In a not entirely unexpected move on 12 January 2009, the US Mint moved to have more control over the price charged for gold, silver and platinum bullion coins. Once ounce coins were set at that time at a price about 25% over gold and silver spot prices that day. Currently, the weekly adjustment of the price is set to reflect the London weekly average of both gold and platinum in regards to currently produced gold and platinum numismatic coins.

This does not apply to gold commemorative coins, which tend to have a higher mark-up over the current gold and silver spot prices. Proceeds from the additional monies collected from the commemorative coin program go to fun museums, the US Olympic program and zoos, to name a few. Commemorative coins that are currently available and exempt from the new, flexible pricing structures include:

• Bald Eagle gold proof coins
• Bald Eagle three-coin proof set
• Bald Eagle gold uncirculated coins

It could be said that this move has been made to simply make the mint more responsive to what they believe could be volatile precious metals markets in 2009. It could also be argued that this move has been made to discourage personal investment in gold, in an effort to keep up with demand, as they demonstrated difficulty keeping pace with in 2008.

Of course, such speculation begs the question as to whether or not the US Mint has enough physical gold to meet a strong surge in demand. The inventories are purported to have remained entirely stable for over 2 years, and many find that difficult to believe given the spike in demand.

Other mints have yet to implement such measures. Instead, a price is set for a coin at the beginning of the year it’s issued. The next minting will have a different price. Despite recent rationing measures as seen by several of the big mints in 2008, none are tagging their pricing system to the markets as the US has moved to do.

There are several reasons that gold is expected to become extremely volatile in 2009. For starters, falling prices for other ores such as copper and zinc decrease gold by a fraction of the worldwide yearly gold output that is derived as a by-product of mining those other metals. Demand has certainly soared, especially among first-time precious metal investors. Furthermore, some people believe that there are few (if any) new gold discoveries left to be made.

If the price of gold or platinum does spike, the US Mint will be ready in 2009, keeping a keen eye on gold and silver spot prices.

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Arthur McGuire

 February 9, 2009