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Starting the Year with 2013-dated Product - But Where do Silver Eagles Go?
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(January 22, 2013) After a rousing finish to the 2012 bullion market, high demand for physical 'real money' meant that very little overhanging inventory remained in dealer stocks at year's end. We have now reloaded with 2013-dated coins including gold Buffaloes, gold Eagles in all sizes, gold Pandas in all sizes, and gold 1-ounce Maple Leafs, Philharmonics and Kangaroos. Also 2013-dated silver Eagles, but there’s a story...
Bullion sales continue strong, a trend which started before the November elections and has continued through the Fiscal Cliff non-event, debt ceiling arguments, the appointment of a new Secretary of the Treasury, and a growing feeling that chances of any significant reductions in federal spending are slight.

The Mint yesterday announced a halt in their sales of silver Eagles due to overwhelming demand at the release of the new 2013-dated coins. Over six million coins (about double the normal sales for a whole month) have left the Mint’s West Point NY location already this month.

We have in stock a few dozen boxes of 2013 silver Eagles from the first week’s release, so our supplies are plentiful for now. However, the Mint sent this email to its distributors yesterday, and what they’re saying (“allocation process”) doesn’t bode well for future supplies, at least for the next few weeks:

"Authorized Purchasers:

The United States Mint has temporarily sold out of 2013 American Eagle Silver Bullion coins. As a result, sales are suspended until we can build up an inventory of these coins. Sales will resume on or about the week of January 28, 2013, via the allocation process.

Please feel free to call us if you have any questions.

Regards,

Jack A. Szczerban

Branch Chief, Precious Metals Group

Department of the Treasury, United States Mint”


Where do so many silver Eagles go in such a hurry? Oddly enough, every year about this time a big percentage of those coins go to Sarasota, Florida, and Newport Beach, California, there to be examined, certified, graded for quality on a 1 to 70 scale, sonically sealed in plastic holders, and then unleashed upon the marketplace.

Sarasota is the home of Numismatic Guaranty Corp (NGC), and Newport Beach is the address for the Professional Coin Grading Service (PCSG). Both are independent coin grading services, which were founded in the 1980s to grade and certify classic numismatic coins. In the field of coin collecting, quality is everything, especially when determining the value of a truly rare coin.

For example, in the year 1796, the mint at Philadelphia struck the first US quarter dollar coin, in the amount of 6,146 pieces. Many fewer than that exist today, and all examples of the 1796 quarter are collector items. Even the most worn out, beat up example is now worth a few thousand dollars. And as you go up the grading scale, prices increase substantially. Using the 2013 edition of the Guidebook of US Coins as a reference, the 1796 quarter in “Very Good-8” condition lists at $17,000, “Very Fine-20” at $35,000, and “Almost Uncirculated-50” at $54,000. At a coin auction in 2010, a PCGS-certified Mint State-65 with a dark patina cost the successful bidder $322,000.

Clearly, if you came across a classic rarity such as the 1796 quarter, you would want to have it graded and certified by an expert organization such as NGC or PCGS, so you would have some idea of its value. Records from those two coin grading services show that, between them, they have been called upon 495 times to certify and grade 1796-dated U.S. quarters over the past twenty some-odd years.

But a little digging shows shows what really keep the coin grading companies busy, and it's not the examination and study of old money from the 18th century. NGC has been grading coins since 1988, and in that time they have certified and graded 5,039,736 silver Eagles, none of which are older than 1986, nor particularly scarce. So how did the art of grading antique US coins evolve into the mass grading of common, modern bullion coins, most of which are virtually flawless, brilliant specimens that will never suffer the wear and injuries that come from hand-to-hand circulation?

The answer is simple: pure marketing in action. Coin marketers, especially telemarketers, television hucksters, and the outifts that run big ads in newspaper and magazines, have latched onto the idea of selling 'graded' modern bullion coins. With a good supply of ‘certified’ Eagles at hand, armies of salespeople take calls from precious metals buyers, with the goal of talking them into paying big premiums for ‘certified’ bullion coins fresh from the Mint.

Every January, when the newly-dated Eagles are released, dealers ship hundreds of thousands of coins, mostly silver Eagles, to either NGC or PCGS for grading in bulk. In the first weeks of a new year, both grading services will also, for an additional fee, designate coins as being “Early Release” or “First Strikes.” Those are rather meaningless terms to a true numismatist, but for the telephone and television marketers, a very shiny lure to help reel in unsophisticated precious metals buyers.

So where have all the 2013 silver Eagles gone? At this time, as happens every January, truckloads of them have been sent to Florida and California to get the ‘certification’ treatment. Last year, over one hundred thousand silver Eagles were graded “MS70,” with several hundred thousand grading “MS69.”

Silver Eagle supplies will likely return to normal in a few weeks. But first, the general public will be given many opportunities to acquire 'certified' bullion items, sealed in plastic holders, at substantial mark-ups.

 

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