For much of the year, the United States Mint has been touting the upcoming recreation of what it has called the “nation’s most beautiful coin.” Augustus Saint Gaudens’ design for the Ultra High Relief Gold Double Eagle will be recreated as a one ounce 24 karat gold coin available for sale to the public. The Mint’s intention to recreate the coin was first announced this March, followed by an official unveiling in July, and a well publicized first striking in November. The US Mint intends to strike the coins throughout 2009 in quantities necessary to meet public demand. So far, coin collectors have responded enthusiastically to the upcoming offering. With the recent mainstream attention on gold, there will likely be interest from the broader public as well. Is the United States Mint prepared to handle the potentially significant demand for the new gold coin? This year the US Mint, as well as most other world mints, have had continuous problems procuring sufficient gold blanks to meet the incredible demand for bullion coins. The US Mint in particular has been forced to suspend sales of some gold bullion offerings and continues to distribute coins though an allocation program since they are unable to meet the full demand. Next year the US Mint will be at odds with itself as it struggles to meet growing demand for their regular bullion coins and new demand for a potentially hot collectible coin. To estimate how much demand the new coin might generate, we can look at the US Mint’s 2006 release of the 24 karat American Buffalo Gold coin. Similar to next year’s offering, the coin design was taken from an old collector favorite, in this case the Buffalo Nickel. The coins were offered as one ounce bullion coins and one ounce collector proof coins. Sales of the coins began in late June 2006. In just over six months, the US Mint sold approximately 337,000 bullion coins and 252,000 proof coins for a total of 589,000 ounces worth of gold. Sales of the regular 2006 American Gold Eagle bullion coins totaled only 261,000 ounces. Even if only the collectible versions of coins are considered, this represents a 50% increase in demand for gold coins. Since the US Mint has been unable to meet the full demand for regular gold bullion coins this year, the prospects that it can handle the additional demand for a popular collectible gold coin on top of already robust gold bullion coin demand seem remote. Another aspect to consider is that the Ultra High Relief Gold Double Eagles are struck on specialized blanks. The coin will have a thickness of 4 millimeters, which is more than 50% thicker than most one ounce gold bullion coins. So far the US Mint has been procuring these specialized blanks from Gold Corp. (GG), a wholly owned subsidiary of the Western Australian Government, who operate the competing Perth Mint. Notably, the Perth Mint recently announced that it would be forced to cease taking orders for precious metals until January 2009 due to “unprecedented demand.” So, not only will the US Mint need to procure a large amount highly specialized blanks from an already tight market, it will need to procure them from a competitor struggling to meet its own demand. Taken together, these factors do not bode well for a smooth release of this “recreated materpiece.” I envision a frustrating series back orders, delays, and eventual order limitations for the new coin. The US Mint intended the Ultra High Relief Gold Coin to be “a prestigous example of the highest level of artistic excellence in American coin design.” Instead it might just end up with another gold related headache.

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