The United States Mint has formally made their 2012 Annual Report public, showing the official financial records from the fiscal year which ended on September 30, 2012. Unfortunately for those who put stock into the year-by-year comparisons, 2012 looks pretty bleak when compared with the 2011 Annual Report.
Overall, the revenue for 2013 was down a whopping $3.44 billion, an outstanding 30.88% drop from just last year. Seigniorage and net income finished at $108.2 million, an astounding 60.55% drop from last year’s numbers. All in all, the large losses have affected the big business and trading lines in the Big Three: circulating coins, bullion coins and numismatic coins; it seems as if nothing is safe.
But the Acting Director of the Mint describes these disappointing figures as a “partial return to the norm” due to the fact 2011 was a record season and also pointing towards the dramatic swings which have been happening since 2009. So, is it time to worry?
The Reasons Behind The Line Drops
Apparently not. It seems that the weaker results in each of the business lines had very good (and unique) reasons which lead to its poor performance.
In the case of the circulating coin, the suspension of the Presidential Dollars’ circulation eliminated the significant proportion of seigniorage that the production provided for the United States Mint. During the 2012 fiscal year, the total revenue of the circulation coin was $776.9 million which was a 36.50% decrease from 2011. On top of that, the seigniorage was only $105.9 million, a 69.64% drop from the prior year.
Despite this drop in revenue, oddly enough the production number of circulating coins saw a 22.8% rise from the prior year, a nod to the fact that the increased production was made up mostly of lower denomination coins. In fact, the cent accounted for an overwhelming 64.2% of all coin shipments in the circulation field, up from 58% last year.
And even though the lower metal costs and reduced operating expenses gave the cent, nickel and dime improvements when it came to unit production, the costs were still 2 cents for each cent, 10.09 cents for each nickel, 4.99 cents for each dime, 11.30 cents for each quarter and 21.11 cents for each $1 coin.
The increase in quarter dollar production is significant in keeping the overall seigniorage positive, helping to offset losses incurred by the production of the cent and nickel. This served to replace the seigniorage which had been previously kept ahead by $1 coins. Quarters are expected to play a large role in continuing this trend in 2013.
The lower sales volumes gold and silver bullion coins we experienced impacted the revenue and profitability margins of the bullion program. This dip was also affected by the lower-than-average silver prices, resulting in an overall revenue of $2.46 billion. This number is down 29.11% from last year’s prices while the net income of the bullion program was down 56.84%, represented by the closing figure of $28.4 million.
These poor performances can be blamed on a number of factors, most blatantly evidenced by the Gold Eagle, Silver Eagle and America the Beautiful Silver Bullion Coins all dropping in revenue. In fact, the only product to profit this year was the American Gold Buffalo, largely due to the extended duration of availability as compared to the year before.
The biggest loser was the American Silver Eagle bullion coins which accounted for a $4.4 million loss in 2012. The overhead costs allocated from the San Francisco Mint are to blame, but this begs the question: if the downtrend continues, will bullion cease to be produced at the San Francisco mint or will authorized purchasers be subject to increased premiums?
The lower sales of gold and platinum products were solely responsible for most of the numismatic revenue loss in 2012. Finishing at $481.2 million, the numismatic program was down by 33.32% from the last year with the net income and seigniorage finishing at $73.9 million, or down 34.72%.
The annual core sets made up for a $2.7 million loss leading to prices being reduced this year. Still, what’s very curious is that despite silver coins showing a 32.7% net margin (which accounted for 2/3rds of the net income and seigniorage, the 2013 anticipated price for silver numismatic products doesn’t reflect this.
So, what do you think about the 2012 Annual Report? Is this a slow return to normal after the 2009 happenings and the abnormally large 2011 year? Or is this the beginning of a downtrend? Let us know what you think below!