The U.S. Mint abruptly suspended previous orders and delayed the sale of the scarce coins highly sought after by collectors and precious-metals bugs on their first day of sale Monday due to concerns about the high prices and premiums that were to be charged for the bullion coins by its network of authorized purchasers.
Under revised terms and conditions, authorized purchasers who wish to participate in the offering must agree to charge their customers a price no higher than 10% above the price at which they acquire the coins from the Mint and must establish and enforce an order limit of one coin of each design for each household.
Authorized purchasers who wish to participate must also agree to sell all coins they receive to customers and aren't allowed to sell any coins either directly or indirectly to their officers or employees.
The Mint set the minimum order quantity for an authorized purchaser who wishes to participate in the offering at 2,000 coins, with additional increments of 100 coins.
The Mint said it can alter terms and conditions under its agreement with an authorized purchaser. Several authorized purchasers said they would be contacting their lawyers to review situation.
One trader said the Mint made a mistake by making a small amount of coins. "A lot of distributors are wholesalers only; they don't deal retail," said the trader. "Where will they find 3,000 customers? "None of us have 3,000 customers."
The Mint can enforce this agreement only with its authorized-purchasers network, not those who purchase the coins from the authorized purchasers and turn around and sell for a quick profit. So people who want this coin should continue to expect to pay a hefty premium in the secondary market.
There are a total of 33,000 coins available for each of the five 2010 designs. If all 11 authorized purchasers chose to participate, they will each receive an allotment of 3,000 coins of each design, for a total of 15,000 coins each.
"It is crucial that any buyer ask the dealer from whom he or she intends to make a purchase if the coins are physically in the dealer's possession," said Scott Travers, author of "The Coin Collector's Survival Manual." He added: "Many dealers will be advertising these coins—and will not have physical possession."
People in the coin hobby say the underproduction crisis has come about because the Mint withheld about 130,000 planchets, the round pieces of silver used to manufacture the coin, for the numismatic version of the 2010 coins to be sold in the first quarter.
The Mint will make any excess coins available on a comparable allocation basis should any authorized purchaser chose not to participate.
The authorized purchaser's premium at $9.75 a coin above the spot price of silver set by the Mint remains in effect.
Comex silver for December delivery closed Thursday up 56.50 cents, or 2%, to $28.7890. Silver is up 71% this year.
The Mint said authorized purchasers will be allowed to charge a reasonable shipping and handling fee.
This isn't the first time this has happened. In 1986, when the Mint launched its silver and gold Eagle coin series, premiums went to 100% for those coins, according to a trader.
source: http://online.wsj.com/article/SB10001424052748704720804576010132267578092.html
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