Viewpoint: Mint Needs Clear Policy on Repricing|
November 20, 2008
In mid-November the U.S. Mint unexpectedly suspended nearly all gold and platinum products and then brought them back after less than one day with mostly lower prices.
Collector response to the price changes has been mostly negative. Some customers who recently placed orders felt that the Mint should issue refunds for the price differences. Others, who routinely purchase their coins as soon as they are released, felt betrayed by the Mint.
Here is one anonymous quote by a Mint News Blog reader that sums up some of these sentiments:
"After 50 years of buying U.S. Mint collector items, I am fed up with this repricing and am giving up all dealing with them. Once an item is offered for sale as a collector item then it should not change in price for ANY reason."
Some customers are reacting by returning coins purchased within the last 30 days at the higher prices, and re-purchasing their coins at the lower prices.
Another anonymous reader quote:
"I have purchased within the last 30 days. The coins I bought 10/17 will be shipped back, except for the 1/10 unc plats, refunded and if I choose I can go online to buy again. The coins I bought yesterday morning, I had to cancel that order, they would not reprice it over the phone."
I should note that there were some collectors who were happy about the price declines. Some collectors used the lower prices as an opportunity increase their holdings of certain coins. Others, who had avoided buying gold products due to the high premiums, have finally decided to place orders now that premiums are lower.
I have not seen any official statements or explanations from the U.S. Mint on the price reductions. Nor does there seem to be any policy to refund customers who recently purchased coins at higher prices. I've seen some reports that the U.S. Mint canceled orders placed earlier in the week ahead of the price changes, but I am not sure if this was the case for all orders.
Even if the U.S. Mint does come out with an official policy or statement, there are definitely ways they could have handled the recent price changes better.
1.) Have a clear policy on when precious metals related products will be repriced. There should be a specific threshold at which the U.S. Mint reprices products. The current process seems somewhat arbitrary. Platinum coins were repriced on Oct 17 and Nov. 13. The market price of platinum on each date $857 and $814 representing a decline of only 5 percent. Gold coins were not repriced until the price had declined more than 20 percent.
2.) Have clear messages regarding suspensions on product pages. This year, when products have been suspended for price changes they have contained the ambiguous message, "Product is not available." This is misleading since it is also the same message used for sold out products. In addition, earlier this year, platinum Eagle listings simply disappeared from the US Mint's website without explanation. This left collectors guessing for more than two months.
In prior years, the U.S. Mint used a product page message for suspended products which clearly explained the situation. This message was used in 2006 and 2007: "Due to the increasing market value of gold, the American Eagle Gold Uncirculated Coins are temporarily unavailable while pricing for this option can be adjusted; therefore, no orders can be taken at this time."
3.) Have a clear policy on customer orders placed at higher prices. Because of the Mint's liberal 30-day return policy, many customers are choosing to return coins purchased at higher prices and re-purchase them at the new lower prices. Instead of forcing customers to go through this tedious process, the U.S. Mint could issue refunds to customers for orders placed within the return period. This would save the Mint the trouble of processing all of the returns and new orders and build some goodwill with their customer base.
4.) And the most logical, but unlikely suggestion, have prices adjusted daily or weekly based on precious metals market prices. The majority of the cost of gold and platinum U.S. Mint products comes from the cost of the precious metal content. So why not have floating prices, which adjust at set intervals based on the market value of precious metal content?
As an example, prices could be adjusted each day based on the closing market price of the precious metal plus a mark up. If the price makes a significant move during the day, offerings could be immediately suspended for the rest of the day. Customers wouldn't have to worry about spontaneous re-pricings and could have piece of mind that they are paying prices based on the current market value of the metals. The Mint could limit returns on these products since customers will paying prices directly based on precious metals prices at the time of order.
Unfortunately, based on my understanding of how the US Mint must price products, this suggestion is not possible. However, it would clearly make a lot of sense.
At any rate, this is the final year for many of the U.S. Mint's platinum and gold products, so these suggestions are somewhat moot. The U.S. Mint recently announced the discontinuation of 22 gold and platinum products due to lack of popularity. One has to wonder, if the U.S. Mint had more clearly defined policies and accurate pricing, maybe the discontinued products would have been popular enough to survive.
Michael Zielinski of White Plains, N.Y., writes a blog about Mint issues at: http://mintnewsblog.blogspot.com/2008/11/how-us-mint-could-have-handled-price.html
To have your opinion considered for Viewpoint, write to David C. Harper, Editor, Numismatic News, 700 E. State St., Iola, WI 54990. Send e-mail to firstname.lastname@example.org.
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On November 24, 2008 mws
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