The Treasury Department of the U.S. has spent years producing nickels and pennies that have a higher production cost than their actual worth. But today, it is making money by offering a range of costly American Eagle currency in the form of proof condition coins. And what are proof condition coins? Well, these are plastic sheathed coins that have never been touched by a human hand. In 2016, the total sales of these pricey coins amounted to $112 million.
The much-in-demand gold coin proofs are presently being sold by the government at a 25 percent profit, a premium which can go up to over $300 per coin. At the same time, the silver coin is offered at over 200 percent premium on the marked silver prices.
Shiny coins lying dormant in retirement accounts
It comes as no surprise that hoarders and coin collectors find this to be a very attractive offer. However, there are some investors who have made deposits in their retirement accounts too. And the sparkling silver and gold coins are almost like lead weights in terms of their performance.
61-years-old Marvin E. Johnson from Iowa says that he purchased over 900 American Eagle coins (silver-proof) from American Bullion Inc. to keep in his retirement savings account. For this, he had to pay more than two times the selling price of the metal in the market. But he filed a suit as he could see a rock-like drop in his investment. Johnson’s lawyer, Thomas Reavely informs that the coins were bought at a premium, but his client would have probably never made a profit.
High profits for the mint
It is true that the U.S. Mint operates in a similar way as a regular coin dealer. If you call them, a salesperson will answer the phone. It has a proper online store on its website too. Customers could sign up and buy yearly proof sets using credit cards. In 2016, the profit made by the Mint on gold coins reached almost 18 percent. And the total profits on silver proofs were about 41 percent.
The profits made by the Mint are transferred to the General Fund of the treasury. The chief financial officer of the entity says that they aren’t doing this to make profits. According to Mint officials, proof coinage is advertised not as an investment but as a collector’s item.