fear in the eurozone escalate, gold would draw fresh support from risk-averse buyers similar to what happened earlier this summer when investors scrambled for the safe-haven asset on fears of sovereign default.” Investors also are watching China for potential news of an interest-rate rise, which would only create a buying opportunity for bargain hunters.

Billionaire George Soros tips his hat to gold

With quantitative easing going full-steam ahead and U.S. interest rates low for the foreseeable future, billionaire investor George Soros said the precious metal still has plenty of kick to it. “The conditions for gold are pretty perfect,” he said Monday. Soros also said the present world order is on the brink of breaking down. “There is now a rapid decline of the United States and a rapid rise of China,” he said. “It is happening very quickly. … If they persist in their present course, it will lead to conflict,” he said, adding that China’s neighbors are already getting nervous about its rising global influence. Read more

Inflation surfaces at Walmart, not in feds’ data

Offering up its statistics Wednesday, the Labor Department said the core consumer price index, an inflation indicator that excludes food and energy prices, was unchanged in October. However, a new pricing survey of 86 products sold there – mostly everyday items like food and detergent – showed a “meaningful” 0.6 percent price increase in just the past two months, according to MKM Partners. At that rate, prices would be close to 4 percent higher a year from now, double the Federal Reserve’s mandate. “I suspect that when [Fed Chairman Ben Bernanke] thinks about reflation, he has a difficult time seeing any other asset besides real estate,” said Jim Iuorio of TJM Institutional Services. “Somehow the Fed thinks that if it’s not ‘wage-driven’ inflation then it is somehow unimportant. It’s not unimportant to people who see everything they own (homes) going down in value and everything they need (food and energy) going up in price.” Read more

The Fed sticks to its quantitative-easing guns

Ben Bernanke had to defend the Fed’s actions on Capitol Hill, where he briefed skeptical lawmakers on the QE plan’s merits on Wednesday, and some of his colleagues said the bank is likely to follow through on its entire $600 billion bond-buying program, citing weak economic data. “It looks like we’ll be purchasing at this pace through the end of the second quarter to add up to $600 billion,” St. Louis Federal Reserve Bank President James Bullard said.

The Fed’s QE plan came under fire this week from a group of prominent Republican-leaning economists and other experts. “The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment,” they said in an open letter published in The Wall Street Journal and The New York Times. Top Republican lawmakers also sent Bernanke a letter warning that QE “introduces significant uncertainty regarding the future strength of the dollar and could result both in hard-to-control, long-term inflation and potentially generate artificial asset bubbles that could cause further economic disruptions.” Read more

Chinese march toward gold continues

“China is considering raising its gold reserves, a move which would push up gold prices in the future, a person providing consulting services to the Chinese government said” in a Chinese daily-newspaper article. “The source told the 21st Century Business Herald [that] China may gradually increase gold holdings as it is not possible for the country to buy large amounts of the metal within a short time.” Two Chinese precious-metals experts also weighed in on gold’s prospects for the article: “Chen Beilei, director of metals and mining at BOC International Holdings, said China may increase its gold reserves to diversify its foreign exchange reserves. … Demand for gold may continue to rise due to inflationary risks brought by Washington’s recently announced quantitative easing program, high public debts and low economic growth in Europe, Chen said. … Feng Rui, president of Silvercorp Metals, said the decline [in gold prices] is an adjustment in the upward trend … and the metal may rise by as much as 20 percent in the future. Feng predicted the price of gold would peak at $1,600 per ounce in 2011.” Read more

“Bullish” Barclays Capital sees $1,485 gold this year

Gold could hit a record $1,485 by year’s end, Barclays Capital analysts say. “Strategically, we are bullish,” the bank said. “Medium-term trend followers are unlikely to have been panicked out of their positions given that important support between $1,314 and $1,331 is still holding. A bearish divergence signal on weekly charts, though, warns of downside risk throughout the month, and we still fear an important clearout below $1,314 to $1,250 before gold recovers. We would be bargain-hunting as the price approaches $1,250.” Read more

French banking giant raises its precious-metals forecasts

BNP Paribas said Wednesday it has raised its 2011 forecasts for gold and silver (as well as palladium and platinum).

Gold: The bank increased its gold forecast for the first quarter of next year to an average $1,415 from its previous estimate of $1,280, with the price expected to rise to an average $1,565 by the end of next year, compared with a previous $1,310 forecast. “Gold is considered one of the best hedges against either of these risks,” BNP Paribas analysts wrote, referring to dollar weakness and rising inflation fueled by QE. “Add to inflation expectations a low nominal interest rate environment, and the decline in expectations for real returns makes alternative asset classes, such as commodities, appealing for investors.”

Silver: The bank expects silver to average $25.30 in the first three months of next year, up from its previous forecast of $19.75, rising to an average $27.45 by year’s end. The spot silver price has risen by more than 50 percent this year to 30-year highs well above $25. Read more

Any dip is a buying opportunity, experts concur

The trend is positive: “We may see some more consolidation in gold,” said INO.com chief and Market Club co-founder Adam Hewison in a Monday video chart analysis of gold. “Now please don’t misunderstand what I’m saying. We are not bearish on gold longer-term. The trend in fact is still very positive. … The longer-term trend in gold … is very clearly up, and it’s going to probably have some pullbacks, which is possible, and then I think we’re going to see the market go to new highs. I don’t think we’ve seen the highs yet in gold.” Watch video

Accumulate on weakness: “We don’t think that the U.S. dollar fundamentally should deliver any form of sustained strength, so we wouldn’t expect to see this serve as a game changer for the commodities,” Fat Prophets analyst Colin Whitehead told CNBC Monday. “The underlying fundamentals for gold – and that is strong and continued investment demand – remain in place over the longer term. So we don’t think that we’re in bubble territory yet. We’re really just in the foothills of the gold bubble. … Certainly as we look at gold, it’s not yet clear as to whether the correction has petered out. We’re certainly going to have some consolidation ahead of what we think is a further upface. So we’ll be looking to accumulate on weakness there.” Watch video

A healthy correction: “This [dip] is just healthy,” CIBC World Markets Vice Chairman Warren Gilman told CNBC Tuesday. “Metal prices probably got a little bit ahead of themselves during the September and October period. Prices got to pretty lofty levels, and I think this is a healthy correction. … I think gold is going to prove to be most resilient. People have been waiting for an opportunity for an entry point, and I think this is probably that opportunity.” Agreeing with CNBC anchor Bernard Lo that paper currencies are vulnerable, Gilman adds: “That’s one of many reasons, and obviously we have inflation on the horizon, and there are plenty of reasons to buy gold, and I think there are a lot more buyers than sellers in this environment. … I think we could get down to $1,250, or we could potentially break $1,300, but I wouldn’t expect it to go much further than that.” Asked what sort of gold to invest in, Gilman says: “I think I would probably shy away from the equities because the equities have had a good run in the last little while. I would go for physical. … Buy coins.” Lo interjects: “Krugerrands, Maple Leafs, and Pandas?” “Indeed,” Gilman answers. Watch video
Stay the course: In a Monday show, CNBC “Fast Money” analysts applauded billionaire hedge-fund magnate John Paulson’s decision to maintain his massive gold position. “You look at his holding, gold. He kept it; he left it alone,” Joe Terranova said. “I don’t know why you would be selling gold right now. You should hold onto it. He’s doing the right thing. There’s nothing in the price action that tells you to sell.” Analyst Carter Worth agreed: “The reason to sell something, right, is weakness that suggests further weakness, or hyper-strength that suggests it’s over. Gold has been deliberate and orderly and measured – a nice bounce over the last three months. … Stay the course.” Watch video

ETFs lose luster in the shadow of physical gold

Doubts continue to be raised about the reliability of certain exchange-traded funds, and Blanchard and Company, Inc. agrees the issue is a troublesome one.
Read the fine print: In a Nov. 10 broadcast, CNBC star Rick Santelli called into question the actual physical precious-metals backing behind the large exchange-traded funds like SLV and GLD. “If you’re looking for something to worry about, think about all the coverage we in house have been giving to ETFs. I like futures contracts because I know there’s silver there, and if I want it, I’ll get it. But ETFs I still have questions about. … It’s clear that you can’t get the physical gold if you want it – they can give you money (instead). Read the fine print – that’s all I’m saying. And I want to put somebody on who’s actually seen their inventory. You think we can find somebody who will actually go on and say, ‘I’ve seen it’? I don’t think so.” Watch video

Hosted by “hostile entities”: Seeking Alpha contributor Mark Anthony has articulated similar fears in a recent article: “I always encourage people to directly own physical precious metals. I do not trust the physical gold ETF, GLD, and the physical silver ETF, SLV. Like some other folks I expressed skepticism whether these funds actually hold the physical precious metals as they claimed. These ETF funds were hosted by entities known to be hostile to precious metal investors and known to have large short positions in silver, so why should people trust them?” Read more

Similar concerns surfaced in a Financial News article Monday titled “Bearish trustees dig deep for gold and diamonds”:

Iain Tait, partner at UK wealth adviser London & Capital, received requests from separate trustees in Jersey and Guernsey for physical diamonds and gold bars last week. He said: “There is the feeling that ETFs are the home of the speculator, while bars and real diamonds are the domain of wealthy families trying to protect themselves.”

Ned Naylor-Leyland, partner at Cheviot Asset Management, said a lack of trust in banks and the spectre of counterparty risk was a problem. “I hear Swiss banks are turning out their vaults for clients wanting to take home their gold. Trust is wearing thin.”

Some investors are put off by the idea that gold ETFs can contain other financial products, such as swaps or derivatives, even if just a small percentage of their weighting.

Angus Murray, chief executive of London-based Castlestone Management, said: “Physical gold is simply metal without any other financial product or structure. My clients want to own an unleveraged real asset.” He added: “If the ETF doesn’t have the ability to list additional shares there can be a pricing issue. Why complicate it?” Read more

Don’t lose sight of the big picture

Analyzing gold’s correction this week in a Seeking Alpha post, Gold in Mind blogger Marek Kuchta concludes:

The only thing that somewhat makes sense is the big picture and the general direction. The gold price has so far gained 20 percent in 2010, even after the current drop. All primary, long-term reasons for gold’s continuous rise such as exorbitant government debt and unfunded liabilities, quantitative easing, high volatility and uncertainty in all markets, fear of commodity inflation (to be followed by imported domestic inflation), and many more, remain in place. There is no obvious reason for a lasting trend reversal in the gold price. Unfortunately, very obvious are the reasons for a further decline of the value of the dollar and possibly also the pound and the euro.

So, strategic investors and savers, don’t lose your nerves. Wherever we are headed, it will be a bumpy ride that may end up in a complete off-road trip. Don’t forget where the north is, think about what you’ll need should we arrive in the wilderness. Nothing is safe there. Diversify, buy gradually, avoid paper promises. Keep your economic seat belt buckled, keep your eyes open, keep gold in mind.

Related posts:

1. Collector Base Strong, Prices Holding Steady
2. Second commemorative golden coin was presented at Trakai Castle
3. Legend Market Report – AN OPPORTUNITY IN THE MARKET

I can figure a coin deal as quick as anyone. In fact I can sometimes just look at a deal and know that I am going to buy it. That is because I am a coin dealer and have been my entire adult life.

But writing…that’s a whole other story. I’ve had trouble all my life writing papers from grade school all the way though college. Hence my tardiness in getting this show report to you, our loyal readers.

Christine and I made the trip down to Baltimore on Wednesday afternoon. We had a few appointments set up and promptly got down to business. After looking at a few dealer’s inventory (and finding the same old “tired” pieces), I went to submit our numerous coins for grading to PCGS. (At the end of this show report, and up on our web site shortly, you will find the fruits of this.)

With an opening bell of 8:00 a.m. on Thursday, Christine and I were there bright and early and literally minutes after the doors opened we arrived at our table only to find a client waiting for us. While that was a great way to start the show, sadly it wasn’t going to last. We did some wholesale business from our inventory early on and then proceeded to set up our booth for the “early birds” at 10 and the public at noon. One of the best things about having a client base is that other dealers figure out quickly that you need to buy coins for them, so while neither Christine or I really got to spend a lot of time walking the floor looking for coin to buy, it was nice that there was a steady flow of dealers coming to us, wanting to show us their wares.

Getting to the meat of this report, I will tell you that Baltimore was definitely better than CoinFest, and way better than the Silver Dollar Expo a few weeks earlier. There are many more “collectors” in Baltimore than the aforementioned shows, and while they didn’t spend money like sailors on shore leave, they did spend. As I write this gold has broken the $1400 barrier, yet in Baltimore we didn’t have one person come up to us and ask for bullion, quasi bullion, or generic gold coins. Not one. Gem gold was in demand, stronger than it has ever been in recent history. And we sold virtually all that we brought with us.

Another observation that I came back with is how focused today’s buyers are. No longer do they settle for a lesser coin, they don’t buy something just to fill a hole. They will wait until that special coin, the one with the look that they have been longing for, appears. The collectors in the market place today don’t just have a want list with a denomination, date, and grade on it, there is also the “look” on their list. And some coins, no matter the grade, just won’t make the grade (no pun intended). They are fussy and they should be. I’ve always had the opinion that coin collecting should be fun. It should release the endorphins in your brain and not cause stress. It seems that the collectors I have met recently have learned from the common mistakes that one would make early on in a hobby. They have paid their dues and will wait it out until they get exactly what they want. While I generally agree with that philosophy, it can be a very dangerous double edged sword. Passing up on a truly rare coin, in anticipation of a finer piece showing up, can be, and usually is, a bad deal. If the coin in question is that tough to locate, then there will usually be another collector lined up behind you to buy it. How many time have you looked at a coin, walked away to think about, and then returned only to find it sold?

So what, besides Gem gold, was selling? Nice commems, MONSTER commems, and type coins, both proof and mint state were selling. MONSTER type coins that sold there went for numbers off the charts. Better date walkers, and yes, even proof walkers were also in demand.

Before you start to look over our new purchases, I’d like to remind you that the next show Christine and I will be doing will be the Money Show of the Southwest in Houston the first week of December. Don’t worry, we will still be buying coins and putting them up on the web before then. So while we won’t have any of show reports until next month, there will be plenty of new coins showing up on our site.

Related posts:

1. Legend Numismatics Baltimore Coin Show Market Report
2. Market Report: The March Baltimore Coin Show
3. Legend Numismatics Baltimore Spring Show 2008 Market Report