What Shoe Will Drop Next?
September 11, 2008
Today is day umpty-seven where collectors cannot buy the proof and uncirculated collector versions of the platinum American Eagles with the "W" mintmarks.
Collectors are probably not complaining too loudly because the price of the precious metal has been in free-fall. It is down more than 50 percent from the highs earlier this year and by about a third since the Eagles went off sale.
I see this morning that platinum is at $1,144 a troy ounce. Falling car sales are taking a large bite out of platinum sales. The downturn in these sales has even hit China.
The Mint though is probably wondering if its cumbersome pricing mechanism which by law requires publication in the Federal Register among other things is just too slow in meeting market fluctuations.
Whatever inventory of coins the Mint had on hand when sales were suspended is now very much in the red as far as Mint costs go. I hope they had some form of hedge in place to mitigate this.
It is certainly difficult for staff to have certain Eagle coins that they cannot sell for pricing reasons and in other areas, like one-ounce gold and silver bullion Eagles where they cannot keep up with demand.
What happens if buyers of physical American Eagle coins get discouraged with the metals market price declines and high markups and simply stop buying, or sharply reduce buying?
That would be the final shoe to drop.
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