Expert: Dan Moore - 1/10/2009

Question
Hi,

I understand why the Post Office issues commemorative stamps; stamps kept in collections bring in money without the Post Office having to give the service--delivery.

But what is the financial advantage for the Mint (government, whatever) to issue commemorative coins? The Mint, etc. doesn't save anything if the coins are kept in collection. (Indeed, collections keep the coins out of circulation and require the Mint to make more coins than if the collected coins were in circulation.)

1, Does the Mint charrge extra to collectors who want mint coins?

2. Or is the incentive a non-financial one?

Many thanks,

Steve

Answer
Steve,

The mint produces commemoratives to celebrate historical events or people.  They do however make a "mint" on these coins.  For each gold coin they make, profits are in the hundreds of dollars.  For the silver dollar commemoratives, they get about $40 for a coin that costs them less than $15 to produce.  And for clad coins, it's almost all pure profit.

Same as the Post Office, coins that do not go into circulation provide the mint with their seniorage profits, but the amount the mint charges for the commemoratives is vastly more than the amount of any seniorage.

For any coin that is not released into circulation (like commemoratives, Sacagawea Dollars, and American Eagles), the Mint charges extra for their newly minted coins.  From $16.00 for an uncirculated roll of state quarters, to over $1,000.00 for Buffalo Gold coins.

So the incentive is both monetary and non-monetary.  They make big profits on all the commemoratives they DO sell, but they must create commemoratives that interest many different collectors (so they WILL sell).

Dan