JAY JOHNSON JOINS GOLDLINE TEAM

We are honored to welcome former U.S. Mint Director Jay Johnson to the Goldline team.

By Robert J. Fazio
Executive Vice President

As the 36th Director of the U.S. Mint, Jay managed the multibillion dollar manufacturing business for the U.S.government. Under his supervision, the U.S. Mint produced a record 26 billion coins in the fiscal year 2000-2001 along with a record "profit" of $2.6 billion dollars.

Jay is also a former U.S Congressman from Wisconsin and a long-time award-winning news broadcaster and recipient of an American Numismatic Association Presidential Award.

Among his various duties for Goldline, Jay will present video blogs discussing important developments in the coin and precious metals markets. Check Goldline's website, www.goldline.com, for new editions of Jay's blog.

To commemorate Jay's addition to the Goldline team, we have devoted this article to a brief history of the United States' Mint and notable facts regarding American coins.

America's First Mint and Coinage

The federal government's power to coin money and regulate its value comes from the U.S. Constitution which was signed in 1787. It would take five years, however, before Congress created the United States Mint and authorized the first U.S. coins: gold Eagles, Half Eagles and Quarter Eagles; silver Dollars, Half Dollars, Quarter Dollars, Dimes, and Half Dimes; and copper Cents and Half Cents.

The first mint was located in Philadelphia which, at that time, was the nation's capital.

The first U.S. coins struck by the Mint were silver "half dimes". Legend states that the silver used for these coins was donated by President and Mrs. Washington.

The Mint's first circulating coins were minted in 1793 and consisted of 11,178 copper cents.

Three new branches of the Mint were authorized in 1835 following the growth in the South after the discovery of gold in the early 1800's. All three mints closed after the Civil War.

Following discovery of gold in California, mints were opened in San Francisco and Denver. The Mint's administrative headquarters were moved from Philadelphia to Washington, D.C. in 1873.

Congress authorized the Mint to manufacture coins for foreign governments in 1874 provided such minting did not interfere with U.S. coin production. The first foreign coins were struck for Venezuela. Since then, foreign coins have been struck for more than forty governments.

There are currently five active mints: Philadelphia, San Francisco, Denver, West Point and the Bullion Depository at Fort Knox.

Fort Knox

Fort Knox is famous for being the United States' principal gold bullion depository. However, this 109,000 acre military base also houses the Army Armor Center and is home to the U.S. Army Recruiting Command.

The United States Bullion Depository at Fort Knox is a high-security facility (among other things, no visitors are allowed to the Depository) which is under the supervision of the Director of the U.S. Mint. The building is equipped with the latest protective devices. The Depository has its own emergency power plant, water system and other facilities. The presence ofthe Army units, including more than 30,000 soldiers and associated tanks, artillery and attack helicopters, provide additional protection to this fortified facility.

The two-story Depository contains a steel and concrete vault that is divided into compartments. The vault door weighs more than 20 tons. No one person is entrusted with the combination.

Housed within this vault are approximately 147.3 million ounces of gold with a current market value of approximately $132,570,000,000. Interestingly, the United States lists the "book value" of this gold at $42.22 per ounce. The standard gold bar in Fort Knox weighs approximately 400 ounces, or 27.5 pounds.

U.S. Gold Coins

The first gold coins minted by the United States included $10, $5 and $2.50 denominations. One of the most valuable U.S. coins in history is the 1933 "Double Eagle" $20 gold coin. The U.S. Mint destroyed all but two of the 1933 Double Eagles. Or so it was thought.

Unbeknownst to the Mint, a small number of the Double Eagle coins were smuggled out of the Mint. The Secret Service actively tracked and recovered a number of these coins. One Double Eagle, however, made its way to a British coin dealer who claimed he acquired it from the King of Egypt's collection. After lengthy litigation, the coin dealer and the U.S. government agreed to auction the coin which was sold in approximately nine minutes for a final sales price of $7,590,020.00. (Jay Johnson, then Mint Director, signed the agreement leading to this momentous auction.) The auction price included a $20 fee to "monetize" the coin so it was once again legal tender.

Modern U.S. gold coins are given a dollar denomination even though the gold value greatly exceeds the face value. For example, the gold American Buffalo, which contains one ounce of pure gold, has a face value of $50. All gold coins minted by the U.S. Mint, including commemorative coins, are legal tender.

In God We Trust

The first U.S. coin to bear the motto "In God We Trust" was the two-cent coin minted between 1864 and 1873. Later, Congress passed the Coinage Act of February 12, 1873 which authorized the Secretary of the Treasury to "cause the motto IN GOD WE TRUST to be inscribed on such coins as shall admit of such motto."

The use of "In God We Trust" has not been uninterrupted. The most notable exception occurred in 1907 when President Teddy Roosevelt ordered "In God We Trust" removed from the Saint-Gaudens $20 gold coin believing that it "cheapened" the motto to include it on coins. Despite his motivations, the public construed the omission of this motto as an attack upon religion. The resulting uproar quickly led to a Congressional act restoring the inscription which was added in mid-1908.

The motto also disappeared from the fivecent coin in 1883, and did not reappear until production of the Jefferson nickel began in 1938. Since 1938, all United States coins bear the inscription with one notable exception.

In 2007, an unknown quantity of newly minted George Washington dollar coins omitted the motto which is inscribed along the coin's edge. The so called Washington Error Coins were also missing the phrase "E Pluribus Unum," the year and mint mark. Although the exact number of Washington Error Coins is unknown, they are believed to be just a fraction of the 300 Million Washington $1 coins minted.

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You can learn more about historic and modern gold coins by calling Goldline at 1-877-376-2646.

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To read more articles from a previous American Advisor newsletter, please click here.