The Coin Analyst: The Baseball Hall of Fame Commemorative Coin Launch Part II- Lessons for the Future

By Louis Golino for CoinWeek ………..

The success or failure of any commemorative coin program is a function of three main factors:

• the appeal of the design
• the extent to which the theme depicted resonates with buyers
• the promotion the coin receives from the Mint and outside organizations

The 2014 Baseball Hall of Fame Commemorative Coin Series is selling so much better than other recent commemoratives because it scores high on all those points and has the added benefit of crossover appeal from baseball fans and the timing factor with opening day being just one week after the coins were launched.

The main draw of the Baseball Hall of Fame commemorative coins for collectors is their sheer beauty, which is even greater when you see the coins in person, though there is a minority view among collectors of a more classic persuasion that the coin is not attractive or is too gimmicky.

Two members of the Citizens Coinage Advisory Commission that I spoke to had very positive comments about the coins. Medallic artist Heidi Wastweet said: “The designs on the coin are not big and flashy but rather logical. The beauty is in the details! You can really feel for the textures on the surface of the ball and mitt brought to life by the sculpting of Don Everhart.” Numismatist Michael Bugeja noted that “the clever design and planchet formatting go hand in glove, so to speak.”

But to sell as briskly as they are, especially to sell plus or minus 50,000 quarter-ounce gold coins (about 12,500 ounces) in less than a day, speculation obviously played a major role, which is hardly surprising for a hot new issue that attracts so much attention in both the numismatic and general media.

The issue for buyers and investors, especially those paying high secondary market prices for the gold coins, in particular graded examples with special labels, is what happens when the promotions end and the interest diminishes, as it always does. Will demand hold up?

There is of course no way to know at this point, but there is genuine collector demand for these coins, though whether it is enough to sustain the high prices that the coins will bring in the coming weeks and months remains to be seen. In my view those who paid issue price will do fine with all the coins from this series, even the silver and clad ones that tend to decline in many other cases, especially if a sell-out is achieved quickly for those issues. Demand will of course decline eventually, but many buyers were unable to order the gold pieces from the Mint, and many of them will buy on the aftermarket. The proof coin is widely viewed as more attractive, but the uncirculated one will have about half the mintage, which will help over the long-term as it will be the series key.

The word from industry insiders about these coins is that the clad ones are of substantially better quality than recent clad issues, and a very high percentage of coins graded at the show received 70’s (something on the order of 70-80%). Both points suggest the Mint really took a lot of care in producing these coins, which will also help support continued interest in them. When buyers end up having to return a lot of coins for quality issues, that turns people off.

In addition, PCGS and NGC will be offering special labels signed by Major League baseball players and, as Don Willis, President of PCGS said in his company’s widely-read message board, labels signed by the coin’s obverse designer, Cassie McFarland. Mr. Willis also said: “We had a flood of submissions of the HOF coin in Baltimore. So many we had to ship a lot back to the office.”

Those who think the mintages are too high for the coins to hold their values over time would do well to remember the 2009 Ultra High Relief coins with a mintage of 115,000 that still sells for a minimum of twice issue price and much more for 70’s for the gold coins, and the 2001 Buffalo silver dollars, which have held steady at $200 each for many years with 70’s of course going for even more. It is always a mistake to zero in on mintage levels without considering demand, and I think the uniqueness and attractiveness of these coins and their crossover appeal with America’s national pastime will make a big difference even after the dealer promotions are over.

The Mint clearly knew this would be a successful program, but after the intense level of interest expressed by collectors in the days before the launch, it realized demand would be even higher than expected. So it did something it rarely does. It imposed ordering limits for online sales, which were 50 of both types of gold coins, proof and uncirculated.

But given the frenzied pace of sales on launch day, especially for the gold pieces, those limits were clearly too high, and many people have said something along the lines of 5 per person, or 5 of each type, would have helped ensure a fairer distribution of these coins. For the clad and silver releases the household order limit was 100 coins, also very high, and clearly aimed more at dealers than collectors.

Because the Mint does not have a wholesale dealer program for major new releases like this, only a bulk program for more bread and butter material like proof sets, there has always been some tension between filling the needs of collectors and dealers. Collectors want very low initial ordering limits, while dealers want to be able to acquire a decent amount of inventory to fill expected orders.

The Mint’s gold coin order limit was clearly better than nothing, as without it the gold coins would have sold out even faster, and average collectors would have felt even more locked out. But it would make a lot more sense to have an initial low limit (such as in 2009 when buyers could initially only purchase one Ultra High Relief double eagle gold coin), which could then be adjusted upwards after collectors have an opportunity to order. Other world mints, as I have explained in the past, make a point of doing whatever they can to discourage speculation and distribute coins fairly, and ours could do more in this regard.

The combination of a maximum mintage half that of previous commemorative issues, high interest, and a 100-gold coin per household limit that dealers easily got around (one on HSN reportedly even bragged about how he used his extended family and staff to obtain thousands of coins) meant a quick sell-out of the gold coins was virtually guaranteed.

The Mint does follow the numismatic press and consults with people like me about these issues, but perhaps it needs to hire a numismatist for its staff, who could provide recommendations on issues such as likely demand levels. It seemed very odd to reduce the maximum mintage for a high-demand coin, but 50,000 would be plenty for most other issues.

Some other implications of this coin launch related to the waiting room, which clearly needs some work. To be sure, a lot more buyers were able to place orders with relative ease this time compared to the 2011 25th anniversary silver eagle sets, and there was no overall crash of the Mint’s site as in the past, though quite a few glitches such as order status information temporarily disappearing, or orders being listed as suspended when they were not.

The Mint’s Deputy Director Dick Peterson has indicated that a new and better order management system will finally be in place this fall, but that will be too late for the next big thing: the coming JFK half dollar anniversary sets and gold proof coins, which will again test the Mint’s technical capabilities to the limit.

Louis Golino is a coin collector and numismatic writer, whose articles on coins have appeared in Coin World, Numismatic News, and a number of different coin web sites. His insightful retrospective on the American Silver Eagle is the cover feature of the February 2014 issue of The Numismatist. His column for CoinWeek, “The Coin Analyst,” covers U.S. and world coins and precious metals. He collects U.S. and European coins and is a member of the ANA, PCGS, NGC, and CAC. He has also worked for the U.S. Library of Congress and has been a syndicated columnist and news analyst on international affairs for a wide variety of newspapers and web sites.

Copyright © CoinWeek LLC. March, 2014