By David Schwager for CoinWeek …..
Proof sets. Mint sets. Commemorative coins. Is there a bottom to the falling mintages of these U.S. Mint mainstays? New lows experienced by the 2016 National Park Service coins raise this question. And what should a profit-minded buyer do?
When the United States modern commemorative period began in 1982 with the Washington half dollar, the pent-up demand meant that an impressive 7.1 million went into collections. Every program of the 1980s sold well over a million pieces, peaking with the 1986 Statue of Liberty coins that achieved a mintage, combining all denominations and finishes, of 15.5 million.
A glut of products in the 1990s caused lower mintages for each program, and maximum mintages included in the Commemorative Coin Act of 1996 meant that multi-million sales were no longer possible, but most coin programs still achieved six-figure mintages.
Popular 21st-century silver dollars like the 2004 Lewis and Clark, 2005 Marine Corps and 2009 Abraham Lincoln sold in the respectable range of 450,000 – 600,000.
In the last few years (with an exception discussed later) commemorative coins sold poorly. The 2013 Girl Scouts silver dollar, for example, did not move enough units to cover production costs, meaning the sponsoring organization earned nothing from the coin. Although military subjects usually do well, the 2011 Army half dollar sold only 39,461 Uncirculated pieces, a new low for modern commemorative halves. The next half dollar, the 2013 Five Star Generals, did slightly worse at 38,095 coin. This record lasted until 2015, when the U.S. Marshals Service Uncirculated half dollar ended with a mintage of 30,231. Despite its popular subject and unobjectionable design, the Uncirculated half dollar in the 2016 National Park Service program became the new series key only a year later. Although the mintage figures will adjust slightly in the next few months, the mint reported 21,335 sales after orders closed December 29, 2016.
The right subject, however, can still give the mint a sales win. Remember that several new mint products sell out each year, sometimes in the first day or first minutes of sales. In the case of commemoratives, the public embraced the 2014 Baseball Hall of Fame coins enthusiastically, buying the entire maximum mintage of gold and silver coins, as well as the most clad half dollars since the Civil War Battlefields program of 1995. Authorizing legislation directed and allowed the mint to give collectors a technically advanced and attractive coin with crossover appeal for the general public. The specifications for the upcoming 2019 Apollo 11 commemoratives mean we could have a similar success soon, especially if the market is strong that year.
Coins move in market cycles, as well described by Q. David Bowers in any of his books. Part of the drop in mintages of the past few years comes from the market valley (possibly in an upswing) in which we find ourselves at the start of 2017. Long-term factors, however, mean that sales levels should remain lower than they were in the past.
One thing that commemorative coins, as well as mint sets and proof sets, have in common is their appeal in the primary market to casual collectors. New collector coins from any mint, whether U.S. or world, usually drop in value after release. Investors make bets on a few new issues hoping they are the exceptions that prove the rule, whether flipping within days or waiting years for markets to mature. Serious collectors enjoy hunting for scarce items and simply buying new coins makes acquisition too easy. That ease, however, makes fresh mint products ideal for the casual collectors who are, in many ways, the most important people in the hobby.
These enthusiasts, who love coins without becoming consumed by them, are more interested in enjoying their purchases than studying or profiting from them. Modern commemoratives provide attractive, pristine coins with a variety of themes in ornate packaging. Opening the mint shipping carton gives the buyer, without spending hours examining and choosing purchases, the simple joy of owning these miniature works of public art. If this casual collector buys a few more as gifts, so much the better.
The number of casual collectors, however, has fallen in a long-term trend. This does not mean our hobby is declining. The overall movement of numismatics is towards a smaller number of collectors who spend more time and money improving both their knowledge and their holdings. The casual collector, thankfully, will always be with us, but there are no longer as many as once filled coin shops and U.S. Mint mailing lists.
Can this long-term trend provide opportunities for the collector and investor? For the pure collector who wants the enjoyment of owning coins bought directly from the Mint, it does not matter whether 5,000 or 1,000,000 other people buy the same product at the same time. Less demand on the secondary market means this same collector can more easily complete a set, perhaps now more able to afford better dates and conditions.
For the investor, the current environment poses a situation with both more complexity and more opportunities. U.S. commemoratives, indiscriminately bought, have seldom rewarded their owners financially, either in the classic or modern periods. Carefully selected key dates, however, can pay off, but only if bought before the market recognizes their key status.
As a case study, consider my attempts (some successful and some not) to profit from commemoratives in the past few years. I noticed that the record-low-for-the-time 39,000 mintage 2011 Army and 38,000 mintage 2013 Five Star Generals Uncirculated half dollars rose in the aftermarket (especially PCGS MS70 coins) and began looking for other opportunities to buy low-mintage commemoratives at issue price.
Because Uncirculated coins always sell fewer units than their proof counterparts, making them scarcer and typically more valuable in the secondary market, I looked only at Mint State issues. In early 2014, the 2013 Five Star Generals Uncirculated $5 gold was still selling for about its issue price of around $400. This was despite its sales total of 5,658, or only a little higher than the famous key date 1997 Jackie Robinson $5 Uncirculated. With a 5,174 mintage, the Robinson earns about $1,000 in MS69. I bought an NGC MS69 Five Star Generals for $415 and waited. Impatience got the best of me, however, and, needing money for a major purchase, I consigned the coin to auction in 2015. I got my money back, but, had I waited until today, the coin would be worth about $550 with room to grow.
The next opportunity came late in 2015 when it became clear that the 2015 U.S. Marshals Uncirculated half dollar would become the new key to the commemorative half dollar series. Before sales closed with a final total of 30,231 coins, I bought a PCGS MS70 example for $145 from a local coin shop and picked up additional raw and MS69 coins whenever I saw them at shops and shows. The plan was to wait five years until 2020 and then see if the bet paid off. The Marshals coins are holding their value, but it is too early to see if they will be losers or winners.
The greatest threat to my modest investment came when 2016 National Park Service coins sold at even lower levels. On a hunch that mintages might continue to fall, I bought Uncirculated examples of the clad half dollar, silver dollar, and gold $5 coins at the mint’s introductory price in the first weeks of sales. I also chose to invest in a PCGS MS70 half dollar from the same local shop for $100. With the headwinds of a price increase by the mint and a soft market, the half dollar remained on a record low pace all year, finishing at 21,335, or about 30% less than the former key date in 2015. A PCGS MS70 sold on eBay just after the New Year for $299.
Weekly sales figures for the gold were a source of tension throughout the year, as I did not know until the final week whether the coin would replace the 5,174 mintage Jackie Robinson as the new low. Soon after sales ended, the mint released a figure of 5,201, or only 27 more coins than the Jackie Robinson. This figure will adjust up and down in the next few months, with downward movement caused by returns and declined credit cards more likely. The Uncirculated gold currently earns about $500, or a little over issue price, and a PCGS MS70 recently sold on eBay for a healthy $895. I plan to wait for final numbers or a price spike before deciding whether to certify and whether to sell.
Tallying up my results for the last three years gives on missed opportunity, one “maybe”, and one win.
To profit from commemoratives, find low-selling coins and buy them directly from the Mint, or certified on the secondary market at a modest markup.
Start before each program begins, looking at the design, the subject, and other offerings for the same year. If a cluttered design, a subject with limited appeal, or strong competition from other commemoratives point towards an unsuccessful issue, then save a few dollars buying Uncirculated (not proof) coins directly from the Mint at the discounted introductory price at the start of sales. If your initial analysis doesn’t point towards buying early in the year, watch the weekly sales figures on the mint web site. If these numbers grow slowly, pointing towards a low final figure, consider making a purchase as the year draws to a close, Keep in mind that sales surge in the final weeks of the year and also that the Mint occasionally closes orders early without warning. Once the year ends and the rough final mintage reveals itself, make the final decision whether to buy. If a commem is a key or semi-key at this point, buy a certified MS69 example. They should be available for not much over the issue price. If a study of grading service populations shows MS70 coins remaining scarce, consider paying a premium for a 70.
If the decision at this point is still not to buy, stop and don’t look back. The Mint will never stop making commemorative coins and another opportunity has already started. If you did buy that fresh commemorative, look for a short-term spike in price. If this happens, as with the 2011 Army half dollar, sell now and take your profit. More often, however, the secondary market takes three to five years to rise or fall to its correct level. Put the coins away and think about them only once or twice a year with the goal of selling in the medium term for a more earned gain.
Just like the overall coin market and economic conditions led to the key dates of the classic commemorative period, macro trends make the key dates of the present day. Circulation keys no longer exist, but the well-informed and decisive buyer of new commemoratives can still get key date coins at issue price today.
National Baseball Hall of Fame Commemorative Coins Currently Available on eBay