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BULLION COIN PROGRAMS OF THE 

UNITED STATES MINT: CAN 

THEY BE IMPROVED? 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

DOMESTIC MONETARY POLICY 

AND TECHNOLOGY 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

APRIL 7, 2011 

Printed for the use of the Committee on Financial Services 

Serial No. 112–25 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

SPENCER BACHUS, Alabama, Chairman 

JEB HENSARLING, Texas, Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, North Carolina 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

MICHELE BACHMANN, Minnesota 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

NAN A. S. HAYWORTH, New York 

JAMES B. RENACCI, Ohio 

ROBERT HURT, Virginia 

ROBERT J. DOLD, Illinois 

DAVID SCHWEIKERT, Arizona 

MICHAEL G. GRIMM, New York 

FRANCISCO R. CANSECO, Texas 

STEVE STIVERS, Ohio 

BARNEY FRANK, Massachusetts, Ranking 

Member 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JOE DONNELLY, Indiana 

ANDRE ́ CARSON, Indiana 

JAMES A. HIMES, Connecticut 

GARY C. PETERS, Michigan 

JOHN C. CARNEY, JR., Delaware 

LARRY C. LAVENDER, Chief of Staff 

(III) 

SUBCOMMITTEE ON DOMESTIC MONETARY POLICY AND TECHNOLOGY

RON PAUL, Texas, Chairman 

WALTER B. JONES, North Carolina, Vice 

Chairman 

FRANK D. LUCAS, Oklahoma 

PATRICK T. MCHENRY, North Carolina 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

NAN A. S. HAYWORTH, New York 

DAVID SCHWEIKERT, Arizona 

WM. LACY CLAY, Missouri, Ranking 

Member 

CAROLYN B. MALONEY, New York 

GREGORY W. MEEKS, New York 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GARY C. PETERS, Michigan 

(IV) 

C O N T E N T S 

Page 

Hearing held on: 

April 7, 2011 ..................................................................................................... 1 

Appendix: 

April 7, 2011 ..................................................................................................... 21 

WITNESSES 

THURSDAY, APRIL 7, 2011 

Deisher, Beth, Editor, Coin World Magazine ........................................................ 3 

Hanlon, Terence F., President, Dillon Gage Metals ............................................. 4 

Hansen, Ross, Founder and CEO, Northwest Territorial Mint ........................... 6 

Nessim, Raymond, Chief Executive Officer, Manfra, Tordella & Brookes, Inc. . 7 

APPENDIX 

Prepared statements: 

Deisher, Beth .................................................................................................... 22 

Hanlon, Terence F. ........................................................................................... 28 

Hansen, Ross ..................................................................................................... 30 

Nessim, Raymond ............................................................................................. 34 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Paul, Hon. Ron: 

Written statement of Michael Fuljenz, President, Universal Coin & Bullion, Beaumont, Texas .................................................................................. 36 

Clay, Hon. William Lacy: 

Editorial from Coin World, dated January 10, 2011 ..................................... 39 

Response from the U.S. Mint to information provided by witnesses during 

the hearing .................................................................................................... 40 

(1) 

BULLION COIN PROGRAMS OF THE 

UNITED STATES MINT: CAN 

THEY BE IMPROVED? 

Thursday, April 7, 2011 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON DOMESTIC MONETARY

POLICY AND TECHNOLOGY, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 10:01 a.m., in room 

2128, Rayburn House Office Building, Hon. Ron Paul [chairman of 

the subcommittee] presiding. 

Members present: Representatives Paul, Lucas, Luetkemeyer, 

Huizenga, Hayworth, Schweikert; Clay, Maloney, and Green. 

Chairman PAUL. This hearing will come to order. Without objection, all members’ opening statements will be made a part of the 

record. 

We will now go to our opening statements. 

I am pleased to be holding this very important hearing examining ongoing concerns over the United States Mint’s bullion coin 

programs. Given the financial difficulties of the last few years, and 

the possibility of large-scale inflation due to the Federal Reserve’s 

quantitative easing programs, it is not surprising that many investors are rushing to purchase gold and silver coins. As the world’s 

largest mint, supplying one of the world’s largest markets for bullion coins, it is imperative that the Mint be able to supply the bullion market with an adequate quantity of coins. 

Our witnesses represent various sectors of the coin industry, 

each with a unique viewpoint, and I look forward to hearing their 

perspectives on the Mint’s bullion coin programs and their suggestions on how to improve the Mint’s efficiency, for planchet shortages and minting stoppages has often been focused on the Mint 

and its procedures for planchet purchases, coin marketing, and bullion sales. 

In a market as potentially volatile as the precious metals market, and given the Mint’s status as a self-funding agency, it is understandable that the Mint does not want to store millions of 

ounces of precious metal planchets whose dollar values could conceivably drop by the time they are minted and sold. However, this 

uncertainty and the cyclical nature of coin sales makes it difficult 

for planchet suppliers to gauge future demand, meaning that they 

are less likely to invest in capital equipment to increase production. 

2 

Thus, with a huge upswing in demand, as we have seen recently 

with Silver Eagles, the Mint is unable to source enough planchets 

and the rush to produce enough one-ounce planchets leads to a reduction in resources available to produce five-ounce planchets, 

proof planchets, etc. 

Silver and gold are in an unprecedented bull market right now, 

with Silver Eagles selling at a rate that, when annualized, would 

mean sales of 48 million coins this year. Considering that total 

American silver production is only around 40 million ounces, this 

would be a significant sales figure, making it all the more important that the Mint minimize disruptions. 

I look forward to the testimony of our witnesses. 

And now, I will yield for an opening statement to the ranking 

member, Mr. Clay. 

Mr. CLAY. Thank you so much, Mr. Chairman, and thank you for 

holding this hearing regarding the U.S. Mint’s bullion coin program. 

And thank you to the witnesses for appearing in front of this 

Subcommittee on Domestic Monetary Policy. 

After reading the witnesses’ testimony, I look forward to their insight regarding those problems they have identified at the U.S. 

Mint and what corrective measures the U.S. Mint should make to 

address these problems. 

Also, I notice that no representative of the U.S. Mint is appearing in front of the committee for this hearing, and at this time, Mr. 

Chairman, I would like to reserve the right to have a comment period so that the U.S. Mint can make comments in regards to this 

hearing for the record. Thank you so much. 

Chairman PAUL. Does anybody else care to make an opening 

statement? 

Okay. We will proceed to the testimony. 

I would like to welcome the panel today. I am looking forward 

to hearing their testimony. 

And without objection, your written statements will be made a 

part of the record. You will be each recognized for a 5-minute summary of your testimony. 

I would like to go ahead now and introduce our panel. We have 

four panelists here today. 

First, we have Ms. Beth Deisher, who is in her 26th year as editor of Coin World, the leading publication of collectible coins. She 

is author of, ‘‘Making the Grade: A Grading Guide to the Top 50 

Most Widely Collected U.S. Coins.’’ Ms. Deisher is often interviewed by the media as a coin collector spokesperson. 

We have, also, Mr. Terence Hanlon, president of Dillon Gage 

Metals Division, located in Dallas, Texas, one of the largest metals 

dealers in the United States and an authorized purchaser of the 

U.S. Mint. A leading expert on precious metals and gold coins, Mr. 

Hanlon has worked closely with the world’s major mints and is 

called upon by gold and silver councils for market and product 

evaluations. 

We also have Mr. Ross Hansen here today. He is the founder and 

CEO of Northwest Territorial Mint, the largest private mint in 

North America and an authorized retailer of U.S. Mint bullion 

coins. Mr. Hansen has been in the precious metals business for 35 

3 

years, and in 2009, acquired the Medallic Art Company, a minting 

facility that used to produce silver blanks for the U.S. Mint. 

Mr. Raymond Nessim is CEO of Manfra, Tordella & Brookes 

Company, a precious metal wholesale distributor and authorized 

purchaser of the U.S. Mint and an official distributor for government mints around the world. Since the 1960s, Mr. Nessim has 

held positions with various firms managing and directing precious 

metal investment. 

Once again I would like to welcome the panel, and we will proceed to the first witness, Ms. Deisher. 

STATEMENT OF BETH DEISHER, EDITOR, COIN WORLD 

MAGAZINE 

Ms. DEISHER. Thank you, Mr. Chairman. I would like to thank 

you and the subcommittee for inviting me to testify here today. 

During my career, I have been privileged to chronicle the U.S. 

Mint bullion coin programs from their origin in the research and 

recommendations of the Gold Commission in 1982; to the passage 

of legislation authorizing the American Eagle gold and silver bullion coins in 1985; to the gold bullion coin first-strike ceremony at 

West Point on September 8, 1986; and then through the twists and 

turns of the ensuing 25 years. 

Since Coin World’s largest constituency is comprised of collectors, 

my testimony will articulate the view of collectors, who often are 

also investors. The quality of the silver, gold, and platinum bullion 

coins produced by the U.S. Mint is exceptional. However, the marketing of these coins is subpar and often disruptive to the marketplace. 

Most of the Mint’s problems in marketing bullion coins are rooted in an ongoing failure to understand who its customers are and 

why they purchase the bullion coins. In my written testimony, I 

have cited a number of problems. In this short timeframe, I would 

like to emphasize solving those problems and making the bullion 

coin programs better. 

These recommendations include: The U.S. Mint should avoid purposely creating rarities. The U.S. Mint should spend time and resources to better acquaint its marketing staff with its various customer constituencies for bullion coin products. 

The U.S. Mint should better inform its customers as to when its 

coin products are going to be available in the marketplace. The 

U.S. Mint should mint to demand by allowing a certain number of 

days for collector versions of bullion coin products to be purchased 

and/or ordered. 

The U.S. Mint should increase bandwidth for its Web site to facilitate the handling of high-traffic ordering periods. The U.S. Mint 

should secure more planchet suppliers and better plan procurement 

and manufacturing so as to avoid disrupting profitable and popular 

coin programs. 

The U.S. Mint should exercise care in scheduling bullion coin 

sales so they are more evenly paced throughout the year and not 

dump into the marketplace near the end of the calendar year. The 

U.S. Mint should take a more active role in providing the public 

with consumer alerts regarding any of its products that might be 

4 

subject to questionable marketing practices in the secondary market. 

The U.S. Mint should place mint marks on all of its bullion coins 

to identify the mint of manufacture. Such marks would preclude 

misrepresentation and possible fraudulent practices in the marketplace. We will also recommend that the U.S. Mint create a standard protective capsule option for housing all of its collector version 

bullion coins. 

Thank you again for the opportunity to testify, and I would welcome any questions that you may have. 

[The prepared statement of Ms. Deisher can be found on page 22 

of the appendix.] 

Chairman PAUL. Thank you very much. 

And we will go on to Mr. Terence Hanlon. Please proceed. 

STATEMENT OF TERENCE F. HANLON, PRESIDENT, DILLON 

GAGE METALS 

Mr. HANLON. Chairman Paul, Ranking Member Clay, and members of the subcommittee, I would like to thank the subcommittee 

for the opportunity to appear before it today to discuss the United 

States Mint’s bullion coin program. It seems appropriate for Congress to take stock of this important program at this time, as 2011 

marks the 25th anniversary of the introduction of the American 

Eagle bullion coins. 

Congress created the world’s most successful bullion coin program with its passage in 1985 of the Statue of Liberty-Ellis Island 

Commemorative Coin Act and Gold Bullion Coin Act of 1985, which 

authorized, respectively, the American Eagle silver and gold bullion 

coins. Since the product launched in 1986, the coins have become 

the dominant bullion coins in the global market for physical bullion 

coin investments. 

Dillon Gage Metals is one of the largest precious metals dealers 

in the United States. Our Dallas-based firm is proud of its affiliation with the United States Mint, as a key distributor of its American Eagle gold, silver, and platinum bullion coins. We look forward 

to the introduction, hopefully later this year, of a palladium coin 

to the program as a result of Congress’ passage last December of 

the American Eagle Palladium Bullion Coin Act of 2010. 

Over the past 25 years, the Mint has produced bullion coins of 

exceptional beauty and quality. Their marketing team has built a 

strong brand for the Mint’s bullion coin line of products which are 

recognized and desired the world over, and has established an 

unrivaled distribution network. 

The Mint is to be congratulated on these accomplishments. This 

is an extraordinary time for the global precious metals market as 

demand for these metals climbs and prices are at or near record 

highs. This demand can be traced back to the international financial crisis that began in 2007, and was further fueled by economic 

uncertainty, jittery equity markets, and the looming threat of inflation. 

Many investors in physical precious metals products prefer the 

size and convenience that coins offer, as well as the imprimatur 

that the national Mint provides. Overwhelmingly, investors choose 

the American Eagle bullion coins, and they do so for three key reaVerDate Nov 24 2008 18:43 Jun 24, 2011 Jkt 066863 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 K:\DOCS\66863.TXT TERRIE
5 

sons: first, the coins weight, content, and purity are guaranteed by 

the U.S. Mint and the U.S. Government; second, there is a liquid 

market for these products because of an established network of authorized dealers that ensure a two-way market; and third, the exceptional beauty and quality of the coins make them desirable. 

As a result, at times the Mint has exceptional demand for its 

gold and silver products, but it has at times been unable to keep 

pace with the demand due to an insufficient supply of coin blanks. 

This has led to disappointed customers and resulted in market 

share losses to other Mints’ bullion products. 

The Mint has taken steps to address its supply difficulties by 

adding additional capacity, but it still struggles to meet demand, 

particularly for the Silver Eagle bullion coins. 

An adequate supply of blanks caused the Mint to forego production in 2009—correction, an inadequate supply of proof versions of 

the American Eagle gold and silver coins because of a requirement 

that gave priority to the production of bullion coins over proof collector coins. Fortunately, Congress addressed that problem with its 

passage of the Coin Modernization, Oversight, and Continuity Act 

of 2010, and provided the Mint the authority to produce collector 

uncirculated and proof American Eagles even in times of unprecedented demand for the bullion versions. 

The Mint also experienced problems with its rollout late last year 

of the America the Beautiful silver bullion coins. The problem highlighted weaknesses in the communication between the Mint and its 

authorized purchasers and the broader retail dealer community 

that the Mint relies upon to sell its products to consumers. 

The Mint should be encouraged to work more closely with its distributors and to have regular dialogue with them. In doing so, it 

will help the Mint to better gauge the market conditions for their 

products by hearing firsthand from those making the markets for 

them. 

The anticipated introduction of a palladium American Eagle coin 

this year will bring a new dimension to the Mint’s bullion offerings. 

It will offer investors an attractive price point in relation to silver, 

gold, and platinum, with different supply-demand factors for the 

material. 

I believe investors will welcome the Mint’s resumption of the production of the platinum Eagle this year, which the Mint halted at 

the end of 2008. Additionally, it would be fitting to mark the 25th 

anniversary of the American Eagle program with production of a 

four-coin collector set comprised of a gold, silver, platinum, and palladium Eagle coin. 

Congress could give a further competitive edge to the American 

Eagle bullion products by adjusting the capital gains tax treatment 

on these investments to make them on par with securities. The 

1981 passage of the Economic Recovery Tax Act created a category 

of collectibles within the Internal Revenue Code, which includes 

precious metals. 

This change in the Tax Code caused precious metals investments 

to be taxed at a different rate than that of investments in equities. 

As a result, current tax law imposes a maximum rate of 28 percent 

on long-term gains on precious metals bullion investments rather 

than the maximum 15 percent levied on securities and mutual 

6 

funds. By lowering the rate, Congress could substantially boost the 

market potential for the American Eagles. 

Again, I want to thank the subcommittee for the opportunity to 

be before it today. I would be pleased to answer any questions you 

may have. 

[The prepared statement of Mr. Hanlon can be found on page 28 

of the appendix.] 

Chairman PAUL. Thank you, Mr. Hanlon. 

We will go on to Mr. Ross Hansen now. 

STATEMENT OF ROSS HANSEN, FOUNDER AND CEO, 

NORTHWEST TERRITORIAL MINT 

Mr. HANSEN. Thank you. 

Chairman Paul, Ranking Member Clay, and members of the committee, my name is Ross Hansen, and I am founder and CEO of 

Northwest Territorial Mint. I have personally been in the precious 

metals business industry for 35 years, and I founded Northwest 

Territorial Mint in 1984 as a full-service integrated Mint. 

We are the largest non-governmental mint in North America, 

and we not only produce our own brand of bullion products but we 

are also a retailer of a number of different governmental bullion 

products, including being an authorized retailer of the United 

States Mint bullion coins. 

Two years ago, I acquired Medallic Art Company, which was, at 

one time, a primary producer of silver blanks for the U.S. Mint. 

And in full disclosure, my company makes a number of challenge 

coins for all levels of military, many government agencies, including numerous Members of Congress. Because of my experience in 

the private sector, I have been asked to testify before this committee regarding the bullion coin program of the U.S. Mint. 

As you may know, the U.S. Mint began its program in 1986, but 

it has only been in the last 3 years that demand for the silver 

American Eagle bullion coins has exploded to unprecedented levels. 

Many social and economic factors have contributed to this dramatic 

increase in demand, not the least of which is the public’s perception 

of an imploding U.S. dollar. 

In recent years, the U.S. Mint has been often been unable to 

meet the increasing demand for its bullion products. The frequent 

shortage of these products has led to the following problems: one, 

the premium charged by the authorized U.S. Mint distributors 

have fluctuated wildly; two, sales have been lost, which decreases 

the amount of revenue to the U.S. Mint; three, the bullion programs of foreign governments have been allowed to penetrate into 

the U.S. market; and four, the production problems have created 

a widely held negative perception of the U.S. Mint. 

The cause of the Mint’s inability to make enough bullion products to satisfy demand can be traced directly to its supply chain, 

specifically its supplies of silver blanks. For example, up until recently the United States Mint was using a single source for its silver blanks. This single source had known limitations in its production capacity and could not expand its production to meet the 

Mint’s needs. 

Rather than working to develop a domestic pool of vendors for 

these raw materials, the U.S. Mint has contracted with the Perth 

7 

Mint in Australia—half a world away—to make up the shortage. 

Any business would recognize that this adds to the cost of the material and transportation, and significantly increases the length of 

delivery. 

I am not here today to merely point out the obvious shortcomings 

of a program for which I have a high regard. Instead, I would like 

to see the American Eagle bullion program continue to grow and 

succeed. 

For this to happen, I offer the following solutions for your consideration: One, the U.S. Mint should create an industry advisory 

group comprised of experienced minting industry professionals who 

are intimately familiar with the material and processes employed 

by both government and private mints. This group should include 

suppliers of both the equipment and raw materials that are used 

by the industry. This group would be distinct from an existing advisory group that deals with coin design issues; the group I am proposing would help with coin production issues. 

Two, the U.S. Mint should engage in an aggressive vendor development program to assure that it has multiple domestic suppliers 

to meet the Mint’s growing needs. Three, as part of the vendor selection the U.S. Mint should ensure that its vendors have an elastic 

capacity, that is, they both have the ability to expand production 

and supply blanks as needed. Four, the U.S. Mint should maintain 

a larger inventory of bullion blanks and finished coins in order to 

better respond to surges in demand for its product. 

And five, the U.S. Mint needs a change in attitude. They often 

have displayed an attitude, which used to be attributed to the 

phone company, of, ‘‘we don’t care—we don’t have to.’’ Their attitude towards vendors and authorized purchasers is often described 

as surly and arrogant. 

It is my opinion that these recommendations, if implemented, 

could help to make a good program into an excellent one that 

would fill its congressional mandate to produce high-quality bullion 

products in sufficient quantities to meet the demands of an everchanging market. 

Thank you for letting me share my thoughts with you. 

[The prepared statement of Mr. Hansen can be found on page 30 

of the appendix.] 

Chairman PAUL. I thank the gentleman. 

We will now go to Mr. Nessim. 

STATEMENT OF RAYMOND NESSIM, CHIEF EXECUTIVE 

OFFICER, MANFRA, TORDELLA & BROOKES, INC. 

Mr. NESSIM. Mr. Chairman, members of the committee, the subject matter being bullion coin programs of the United States with 

a question, can they be improved, the answer to the question will 

always be yes, they can be improved. Established measurable goals 

can always be improved by means of flexibility and transparency. 

Silver Eagles recent short-term supply probably is caused by domestic fabrication capacity of silver blanks. This issue may be addressed by extending some flexibility to U.S. blank fabricators in 

order to help them invest in additional capital equipment for increased capacity, maybe flexibility simply in the form of a minVerDate Nov 24 2008 18:43 Jun 24, 2011 Jkt 066863 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 K:\DOCS\66863.TXT TERRIE
8 

imum quantity order guarantee per annum for a certain period of 

time. 

With regard to the America the Beautiful silver coins, the issue 

was not that of distribution but rather that of supply. The United 

States Mint has effectively built up great anticipation for the new 

2010 silver America the Beautiful set. 

Expectations were that the Mint would mint sufficient quantities 

to satisfy potential public demand. Instead, the Mint announced 

only in December of 2010 that they were able to fabricate only 

33,000 sets. 

As wholesale distributors, the day we were notified of our allocation we proceeded to sell part of our allocation to several retail 

dealers, as we normally do. Later that same day, or maybe the following day, we were informed by the Mint that allocations were 

cancelled and that they will relaunch, and accept orders on December 10th. 

The smaller-than-expected mintage prompted some retail dealers 

to offer these coins on their Web sites to the retail public at very 

high prices. We had to cancel our sales agreements, which placed 

us in a very embarrassing predicament. 

To protect the U.S. public from potential price gouging, the U.S. 

Mint issued new directives on December 9, 2010, to the A.P.s requiring them to: make available for sale directly to the retail public 

all their allocations; limit profit margin to no higher than 10 percent; enforce a limit on coin design and sales for each household; 

and not sell any such coins to either their own company officers or 

employees. 

Despite the problems which this has caused, we consider, in our 

opinion, that the Mint has done the right thing and made the right 

decision. These directives created three problems for us, namely: 

one, the risk of being accused of price fixing; two, not being able 

to hedge the silver content of our purchase, which is our norm, consequently being left exposed to price risk decline; and three, as 

wholesale distributors we were not adequately equipped at the 

time to sell one coin of each design for each household. 

Under the circumstances, the Mint acted promptly, decisively, 

and did what it had to do to counteract delayed production and limited mintage. 

If there are any lessons to be learned from this experience with 

reference to, ‘‘can they be improved,’’ maybe providing A.P.s with 

reasonable price notice change or mintage problems; minimizing 

surprises by means of regular, open, transparent communications 

with the A.P.s regarding marketing plans, fabrication, or minting 

obstacles, or any other difficulties; and allowing the Mint more 

flexibility by lifting some legislative restrictions, allowing them to 

operate a little bit more like a commercial entity. 

In conclusion, and in our opinion, the current middle management of the Mint, be it bullion, procurement, precious metals, contracting, production, or manufacturing consists of very experienced, 

qualified, and dedicated individuals. What appears to be void in 

our experience is a senior chief executive with sufficient authority 

to act and report to a political appointee and to a board of directors 

comprised of a cross section of specialists with commercial experience, U.S. blank fabricators, and U.S. authorized purchasers. 

9 

Thank you. 

[The prepared statement of Mr. Nessim can be found on page 34 

of the appendix.] 

Chairman PAUL. I thank the panel. 

And I will now yield myself 5 minutes for questions. 

First, I would like to mention that one of the reasons I think we 

are here today and we are concerned, is because we have a shortage of coins and there is a high demand, and the Mint hasn’t been 

able to keep up. That seems to be the major problem. 

And then the questions raised are how things are distributed and 

how things are managed, and what is the responsibility of the 

Mint? But in many ways, what we are talking about here is a reflection of what we are doing to our money. This shortage is a consequence of the debasement of a currency. 

Of course, there was a time when there was a fixed exchange 

rate between the paper and the coinage when the coins had actual 

value, gold or silver. And in the 1930s—in 1933, of course, there 

was a devaluation of major proportions and it went from—a dollar 

went from one-twentieth of an ounce of gold to one-thirty-fifth of 

an ounce of gold, and then gold was made illegal and it was fixed 

for a long, long time. 

In the 1970s, we had two fixed devaluations: one, it went onethirty-fifth of an ounce to one-thirty-eighth of an ounce of gold; and 

then it was refined 2 years later in 1973 to one-forty-second of an 

ounce of gold. And then after that, the debasement of the currencies went to the marketplace as gold was legalized. 

So we have had steady debasement of the currency, and now, as 

some of you have already mentioned, the economy has a lot to do 

with—people are worried and concerned about how they preserve 

their wealth. So there has been a high demand for silver and gold 

to the point where now there are shortages. 

The problem is a technical problem on how to deal with this, but 

ultimately, if you had a sound currency, this would be a non-event; 

it would be a non-problem. But right now, when you think about 

the debasement of the currency, it has been horrendous. One-twentieth of an ounce of gold to one-forty-second of an ounce of gold. 

That is a huge debasement of our currency, and people are struggling and just wondering, what do you do when a government does 

this to its money? 

But anyway, I would like to see it facilitated, that people can 

handle—help take care of themselves because before 1976, it was 

illegal to do this, to actually buy coins and buy gold coins, and you 

went to jail if you bought a gold coin. 

But I do want to ask a general question to the panel: If you 

would, I know you have touched on this already, but just if you 

could briefly explain to us the distribution network—how does it 

work from the time the Mint does something and until I can go get 

a coin in my pocket? Would one of you volunteer and describe to 

me exactly how that works? 

Mr. Hanlon? 

Mr. HANLON. Yes, I would be happy to. 

The Mint has authorized purchasers, of which we are one. So the 

product comes from the Mint to us, as an authorized purchaser, 

and we have the responsibility of making a two-way market, both 

10 

providing that product to dealers who are providing the product directly to the retail customer. And as well, we have a responsibility 

to make a buy-back that is reasonable so the spread between the 

bid and the ask is a reasonable number, a close number so it also 

maintains a liquid market. 

So it takes three steps. It comes to the authorized purchaser. We 

then distribute to the dealer—sometimes a wholesaler who will distribute it one more time. 

But normally, we are selling to the dealer who is providing that 

product to the customer. That ranges from coin dealers, banks, brokerage houses, pawn shops. It is a fairly liquid market at this 

point. 

Chairman PAUL. Is there a buy-back arrangement with the Mint, 

or once you buy them, they are yours? 

Mr. HANLON. No. The Mint strictly sells— 

Chairman PAUL. Right. 

Mr. HANLON. —they do not buy back. 

Chairman PAUL. Okay. Another quick question: Right now I understand that I can’t go to the Mint and buy bullion coins. Would 

there be anything wrong with that? 

Mr. HANLON. The Mint is not capable of handling that. First of 

all, they can’t handle a two-way market because they would have 

to hedge their position, which they have absolutely no experience 

or knowledge in. 

It would be overwhelming, actually, for the Mint to take that position. The spreads would be too wide if they did get involved in 

it. 

Yes, it would be wrong. 

Chairman PAUL. But they still sell proof sets. Is that correct— 

the Mint? 

Mr. HANLON. The Mint still sells— 

Chairman PAUL. To individuals. 

Mr. HANLON. —numismatic products to individuals, yes. 

Chairman PAUL. Okay. My time has expired. 

I yield to the ranking member, Mr. Clay. 

Mr. CLAY. Thank you, Mr. Chairman. 

Ms. Deisher, in your December 20, 2010, editorial in Coin World, 

you called on Chairman Paul and members of this subcommittee to 

review the Mint’s handling of the five-ounce silver bullion coin program. In that editorial you noted that the 2010 production numbers 

were significantly lower than the net worth that authorized purchasers had anticipated. 

You wrote that such low mintages will produce a speculating 

frenzy smacking of contrived rarity, and it is incumbent upon the 

U.S. Mint to produce sufficient bullion coinage to satisfy demand. 

So I am sensitive to the fact that the U.S. Mint fell short in that 

respect. 

However, I was pleased to see in Mr. Nessim’s written testimony 

that in his view, the U.S. Mint took appropriate mitigatory actions 

to address the very speculating frenzy you referred to. While I 

would hope we can find a way for the U.S. Mint to address the supply issues, I am pleased that the Mint took action to protect the 

U.S. public from potential price gouging, which Mr. Nessim described as the right direction. 

11 

I would also welcome any suggestions from the witnesses as to 

how we can ensure that the Mint is able to supply investor and collector demand. 

Finally, in fairness to the U.S. Mint, I would like to ask for 

unanimous consent to enter into the record an op-ed from former 

U.S. Mint Director Ed Moy that gives the U.S. Mint’s perspective 

on this— 

Chairman PAUL. Without objection, it is so ordered. 

Mr. CLAY. Thank you. 

Ms. Deisher, in your written testimony you recommend that the 

U.S. Mint should take a more active role in providing the public 

with consumer alerts regarding any of its products that may be 

subject to questionable marketing practices in the marketplace. 

Can you give me an example of the type of questionable marketing 

you refer to and how you think the U.S. Mint should address it? 

Ms. DEISHER. One of the ongoing problems that we have seen is 

the secondary market making products of what they call firststrikes. The U.S. Mint has said they do not keep track of the first 

coin struck. What they do is put tracking numbers and information 

on packaging slips, and these go to the grading services, and the 

grading services are looking at the low numbers saying, ‘‘Aha, this 

is the first coin struck.’’ 

In the collector market, that is the magic thing, to have a first 

coin struck. What we are seeing in the market—and you see it on 

the cable television programs all the time—they are asking huge 

premiums and saying, ‘‘These are the first coins struck,’’ when in 

fact, they are not. 

The Mint issued a consumer alert, one in 2006. This continues 

to be a problem. In fact, there was a civil suit against one of the 

grading services in Florida and that company settled out of court 

and paid quite a bit of money. 

But other services continue to do this and many people pay huge 

premiums for something that is not. We would like to see the Mint 

be more proactive and make the public aware that there is no way 

that they know if the coin is the first one struck or not. This is one 

of the areas that we feel the Mint could be much more proactive. 

Mr. CLAY. I am sorry. 

What is your opinion on limiting the newest coin to one household—to one purchase per household? Is that effective, or— 

Ms. DEISHER. What it does is encourage speculation. For instance, in the America the Beautiful, they limited the bullion product to 33,000. 

This is a pattern we have seen with virtually every new product. 

They will have some type of limitation because the market has 

built up a great enthusiasm. Whether it is a production problem or 

whatever, there is a limited quantity. 

And therefore, speculators go in and only if you have one per 

household, but I can assure you, probably on the Mint’s mailing list 

and some of these people who were told to sell them like that, the 

dog in the house had an address, the cat in the house, and every 

cousin in town had an address. There are ways to get around that. 

These artificial, one-per-household things don’t work. 

So the solution is to work ahead of time to understand what market demand could be. I have to tell you that we follow virtually 

12 

every world mint that produces coins. We don’t see this problem in 

any other mint. 

Mr. CLAY. Thank you. 

Thank you. 

Chairman PAUL. I yield 5 minutes to Mr. Luetkemeyer. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman. 

Mr. Hansen, I am just kind of curious: Can you tell me just how 

volatile the market is, and if we oversupply it, is that going to have 

an effect on it? Can we oversupply it based on demand? Can you 

just give us a little educational background on it? 

Mr. HANSEN. On some of the collector coins, yes, it can be oversupplied. And we have seen that. 

On the bullion market, the bullion market is a very volatile market. All of us dealers can attest that it depends on what is happening in the financial markets. Our sales can fluctuate wildly. 

But if the U.S. Mint carries a larger inventory, it can help with 

some of the supply shock. 

Mr. LUETKEMEYER. Who would bear the cost of that increased 

supply or inventory? 

Mr. HANSEN. The U.S. Mint is actually quite profitable when it 

comes to making their bullion products. And if there was any additional cost, it would be quickly made up by the increase in profits. 

Mr. LUETKEMEYER. So they just pass the cost on, is what you are 

saying? 

Mr. HANSEN. Right. The U.S. Mint, in my best estimate, loses 

about a—about a third of their sales are lost because they can’t 

supply to demand. And the small increase in production would give 

substantially more sales— 

Mr. LUETKEMEYER. Okay. 

Mr. HANSEN. —which would then provide the profits to afford 

that. 

Mr. LUETKEMEYER. Okay. 

Mr. Hanlon, in your testimony you talk about perhaps changing 

the tax rate from 28 percent on collectibles, which include precious 

metals, down to 15 percent, which is there for the securities and 

mutual funds. Can you tell me, how much would this increase demand? How much kind of a cost would this be to the government? 

Tell me what you think would happen here if we did this. 

Mr. HANLON. As far as the Mint is concerned, it would benefit 

greatly because there are multiple people who would love to purchase precious metals as an alternative investment to standard securities, so it is— 

Mr. LUETKEMEYER. So if you did this perhaps would the demand 

for the product go up 10 percent, 40 percent? 

Mr. HANLON. In today’s conditions, I would say 30 percent to 50 

percent would be very realistic. 

Mr. LUETKEMEYER. Okay. That begs the question, then, because 

one of the problems we have right now is that obviously the Mint 

can’t keep up with the demand as it is, so how would it keep up 

with the demand in your scenario, if you increased the tax benefits? 

Mr. HANLON. That would include all the precious metals, specifically gold and silver. But platinum and palladium have gained a 

lot of attention because of their continued liquidity in the market. 

13 

The fact that the U.S. Mint offers any product makes it that much 

more popular, makes it that much more liquid. 

But if you take the ETFs—the exchange traded funds—for instance, and you see the amount of money that has been invested 

in that as an alternative investment to securities, it is a massive 

number. That number in itself, I believe, would be doubled as well 

if the capital gains tax benefit were applied to that, which it should 

be. It is ludicrous, actually, that it is not. 

Mr. LUETKEMEYER. Okay. 

Mr. Nessim, very quickly, in your testimony you indicated that 

the Mint, whenever they are selling the bullion to authorized purchasers, they limit your profit margin to 10 percent. Is that correct? 

Mr. NESSIM. No. This was only applicable to the America the 

Beautiful silver five-ounce coins. 

Mr. LUETKEMEYER. Okay. But they are limiting your profit on 

that particular issue? 

Mr. NESSIM. Yes, correct. 

Mr. LUETKEMEYER. But the other issues, other coins that they 

Mint, there is no limit on the profit? 

Mr. NESSIM. No. They are limiting the profit on the America the 

Beautiful simply because we are requested to sell directly to the 

public, which— 

Mr. LUETKEMEYER. Okay. 

Mr. NESSIM. —they never do on the other bullion coins. 

Mr. LUETKEMEYER. Very good. 

I am about running out of time here, but I just have one quick 

question: How does our Mint activities and our coinage compare to 

other foreign countries? Apparently, there are other foreign mints 

that you are competing against, or working with, or selling other 

products. Can you give us a gauge on that? 

Mr. NESSIM. Yes, they are excellent. They produce more than any 

other mint. The quality is excellent. The other mints produce a 

very good quality, but the U.S. Mint is by far the largest fabricator 

of coins. 

Mr. LUETKEMEYER. Okay. Thank you. 

I see my time is about up. Thank you, Mr. Chairman. 

Chairman PAUL. Thank you. 

I yield 5 minutes to Mr. Green, from Texas. 

Mr. GREEN. Thank you, Mr. Chairman. 

I thank the witnesses for appearing. 

Also, I thank the ranking member for his great work in helping 

us with these issues. 

Members and witnesses, excuse me. Let me ask a question about 

the platinum blanks and the half-dollar silver proof blanks. Is it 

true that the only manufacturer for these products is in Australia? 

Mr. HANSEN. I can best address that— 

Mr. GREEN. Yes, sir. 

Mr. HANSEN. —as the only manufacturer here. No, there are a 

number of manufacturers that could be—it could be done here in 

the United States. The U.S. Mint just hasn’t sought them out. 

Mr. GREEN. If I may, let me—thank you for that, but rather than 

get to that point—and we may get there—the question really has 

14 

to do with what is currently the circumstance. Is it currently the 

circumstance that this is the case? 

Mr. HANSEN. I believe that is correct. 

Mr. GREEN. Only Australia. And I think you were about to indicate that it could be done within the United States, notwithstanding the fact that it is not being done within the United States. 

Is this correct? 

Mr. HANSEN. That is correct, sir. 

Mr. GREEN. Okay. Now, is it true that until about 1981, we did 

have a presence in the marketplace with these products? Does anybody happen to remember about when it occurred? 

Mr. HANSEN. Are you saying the U.S. Mint was producing its 

own blanks? 

Mr. GREEN. That we had the blanks for the platinum blanks and 

the half-dollar silver proof blanks. Isn’t it about 1981 when we 

used to do this? 

Yes, ma’am? 

Ms. DEISHER. The American Eagle bullion coin program was not 

created until 1986, and silver was taken out of American circulated 

coinage in 1965. So the U.S. Mint’s refineries in silver planchet 

production really ended in the 1960s. 

It was not until the bullion program was created, actually in December of 1985 and they—it took them a year to gear up. But no 

precious metals coinage had been produced by the U.S. Mint, or 

struck by the U.S. Mint, during that interim. 

Mr. GREEN. How do you account for the absence of a U.S. company in the marketplace with these blanks? 

Mr. HANLON. Could I help address that, Mr. Green? 

Mr. GREEN. If I may, the lady may have an opinion that I am 

interested in. I will give each of you an opportunity. I would like 

to hear the lady’s opinion. 

Ms. DEISHER. I am not sure I understand your question. Are you 

referring to the bullion blanks— 

Mr. GREEN. Right now, we have an Australian company that produces the platinum blanks and the half-dollar silver proof blanks. 

Ms. DEISHER. Yes. 

Mr. GREEN. We don’t have an American company that is doing 

it. 

Ms. DEISHER. We are aware that there are American companies 

capable of doing it, but— 

Mr. GREEN. I understand, but— 

Ms. DEISHER. —we do not know— 

Mr. GREEN. I understand. Okay. If your answer is that you don’t 

know, I accept it. 

Ms. DEISHER. We have asked the United States Mint and we 

have not gotten a clear answer. 

Mr. GREEN. So you don’t have an opinion as to why? 

Ms. DEISHER. I do not. 

Mr. GREEN. Okay. 

Let’s move to the question now. It really is, why is it that it is 

not being done in the United States? I understand we have the capacity and we are capable, but tell me why. 

Yes, sir? 

Mr. NESSIM. May I answer? 

15 

Mr. GREEN. No, the gentleman who is next in line. 

Mr. NESSIM. Oh, I am sorry. 

Mr. GREEN. I am going down the line. I am sorry. 

Mr. HANLON. Ray and I feel—from the same perspective, and I 

believe that the answer is that the specifications for actually making the blanks for platinum coins or the silver or the gold are fairly 

stringent, and that creates an issue, according to the Mint, for 

those who are willing to meet those specifications in exchange for 

the profit that is made on that particular product. 

Mr. GREEN. Because the yellow light is on, let me go to the next 

person. 

Can you give me a brief response there? You were going to give 

one earlier. 

Mr. HANSEN. As the only manufacturer here, I can just tell you 

simply, the U.S. Mint has not been responsive to requests from my 

company or others to do the blanks. They don’t develop their vendors within the United States. 

Mr. GREEN. There are some who contend that this goes back to 

budget cuts in 1981. Is there any connection to the budget cuts in 

1981? Does anybody see any connection? 

Mr. HANSEN. No, sir. 

Mr. GREEN. Okay. 

The next gentleman, please? 

Mr. NESSIM. I believe it is a matter of economics. Our parent 

company is a fabricator of blanks, and we have proposed and offered and sent samples to the U.S. Mint of our blanks. Their specs 

are very high and their prices are very advantageous, meaning 

they would shop around and get the best possible price, and from 

an economic standpoint, if it makes more sense to bring it in from 

Australia or anywhere else as compared to manufacturing them 

here it should be done. 

Chairman PAUL. Your time has expired. 

Mr. GREEN. My time is expired. Thank you. 

Chairman PAUL. I yield 5 minutes to Mr. Lucas, from Oklahoma. 

Mr. LUCAS. Thank you, Mr. Chairman. 

Ms. Deisher, let’s run and gun here a little bit in this 5-minute 

timeline we have. Would you explain to the committee in the 

briefest of terms your comments about why mint marks are important not just to collector coins but bullion coins, and why for 2,000 

years mint marks have been important? 

Ms. DEISHER. Yes, sir. It shows the mint of origin, and sometimes there are unequal productions at the facilities so it could possibly create a rarity, but the reason I went to this, especially with 

the new coin programs coming on and the additional silver, is the 

problem that I identified on the packaging and the likelihood that 

secondary market could abuse this also. So it is very important and 

it was historically the case that the U.S. Mint always identify—or 

pretty much identified, especially in its precious metals, its gold 

and silver coinage— 

Mr. LUCAS. As have most mints for 2,000 years. 

Ms. DEISHER. Yes. 

Mr. LUCAS. Second question: The Mint’s Web site. You comment 

about the bandwidth. I assume that means the ability for people 

in these rushed periods to get online. 

16 

From your investigations as a reporter, what kind of capacity do 

you think the Mint has and what kind of demand, at key points, 

have they had? What is the ratio in their present configuration? 

Ms. DEISHER. It is my understanding they are working to increase that, but I can tell you, every time there is a new collector 

product offered, and you go to the Web site, people sit there for 

hours trying to get in and you can’t. And then you call on the 

phone and you are backed up. 

I don’t know what their peak capacities are, but what happens— 

I know of instances where people will pay people sitting at home 

to sit there for hours and hours and hours to try to get in to buy 

products. And this is ongoing. This has been happening—I remember in 2007, and it was horrendous for the First Spouse programs. 

Mr. LUCAS. So it is not just a one-time anomaly. 

Ms. DEISHER. No. 

Mr. LUCAS. It is a regular problem in peak order periods. 

Would you touch on the effect—the entire panel has discussed 

this 33,000 coin issue and starting and stopping it. From your perspective, not only as a reporter but in a business that sells advertising and watches these various enterprises, could you give us a 

little insight in the economic impact that this start-stop-sputter situation in this particular case had on real world businesses? 

Ms. DEISHER. I would like to submit for the record comments of 

one of our advertisers, Mr. Mike Folgens, and he very clearly talks 

about how you have to place advertising months in advance. He 

lost several hundred thousand dollars in the anticipation it would 

be business as usual trying to get advertising placed in our publication and others. 

When the Mint Director had been talking about how they expected 100,000 of these sets to be produced—and this was in July— 

it wasn’t until December that we learned there were going to be 

33,000. Of course, that created a frenzy in the market. 

They have another 27,000 blanks that they have decided to make 

into a collector product. This same thing is going to happen in 

probably 6 weeks and it will be actually a greater problem because 

of the low mintages. 

These kinds of things—from a collector perspective, if you can’t 

start at the beginning of a program, you are discouraged from ever 

participating in it again. It is a pattern that we have seen over and 

over where somehow there is a limited mintage set up for the beginning of a program, there is wild speculation, and then people 

just get discouraged and stop buying the product on the collector 

side. 

Mr. LUCAS. Could you touch for a moment on the Mint model? 

And then I have a question for the rest of the panel. 

Historically, in 1792 the Mint was set up. You brought your precious metals in, you paid a small fee, and they turned it into the 

appropriate coins of your request. And then we went away from— 

I guess the term would be free coinage—to a process where the 

Mint was a government enterprise stamping out things, meeting 

demand as requested by the Treasury. 

Now, in recent years we have changed that business model again 

to a more business-oriented model, correct? 

Ms. DEISHER. Right. 

17 

Mr. LUCAS. Part of the proceeds go into the revolving fund. 

Would you offer any observations you might have on how going 

from the previous model where whatever they did did not benefit 

their operating fund to a model now where the more products 

moved there a benefit to the direct—to the Mint’s fund itself? 

Could you expand on any of that? 

Ms. DEISHER. Certainly, the model that came into play in the 

mid-1990s is much more efficient and I think it gives the Mint 

flexibility to plan. Where we see a failure is to plan to avoid the 

crisis management type things. 

It might need some refinement. It is definitely the kind of model 

in today’s world. 

Mr. LUCAS. If the chairman will tolerate me just a little bit more, 

the old lament from the 1980s prior was they didn’t want to do 

anything. Now the lament is because of the different model, they 

want to do so many things that the typical collector might not be 

able to buy all of the options they offer. Is that a fair observation 

from the folks in the country? 

Ms. DEISHER. That is a fair observation. When I did an editorial 

back about 7 years ago, if you purchased one of everything the U.S. 

Mint produced that year, it would have cost $3,000. 

Mr. LUCAS. Impossible for most— 

Ms. DEISHER. We did the same analysis this year and it was over 

$10,000, and because they are not producing platinum that—it 

would be even higher if they had those. So to be a complete collector today is—collectors are really priced out. You have to select 

a series if you want to be complete. You can’t be a completist today. 

Mr. LUCAS. I appreciate the chairman’s indulgence on time. 

Chairman PAUL. I thank the gentleman. 

And without objection, the statement Ms. Deisher referenced will 

be placed into the record. 

Ms. DEISHER. Thank you, sir. 

Chairman PAUL. And now, I would like to yield 5 minutes to the 

gentlelady from New York, Mrs. Maloney. 

Mrs. MALONEY. I thank the chairman for yielding and for holding 

this hearing. 

We certainly want to have high-quality coins produced, but on 

the panel, I believe we have only one person from the private sector, Mr. Hansen, who is working in this area. So I would like to— 

and I understand in your testimony you came out and said things 

that you thought the qualifications or demands were too onerous. 

So I would like to ask you, what are the factors you would encourage Congress to consider in creating any future bullion coin 

program? You cited ensuring sufficient blank suppliers so that one 

coin program’s production does not affect the supply of blanks for 

another coin program. Are there other recommendations that you 

would like to speak to that you believe would be an improvement 

on the part of government? 

Mr. HANSEN. Mrs. Maloney, I believe that the onerous comment 

about the blank quality was made by Mr. Nessim, not myself. But 

the U.S. Mint does have high standards for their blanks. We have 

always met those standards. The standards are really not that onerous. 

18 

The U.S. Mint has a very arbitrary system of accepting blanks, 

and in the past when we have supplied blanks to the U.S. Mint, 

we never had any problems with quality, but it has been used as 

a weapon to kind of limit the suppliers. The U.S. Mint kind of has 

it in their mind who they want to supply blanks. 

The problem isn’t with the quality issue. The problem is the U.S. 

Mint just recognizing that they need more than one supplier and 

they just need to open it up. And they should be made in the 

United States, not overseas, if we are providing American jobs. 

Mrs. MALONEY. Let’s do it. Thank you. 

Oh, I think I still have some more time. 

Chairman PAUL. Yes, you do. 

Mrs. MALONEY. Oh, I have some more time. Okay, great. 

Mr. HANSEN. And if I could just make one more comment on it, 

Medallic Art Company made a substantial investment of many millions of dollars before I acquired them in getting ready to supply 

the blanks for the U.S. Mint, which they had done for many years, 

and they were just universally rejected and no logical reason was 

ever given. They were just basically told, ‘‘Thank you, but no.’’ 

One reason I acquired the company is because the previous 

owner had no market for the products, and if the U.S. Mint had 

accepted us as a blank supplier, we wouldn’t be sitting here today. 

We could supply all the blanks the U.S. Mint would ever need. 

Mrs. MALONEY. But then when you got the business, you got 

them to accept your blanks, right? 

Mr. HANSEN. No. 

Mrs. MALONEY. Really? 

Mr. HANSEN. In fact, I have had many discussions with the previous Mint Director, told him I could supply him with blanks. He 

just smiled and said, ‘‘Oh, okay,’’ and I asked him if he would like 

to come out and tour our facilities and there was just a deadpan 

response. 

Mrs. MALONEY. So how many companies are supplying the 

blanks now in America? 

Mr. HANSEN. There is one primary supplier, which is a company 

in Coeur d’Alene, Idaho. They recently added a second one in the 

United States, which is in Rhode Island. But the two major suppliers are Idaho, and also the Perth Mint in Australia. 

Mrs. MALONEY. Australia? 

Mr. HANSEN. Australia. 

Mrs. MALONEY. Why are we giving preference to Australia? 

Mr. HANSEN. That is a question directed to the U.S. Mint. 

Mrs. MALONEY. And when they don’t—they don’t have competitive bidding? They don’t have—they just say no to you? They just 

say you can’t do it and they don’t give you any reason? 

Mr. HANSEN. That is correct. 

Mrs. MALONEY. Mr. Chairman, I think we should inquire why 

and see if we can have a competitive bidding to get the best product at the best price. 

And Mr. Nessim, it was your statement that you thought that 

the standard was too high, if you want to explain that. 

Mr. NESSIM. No. It is not too high. It is high, but it should be 

high and it is comparable to other major mints. 

19 

Mrs. MALONEY. Well then, if I could ask you, Mr. Hansen, if you 

can’t sell your blanks to the U.S. Government, who are you selling 

them to? 

Mr. HANSEN. We have our own line of products and we have 

about 250 people who work at the Mint and we make a lot of products for Congress, too, and the U.S. military. And we have a very 

active secondary market. We actually compete with the U.S. Mint 

and we also sell their products. 

Mrs. MALONEY. My time has expired. 

Chairman PAUL. I thank the gentlelady. 

And I will go on to Mr. Schweikert, from Arizona. 

Mr. SCHWEIKERT. Thank you, Mr. Chairman. 

And this one may be a little slightly off topic, but for those of 

you who also sell larger numbers of product, out of curiosity: Do 

you buy hedges on the cost of your commodities? That is for— 

Mr. NESSIM. What is the question again, please? 

Mr. SCHWEIKERT. Buying a hedge. So let’s say you are about to 

order— 

Mr. NESSIM. Yes. We do hedge. 

Mr. HANLON. Yes. Hedging is part of the procedure, the policy, 

the business of carrying bullion products, and the whole purpose of 

hedging, of course, is that we don’t play the market, we aren’t speculating. So it is an additional cost involved in trading of precious 

metals, specifically the U.S. Mint bullion coins, in this case. 

Mr. SCHWEIKERT. Mr. Chairman, then the second part of the 

question is, how do you buy a hedge if you are not completely sure 

about how much product you are going to be acquiring? 

Mr. NESSIM. When we know exactly what we are going to buy 

we hedge that exact— 

Mr. SCHWEIKERT. Okay. So you are hedging actually once you 

know what inventory you are going— 

Mr. NESSIM. Otherwise you cannot hedge, yes. 

Mr. HANLON. Sir, the point of the hedge in the respect of buying 

the product is that you buy products to have live so you can provide immediate delivery. So you do know the number of ounces 

that you are purchasing and that is the same number that you are 

hedging. In other words, you are taking the opposite position in the 

market against your long position and so the hedge is a number 

that you always do know. 

Mr. SCHWEIKERT. Mr. Chairman, part of the question was more 

based—I was concerned that you were having a fulfillment issue of 

product after time you had already hedged your risk. 

Mr. NESSIM. My point in my testimony was that we were informed on the silver five-ounce coins. We were informed of our allocation on one day and then the following day we were told that this 

is cancelled. 

Mr. SCHWEIKERT. Okay. You beat me back to my notes, so—but 

that was an anomaly that happened? 

Mr. NESSIM. Correct. It never happened before. 

Mr. SCHWEIKERT. Okay. Is there anything else you would want 

someone like me to know about how you do those mechanics? 

Mr. NESSIM. It is not really significant for that particular purpose, really. It is our problem of hedging or underhedging, but it 

has nothing to do with improving the Mint’s performance, no. 

20 

Mr. SCHWEIKERT. Okay. 

Mr. Chairman, thank you. That was actually the question I had. 

I yield back any time I have. 

Chairman PAUL. Does the gentlelady from New York care for 5 

minutes? 

Dr. HAYWORTH. Mr. Chairman, I yield back my time at present. 

Thank you, sir. 

Chairman PAUL. Okay. Thank you. 

Mrs. Maloney, would you care to follow up with another question? If so, I will yield to you. 

Mrs. MALONEY. Yes, I would. 

I was interested, because we are facing a job crisis here in America; we need to employ Americans. And so I was curious—although 

Australia is a wonderful ally, a wonderful country—why we are 

doing that. 

And I was told that while Gold Corporation in Australia supplies 

several different precious metal blanks, they are the only supplier 

of platinum blanks and half-dollar silver proof blanks. So if American companies can’t supply what they are supplying, then there is 

a reason why they are going there. 

So I would like to ask you, Mr. Hansen, why you or other suppliers here in America are not making that available to the Mint? 

Mr. HANSEN. We have offered. We are qualified to make—and 

there are a number of manufacturers in the United States that can 

make blanks, both platinum blanks and silver blanks. 

I asked this question directly of the former Director of the Mint 

and he said it was not a priority for them. They said that this is 

a global marketplace, and that they source globally, and really 

their priority was not to source in the United States. That was the 

explanation that was given to me. 

Mrs. MALONEY. Thank you. I wanted to clarify that. 

Thank you. 

Chairman PAUL. If there are no other questions, this hearing is 

adjourned. The Chair notes that some members may have additional questions for this panel which they may wish to submit in 

writing. Without objection, the hearing record will remain open for 

30 days for members to submit written questions to these witnesses and to place their responses in the record. 

[Whereupon, at 11:06 a.m., the hearing was adjourned.] 

(21) 

A P P E N D I X 

April 7, 2011 

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