by Louis Golino for CoinWeek ………
Collecting modern U.S. coins just got a lot more interesting. During the past week there have been a series of rather dramatic developments involving the U.S. Mint, whose origins and implications remain unclear at this point.
First, on January 17, just ten days after the opening of sales to its network of authorized purchasers, the Mint announced that it had temporarily sold out of 2013-dated bullion American silver eagles and that sales would not resume until at least January 28, or once the Mint had replenished its inventory. The Mint also indicated that when sales resume, it would be on a rationed, or allocation basis, a method used back in 2009 and 2010, when the Mint ran out of silver planchets because of high demand, and there were extended disruptions in the supply of silver eagles.
The opening day of sales for this coin on January 7 reached a new record with the sales of 3,937,000 coins. Total sales during the ten days the coins were available from the Mint to its distributors was 6,007,000, a figure that would be high for an entire month of sales.
Sales of silver eagles are normally very strong in January for several reasons. Dealers and investors like to stock up on the new issue right after it is released, and in this case the Mint had run out of 2012-dated coins for its authorized purchasers in late December, although the coins remained available from retail dealers.
In addition, silver prices have been in the $30 range recently, which most investors consider to be a bargain, and they have started to see some upward pressure, reaching a little over $32 an ounce by the middle of January.
There have been a lot of rumblings about tighter supplies of physical silver in recent weeks, demand for physical silver remains very solid, and prices in the paper silver market for future deliveries of silver contracts have been pushing higher. Those are all signs that investors see higher silver prices coming soon, which probably played a role in spurring higher-than-normal volume of sales of silver eagles.
As a result of the sell-out, many dealers are selling out of their supplies of 2013 coins, which only arrived from the Mint days ago, and retail premiums are rising.
The early sell-out recalls the 2009-2010 situation, which resulted in months of tight supplies, and higher premiums. For silver eagle collectors, it also resulted in a very unfortunate development, namely, the cancellation of collector versions of the coin in 2009, both the proof and uncirculated burnished coins.
The then-Mint director, Edmund Moy, who was generally seen as a friend of coin collectors, explained that by law the Mint had to prioritize the manufacture and distribution of bullion silver eagles, and that it would be unfair to buyers if only a limited number of proof coins were produced. Based on that interpretation of the federal laws governing the minting of silver eagles, the Mint decided to cancel the collector coins, which resulted in extensive criticism from collectors, who were not at all pleased about the gap in their collections. Even the 2010 proof coin was only announced late in the year, and no burnished version was issued that year.
In 2010, as part of the Coin Modernization Act, a provision was included that left it up to the Treasury Secretary to determine what quantity of silver eagles is necessary to meet public demand. That legislation, which also gave the Treasury Secretary greater discretion to issue collector versions of silver eagles, is something the Mint and Congress developed together, and that is an example of the kind of collaborative dynamic I have argued before takes place behind the scenes .
What this means for the issuance of 2013 collector versions of silver eagles remains unclear. As of the time of this article, the proof coins are still slated for a January 24 release, but the five-ounce silver America the Beautiful coins, whose prices were recently raised , have been removed from the part of the Mint’s 2013 schedule with specific dates and placed at the end in a list of products whose release dates remain to be determined.
Some people are expecting these developments to push early sales of the proof silver eagle coins higher, which is certainly possible. Collectors unable to buy bullion coins may want to get more of the proof version than they usually do, but I am not sure it will work out that way.
Buyers of the bullion coins tend to be silver investors, whereas the proof coin appeals more to collectors. Plus the proofs are priced at roughly twice their silver value, and silver investors looking to stack silver have far cheaper options than proof silver eagles, or bullion eagles at higher-than-normal premiums.
Moreover, at this point there is no reason to expect a cancellation of the collector versions of silver eagles, as happened in 2009, because of the legislative fix of 2010, even if demand for the bullion coins remains high.
Meanwhile, there have been a series of unusual early sell-outs of 2012-dated numismatic products on the heels of the sell-outs of the 2012 proof sets and silver proof sets.
All denominations of 2012 proof gold eagles have sold out, and only the four-coin set remains for sales. With the exception of the one-ounce coin, the individual fractional proof coins sold out at approximately half the mintage of last year’s coins. Final mintages will be determined by sales of the four-coin set, but the strong potential exists for some new key coins.
Whether that translates into significant aftermarket premiums remains to be seen, though I do expect at least some premium for the fractional coins before long, especially the half-ounce coins. And as always, a future coin could come in with a lower mintage.
In addition, the 2012 Buffalo proof coin was pulled from sale with the most recent sales total being 19,302, as of January 14, putting the coin just above the mintage of the key-date 2008 proof coin, which has been selling for about $4,000 for the past five years. I expect the 2012 coin to acquire a decent premium quickly, but the value of the 2008 coin may also come down since they are so close in mintage. The final mintage of the 2012 coin will not be known for some time.
Then there is the 2012 Hawaii national parks five-ounce coin, which is the first 2012 coin in that series to sell-out, even though sales of several other 2012 issues were higher. Last reported sales for the Hawaii coin were 14,767.
There has been a lot of speculation about what this unusual early ending of sales at low mintage levels means.
Some people wonder if it is a strategy designed to spur higher demand by keeping collectors guessing about when coins will become unavailable, which would also help to lessen the impact of higher prices on some of the Mint’s silver products since buyers would in theory have a stronger incentive to act quickly.
Or, this could be related to the Mint’s declining numismatic revenue totals. Perhaps the Mint is producing smaller batches of coins to reduce costs by reducing the chance of ending up with coins that do not sell and which have to be melted down.
Whatever the actual reasons, these are exciting developments for collectors of modern American numismatic coins, and 2013 should be another interesting year for this field of numismatics.
Louis Golino is a coin collector and numismatic writer, whose articles on coins have appeared in Coin World, Numismatic News, and a number of different coin web sites. His column for CoinWeek, “The Coin Analyst,” covers U.S. and world coins and precious metals. He collects U.S. and European coins and is a member of the ANA, PCGS, NGC, and CAC. He has also worked for the U.S. Library of Congress and has been a syndicated columnist and news analyst on international affairs for a wide variety of newspapers and web sites.