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"Demand Destruction" in PMs.
jmski52
Posts: 23,224 ✭✭✭✭✭
The buzzword in the oil pits is the drop in demand due to higher retail fuel prices is "demand destruction", and certainly the same thing is happening in the Mint's product lineup as the precious metals head lower, without any price adjustments on the Mint's part.
Platinum is my example, simply because I ran the numbers last Friday. Last Friday, when platinum was at $1,740.00/oz., the 2008 Platinum Proofs ordered from the Mint had the following margins:
1/10 oz. Proof - 60.09% over spot
1/4 oz. Proof - 52.86% over spot
1/2 oz. Proof - 47.12% over spot
1 oz. Proof - 44.25% over spot
4-coin Proof Set - 42.58% over spot
Today, with spot platinum at $1,707.00/oz., the Mint's effective margins are:
1/10 oz. Proof - 64.00% over spot
1/4 oz. Proof - 55.82% over spot
1/2 oz. Proof - 49.96% over spot
1 oz. Proof - 47.04% over spot
4-coin Proof Set - 45.35% over spot
The longer this situation drags on without the Mint re-pricing these coins, the more dramatic impact it will have upon the final mintage figures. The same phenomenon is occuring in the Unc Plats, and all of the recent gold issues as well.
Another factor in the developing situation is the overall economic picture, with liquidity being an issue. Collector resources are being re-deployed in more important areas, such as normal everyday living expenses.
With the Mint's ever-burgeoning agenda, subsequent years will be even-lower mintages for all of these same reasons. One thing that the Mint should do is to make their pricing much closer to the market, and to quote prices in realtime. Other retail bullion vendors do this easily. It might help them keep their market.
Platinum is my example, simply because I ran the numbers last Friday. Last Friday, when platinum was at $1,740.00/oz., the 2008 Platinum Proofs ordered from the Mint had the following margins:
1/10 oz. Proof - 60.09% over spot
1/4 oz. Proof - 52.86% over spot
1/2 oz. Proof - 47.12% over spot
1 oz. Proof - 44.25% over spot
4-coin Proof Set - 42.58% over spot
Today, with spot platinum at $1,707.00/oz., the Mint's effective margins are:
1/10 oz. Proof - 64.00% over spot
1/4 oz. Proof - 55.82% over spot
1/2 oz. Proof - 49.96% over spot
1 oz. Proof - 47.04% over spot
4-coin Proof Set - 45.35% over spot
The longer this situation drags on without the Mint re-pricing these coins, the more dramatic impact it will have upon the final mintage figures. The same phenomenon is occuring in the Unc Plats, and all of the recent gold issues as well.
Another factor in the developing situation is the overall economic picture, with liquidity being an issue. Collector resources are being re-deployed in more important areas, such as normal everyday living expenses.
With the Mint's ever-burgeoning agenda, subsequent years will be even-lower mintages for all of these same reasons. One thing that the Mint should do is to make their pricing much closer to the market, and to quote prices in realtime. Other retail bullion vendors do this easily. It might help them keep their market.
Q: Are You Printing Money? Bernanke: Not Literally
I knew it would happen.
I knew it would happen.
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Comments
The Mint doesn't consider these to be bullion.
True enough. But the market will make that decision, whether the Mint considers them bullion or collector coins. Either way, the Mint should consider the impact of bullion price changes on their customers, and they seldom do.
The net result of their pricing policies is low mintages. A word to the wise.
I knew it would happen.