By Joshua McMorrow-Hernandez for CoinWeek.com …..
When the United States Mint released the first Palladium American Eagle coins on September 25, 2017, a new era for the long-running American Eagle family of bullion coins began.
In the weeks following the release of 15,000 silver-white, 0.9995-fine one-ounce palladium bullion coins, collectors and investors alike have indulged in studying the beautiful high-relief coin, which carries two classic designs by noted artist and sculptor Adolph A. Weinman (1870-1952). The obverse of the $25 face value coin features Weinman’s beloved Winged Liberty (or “Mercury” head) design that was featured on the United States dime from 1916 through 1945. The reverse of the palladium coin features a lesser-known – but no less beautiful – Weinman design that was originally seen on the 1907 American Institute of Architects (AIA) gold medal, which depicts an eagle atop a rock breaking an olive branch with its beak.
The palladium coin, authorized by Congress with the American Palladium Bullion Act of 2010 (Public Law 111-303), was a long time coming. It would take years before the first coins born from the legislation would be struck. Several studies and development plans came and went in the interceding period. One 2013 feasibility study certainly didn’t help the cause of launching a new palladium coin. Findings of that report suggest a palladium coin would be an unprofitable venture in the investment arena and inspire only limited sales from numismatic consumers.
As collectors, coin dealers, and others analyze the American Palladium Eagle, numismatists are getting a better perspective on what these new coins may mean to the hobby both now and in the future. Major third-party coin-grading firms have begun offering special labels honoring the earliest strikes of the series. Meanwhile, Numismatic Guaranty Corporation (NGC) has already discovered the existence of prooflike examples, necessitating the creation of a “PL” designation for some American Eagle palladium coins. While the uncirculated pieces are presently the only variant of the palladium coin in production, the U.S. Mint plans on releasing a proof version struck at the West Point Mint in 2018.
The release of the first proof American Palladium Eagles in 2018 will help keep the new bullion coin series in the headlines for at least another year, but how long will these new coins remain hot, as they were in autumn of 2017 following their widely heralded release? As of this writing in October 2017, virtually all the major bullion distributors have already sold out of Gem BU specimens, which were generally offered for between $120 and $170 above spot, depending on the dealer and occurrence of special offers and including pre-sale pricing. This means that many typical uncirculated specimens were selling for $1,000 to $1,100 each around the time of their release.
Meanwhile, MS-69 and MS-70 specimens have generally been offered for $1,500 to $2,000 USD each, depending on the dealer, distinctions on the label in the certified holder and other market variables. Certified Palladium Eagles with labels signed by former United States Mint Chief Engraver John Mercanti have been fetching as much as $4,000.
Palladium Coins Infuse “New Energy”
Andrew Salzberg, General Manager of Modern Coin Mart, says Palladium Eagles have performed remarkably well so far.
“We feel that premiums started out at appropriate levels and slowly rose as the marketplace began to view this release as a collectible product,” observes Salzberg. “What began as a release that was intended to be the first opportunity for bullion customers to easily purchase palladium from the U.S. Mint has quickly become a new opportunity for traditional collectors to add something new to their collections. It really didn’t take long for the market to recognize the beauty and collectible aspects found within the palladium coins.”
The beauty and numismatic merits of the American Palladium Eagle are helping to keep the sales rate at a brisk pace in the secondary market, despite prices regularly above $1,500 per coin.
“We do not feel collectors are experiencing sticker shock at the price of the new series,” Salzberg says. “When palladium was first issued from the U.S. Mint, it was issued at a higher premium than we are used to seeing. However, as a collector myself, I can understand why,” remarks Salzberg, who says palladium is relatively harder to obtain in large quantities and to work with than gold or silver.
“Our certified options have also seen great success. When compared to other coins that have been certified to be in perfect condition and have a limited mintage of 15,000 pieces, many are seeing the Palladium Eagle at its current price as a bargain.”
Relatively scarcer than standard “Gem BU” specimens, MS-70-graded examples are unsurprisingly at the top of many collectors’ wish lists.
“Just like with any other series issued form the U.S. Mint – the coins that earn the flawless 70 grade have grown in popularity and demand. At this time, we don’t expect that trend to change with the release of palladium coins.”
What the long-term trends bring is yet to be seen. When the American Platinum Eagle was released in 1997, there was also much anticipation about their market success. Ultimately, the Platinum Eagle never claimed a large share of market activity as compared to its more popular gold and silver counterparts. But that doesn’t mean that Platinum Eagles lack numismatic merit.
“For me personally, as a collector, I love the eye-appeal of platinum coins,” Salzberg notes.
“The metal itself is absolutely gorgeous, and I value the fact that there is a use for the metal within the engineering field,” he remarks, noting that platinum has a variety of industrial applications, including medical, electrical, and automotive, among others. “Also, the mintages of platinum coins are typically very low and the designs are strong. In my opinion, Platinum Eagles don’t get the attention they deserve from the collector base, and if you follow that train of thought, they could potentially be undervalued.”
Only weeks into the series, it’s virtually impossible to say whether the Palladium Eagle series will surpass the Platinum Eagle in terms of long-term performance in the collector market. However, Salzberg says there is palpable enthusiasm for this fresh series.
“Coins like this that the U.S. Mint issues inject a new energy into the market. When a new product like the Palladium Eagle is released, it’s easy to see a new vigor in our customers – we witness more purchases and increased engagement across all online platforms – it really is an exciting time within our industry.”
Artistic Merit Carries Coin
“Excited” is the word Gainesville Coins Market Analyst Everett Millman used to describe the sentiments his team feels about the new palladium coin.
“Everyone loves the classic Winged Liberty/Mercury design, and several of our customers have said they appreciate that the design is much larger on the palladium coins than on last year’s small gold versions of the design from the U.S. Mint (or on the original silver dimes, for that matter),” says the Florida coin professional, referencing the dime-sized 2016 Mercury Dime Centennial 24k gold coin.
“I think the artistic merit of both the obverse and reverse designs is a huge selling point.”
The new palladium coin also provides a safe, new vehicle for trading the rare, silver-white bullion metal.
“From our perspective, an official palladium bullion coin also makes trading in the metal much more secure and convenient,” Millman notes. “Over the years, anytime a customer wanted to sell us palladium, it was always a generic bar. Since palladium is a somewhat obscure metal, these bars had to be sent off to be tested before we could make an offer–and they often came back as fake, made mostly of base metal.”
With the visibility of palladium increasing as investors add more of the commodity to their portfolios, Millman says offering the metal in the form of a coin can help eliminate the prevalence of fake palladium in the investment market.
“A trusted U.S. Mint palladium coin makes a precious metal dealer’s life much easier!”
While some dealers are busily selling certified MS-70 examples of the 2017 American Palladium Eagle, Millman isn’t so sure that area of the market is going to be as strong as it is for the more traditional American Eagle series.
“I think that there will certainly be a bit of premium for MS-70 Palladium Eagles, but maybe not as much as with other gold and silver bullion coin series,” he notes. “Palladium is going to be a new and foreign metal to a lot of collectors/investors, so part of me believes they will be curious about how it feels. That means I expect a few more of the Palladium Eagles to be sold raw rather than slabbed compared to, for example, Silver Eagles.”
If this bears out, it won’t be the first time an American Eagle series sputters in the otherwise hot certified modern coin market.
“I’ve seen this phenomenon to a small extent with platinum coins,” says Millman, who enjoys collecting American Platinum Eagles for their annually changing reverse designs. “The market for Platinum Eagles has never been especially hot in the four years I’ve been working in numismatics, so you can often find the coins on the secondary market for little to no premium above their melt value. That can be enticing when you’re planning to invest the money in bullion, anyway.”
Demand Among Collectors Is Robust
JM Bullion Trader, Sales, and IRA Manager Alexander Haus says many of his customers, some of whom buy strictly with investment intentions, snapped up Palladium Eagles once the coin became available.
“We were able to sell out our initial allocation within a few days of the release,” he states. “To the precious metal investor and numismatic collector, palladium has tremendous value for its numerous uses in various industries not limited to but including jewelry. As a result, the demand within the collecting community is high.”
Haus speculates there could be more than just an uncirculated and proof version of the palladium coin in the coming year.
“Given the demand [for the current coin] and the upcoming proof issue in 2018, I would not entirely be surprised if a burnished version minted as well in the next year.”
If the popularity of the Palladium Eagle continues into 2018 and beyond, then the series could surpass the overall market visibility of its immediate American Eagle-brand predecessor, the American Platinum Eagle – a coin that Haus says may presently be a good buy.
“I am a believer that platinum in general is undervalued due to the limited supply, especially given the current gold-platinum ratio. These factors and low premiums make for a great opportunity to invest in platinum coins.” Among these, Haus – like other dealers interviewed here – has faith in the American Platinum Eagle.
“I would recommend and personally collect the American Platinum Eagle coins. Premiums on platinum are typically constant as mintage numbers are historically significantly lower than the other metal releases.”
Low Mintages as Selling Point
APMEX sells a wide variety of bullion coins, and according to Director of Numismatics Michael Garofalo the platinum coins are selling briskly.
“It has been very well received by APMEX customers – both collectors and investors,” he says. “This is evidenced by the fact that we sold out a number of new American Palladium Eagle products – 2017 MS-69 NGC Early Release coins, 2017 First Strike PCGS MS-69 coins and, most important, the BU coins. All sold out quickly and we are in the process of locating more.”
What about MS-70 coins?
“Only 15,000 pieces were struck, so the number of 70s is very limited. Customers are very anxious to buy these coins and they want to obtain them in the highest grades possible,” he says. “Who doesn’t want the best of the best?” But does the price of the one-ounce palladium coin, which presently sells for well more than $1,500 each, giving customers pause? According to Garofalo, sticker shock isn’t scaring away many people with the means to buy the Palladium Eagle.
“These coins have a low mintage of only 15,000 coins, so that factor justifiably contributes to the premium on these coins. Also, given the fact that this is the first time in 20 years that the U.S. Mint has initiated an Eagle coin to be struck in a new metal, well, that just adds to the excitement and allure of these new coins.”
Garofalo, who has been a professional numismatist since 1979, says the previous entry among the American Eagle bullion coins, the Platinum Eagle, may have suffered in part from the perception that platinum is considered a commodity.
“They may be placed in an Individual Retirement Account (IRA), but they are considered by Wall Street to be simply commodities, rather than collectibles. I do think that gives platinum a great opportunity for appreciation, as they really seem to be undervalued in the realm of American Eagle coins.”
Whether or not the economic status of palladium, which is considered a popular commodity-minded alternative to platinum, helps or hinders Palladium Eagles remains to be seen. For now, the buzz surrounding Palladium Eagle coins seems promising. It’s certainly no wonder – it’s an entirely new metal for U.S. coin production, and the $25 series revives one of the nation’s most popular coin designs with its “Mercury” motif. Yet, palladium bullion coinage is hardly a new concept among world bullion coins.
Sierra Leone struck the first official government-issued palladium coins in 1966, and in 1991 the Soviet Union released the Russian Ballerina series, which became one of the most popular palladium bullion coin programs in the world. In 2005, the popular Canadian Maple Leaf series added palladium coinage to its lineup of bullion coins.
“While palladium is a new metal for the U.S. Mint, collectors have been buying palladium for many years,” Garofalo says. “I think collectors will warm up and grow to really like these Palladium Eagle coins.”
Garofalo, who personally enjoys the longevity and multiple finish varieties of the American Silver Eagle series, is excited about the opportunities the palladium series will offer collectors in the future.
“What’s great about the Palladium Eagles is the designs are truly classic. The obverse is, of course, Adolph Weinman’s time-honored Mercury dime design while the reverse was taken from another Weinman medal used since 1907 – the majestic eagle perched atop a rock. With such classic designs from one of the greatest designers of all time, they are strong contender to remain popular for years to come.”
Garofalo, a numismatist at heart in the profit-driven bullion industry, reminds collectors to chase after the coins that speak to them. “If you love what you own, you will enjoy owning it forever, and if it makes a profit for you or for your heirs, consider it as a great investment. Buy what interests you and what you won’t mind owning – that will make you happier than chasing whatever the new and exciting thing for the moment happens to be.”
NGC-Certified American Palladium Eagles Currently Available on eBay
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