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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