Investing in American Silver Eagles (ASE)
I started buying ASE when they first came out in 1986. I remember I bought them in green-top tubes with 20 ASE contained in each tube. At first I could get them at around $9 to $10 a piece and soon they went up to almost $20 a piece because it was the first-year issue. I always believe it is a very good investment if one can just buy one hundred pieces of ASE each year and then stash them away for future gains. The reason behind this is because one can always buy ASE at only a small premium (usually $1.25 to $2.00) over silver spot when they first come out and yet years later some of them will become rare or scare silver dollars which will command a higher premium. However, after a few years seeing most ASE going nowhere (pricewise) I abandoned my own advice and stopped buying ASE. With the emerging of ebay, it creates an instant market for buyer and seller and all of a sudden the numismatic market especially the one for ASE starts blooming. I have analyzed the investment potential between silver eagles, gold eagles and platinum eagles and find to my amazement although one can find more rare coins in the gold and platinum eagles yet the most attractive investment potential still belongs to ASE. The reason is the price of precious metals especially platinum is simply prohibitive for most investors/colletcors. For example, everybody knows the 2006 $100 one oz. platinum eagle, uncirulated, is going to be a very rare coin (current sales figure is 3,600 for 2006) and yet it is currently sold by the U.S. mint at $ 1,390 each. With such a high premium (almost $ 300 over platinum spot), the downward potential is high and is out of most small investors' reaches. Also, when the mintage of a coin is that low, no dealer can acquire enough coins to develop a market and therefore they will not spend money in promoting it. On the other side, it is still very affordable to build up a nice ASE collection. Therefore, in the last month I had compiled a lot of data regarding ASE investments and I would like to share with fellow collectors/investors.
(1) Knowledge is king - before one can become a sophisticated investor, one must become a collector first and that means obtain books such as Red Book (A Guide Book of United States Coins), subscribed to numismatic magazines such as Coin World or Numismatic News, join locan coin clubs or ANA (Americian Numismatic Assocation). One can also obtain a lot of information regarding U.S. coins from the U.S. Mint web site.
(2) Understand what cause ASE prices to go up - there are many reasons for the price of a particular year of ASE to go up. Somtimes investors pay high premium for the grade of a coin (e.g. MS70), sometimes they pay for the rarity of a certain ASE (e.g. 1995W proof silver eagle) and sometimes it is due to the promotion of dealers. I will discuss each in the following sections.
(3) Study, establish a WANT LIST and then set a goal - If you are not a sophisticated investor/collector, you can simply purchase 100 of silver eagles each year directly from a reputable dealer so that the ASE you receive are untouched and orginal. You simple stash them away in a safe and smoke-free environment or lock box and wait for them to go up in price. If you have stashed 100 pieces of the 1996 ASE in 1996, today these 100 ASE will fetch around $985 on ebay. If you want to be a little more sophisticated, you can subsribe to the U.S. Mint and started buying their products. If you are one of the lucky persons who purchased 10 sets of the 20th Annivesary Silver Eagle Proof Set at $100 a set for a total of $1,000, you can easily double your money by selling them at $200 a set for a total of $2,000 on ebay. If you send them to PCGS or NCG for grading, you will get much more for them. However, if you really want to have some fun and challenge yourself, then you can study the ASE production figures and market, make a WANT LIST for the ASE you want to obtain and then set a goal in what type of return you want to obtain and how long you need to hold your ASE before acheiving this return.
(4) The rarest ASE
I believe currently the rarest silver eagle in the whole ASE series will be the 1995W proof silver eagle. However, the 1995W ASE has a total mintage of 30,000 and virtually every one of those coins still exist in a collectable grade. Currently, they are selling on ebay at around $4,000 to $6,000 price range depends on the grading. This coin price may reflect full maturity already. The next ASE that comes to my attention will be the 2006 reverse proof ASE, especially the PCGS PF69 one are commanding a high premium. Once again, they are supposed to have a large supply around and it may reach its price potential. Only time can tell.
I did not not realize when earlier I had an opportunity to obtain an uncirculated copy of the 2006W silver eagle directly from the U.S. Mint for $ 19.95. I thought they were identical to the regular uncirculated 2006 silver eagles sold by bullion dealers. Only after they were sold out, I recognized that these were going to be "scarce" silver eagles made by the U.S. Mint. Since the Mint is not supposed to sell "bullion" directly to the public, they use burnished silver blanks and then put a special "W" mint mark on these 2006 ASE so they call them "Coins" instead of "bullion". As of December 25, 2006, I started seeing this coin being bidded up to $45 on the ebay and the dealer claims this will be a silver eagle with only 256,000 mingtage. If this is the case, it will make this uncirculated eagle the rarest uncirculated silver eagle, even rarer than the 1996. I really want to hit myself for missing such an opportunity. I think the craze for this ASE has just started and I won't be surprised to see the price of this coin climbing up to the $100 price range in the very near future and then settles back down to the $50 to $60 range.
(5) The regular uncirculated ASE that commands the highest premium - with a mintage of only 3,603,386, the 1996 ASE is the ASE with the lowest mintage since the U.S. Mint started producing ASE in 1986. A raw 1996 silver eagle (with no certification) is currently selling around $ 46. An NCG MS69 1996 ASE is selling at the $80-$85 price range and a PCGS MS69 1996 ASE at the $120 - $165 price range. Since this 1996 silver eagle is the key ASE of the uncirculated eagle series, I believe there are still tremendous investment potential for this key eagle in certified high grade. However, there are a lot of difficulties in obtaining high quality ASE in any years and I will discuss this problem later.
(*Please see remarks about 2006W ASE added in section (4) which will replace 1996 ASE as the rarest uncircualted ASE.)
(6) Certified or Raw ASE? PCGS or NGC?
If an investor is also a veteran collector, I think he or she can make more profits in discovering raw ASE from original tubes and then cherry pick the nicest one and send them to either PCGS or NGC for grading. If any one come back in MS70 their returns will be unbelievable. Unfortunately, not too many of us have both the expertise and the time to look over so many raw ASE to pick the best one. Therefore it is almost easier for an novice investor to purchase ASE cerified by either PCGS or NGC only. I understand ANACS (by ANA) has reformed their grading services and there are a lot of improvements. However, their grading standard at this time is still an unknown and not as established as the other two grading services. From my own personal experience (which can be wrong), the PCGS grading standard is tougher than that of NGC, usually you can add one grade to the PCGS graded ASE to equal to the NGC graded ASE. For example, a 2000 PCGS MS68 ASE will probably equal to a 2000 NGS MS69 ASE. I know some dealers will disagree with me. However, the prices realized for 2000P ASE on the ebay do not lie. Currently, a 2000 NGC MS69 ASE is selling for $20.50 to $ 28.60 while a 2000 PCGS MS68 ASE is selling for around $31.50 and a first strike PCGS MS68 2000 ASE will go as high as $49. So what is the conclusion, NGC or PCGS? It really depends, if you can find a NGC MS69 or even MS70 ASE in good prices with no problem, grasp it. However, if there is not a lot of price difference between a NGC MS69 and a PCGS MS 69 ASE, of course you should go for the PCGS. One good examle is the 1987, 1988 and 1989, currently there are not a lot of price difference betweent the two in MS69, I believe the PCGS will be a better buy.
(7) If it is graded MS69 by either NGC or PCGS, it must be a great coin!
Unless it is a very rare year, an investor should not purchase any uncirculated ASE certified by either NGC or PCGS that are graded lower than MS69. However, just because they are certified MS69 by either NGC or PCHS do not mean they are good coins. I started buying ASE about a month ago and most of the one I purchased were graded MS69 by the above two grading companies. To my chagrin, almost every single one of them I won from ebay had one or more problems. The most common problem is "white spot" found on the ASE. According to the dealers I talked to this is a common quality control problem existed in the U.S. Mint and these happen to a lot of ASE currently selling on the ebay. I recently purchased a 2006 First Strike PCGS MS69 silver eagle, when I received it I found black stain formed by finger print on the ASE. The dealer allowed me to return for a replacement. So I spent $3.40 to send back the ASE and after about two weeks I got a replacement. To my surprise, I again found 3 white spots around the rim of the ASE and a very tiny black spot on one of the sun rays on the obverse of the ASE. The problem is that many ebay dealers are using stock photo for the ASE they are selling and you cannot really see the real coins you are getting. Some display the pictures of the ASE you are bidding on, but they are either with only one side (no reverse picture), very fuzzy picutres or even on very good pictures sometimes it is difficult to tell if they are any toning or haze on the surfaces of the ASEs. Most of the time I try to ask the dealers before I bid on the ASE, the honest one will tell you if there are any problems. Better yet, some of them will offer return policy for their coins. However, some of them will simply tell you since PCGS give the ASE a MS69 grading, it must be a great coin. THAT IS SIMPLY NOT TRUE. I believe white spots on the ASE were formed after they were graded and even the one with spots while they were graded usually would not affect their grades. So buyers beware! I have come to the conclusion that if you really want to build up a great ASE collection, you may have to go to local coin shop or go to coin show and examine the ASE carefully before you purchase them or find an ebay dealer whom you can really trust. (Sometimes it is better to buy a coin with its picuture displayed than to buy a coin with a stock photo pictured; in the same token, better buy from the dealer with only one coin than the one with tons of the same coin.) Because of this fact, I do not believe I can find a problem-free 1996 ASE in PCGS MS69 ebay. I really believe many of the ASE that are sold in good prices on ebay are not problem free ASE. That is only my personal opinion.
(8) Interesting phenomenon
One of the interesting terms I found used on ASE is "First Strike". According to some of the dealers' descriptions to be qualified for this "First Strik" designation, the ASE must be ordered and received from the U.S. Mint in the first month of production. I find this extremely hilarious, because if you go to the web site of the U.S. Mint, they have an article in clarifying the term "First Strike". Bascially there is no such thing as "First Strike" because different dies are used for striking ASE. There is a limited life span for each die and after the die comes to its end of use, it will be destroyed. Therefore, there will be first strike for each die, the first few ASE struck by each new die will be much better than the latter one being struck from the same die. In the same token, just because the ASE are sent by the US Mint in the first month do not guarantee their better quality. I compare some of the First Strike ASE I purchased with the regular one, I simply cannot tell the difference. On the other side, I belive the Uncirculated ASE sold directly by the mint will actually be in better quality than the regular one because they are suppposedly struck on burnished blanks and then hand packed into capsules. I regret I didn't order a 2006 ASE from the mint at $19.95 so I can compare them and now they are all sold out. Therefore I believe this First Strike is a gimmick invented by some ingenious dealers to sell ASE at a higher premium and therefore more profit for them. The best evidence for my theory is that a 1992S NGS MS69 ASE is selling about $24 and a 1992S PCGS MS69 ASE is selling for about $29-$41 on ebay and yet one dealer has tons of 1992S First Strike PCGS MS69 ASE and they all fetched at about $ 152.50 to $250.26 each (the price has since been dropping). For the 1995 ASE, the NGC MS69 sells for $22 to $26, the PCGS MS69 sells for $32 to $56 and yet a PCGS MS69 First Strike just fetched $127.50 on ebay. This holds true for almost every year of ASE. The funny thing is that usually only one or two dealers are selling these "rarity". I tried to ask several dealers if they know why these First Strike eagels command such extraordinary higher premium over regular certified ASE of the same year, they either did not know or would not comment or speculate. Therefore, without further evidence, I do not believe "First Strike" ASE are not good long-term investments. Once again, this is only my personal opinion.
(9) So what are good buys for ASE?
The 1996 ASE in either raw condition or certified MS69 by either NGC or PCGS will always be popular. The challenge is to find one that is problem free. In this case, if you can find a problem free raw 1996 ASE, it is almost better off for you to spend money in sending it in to NGC or PCGS for grading.
It is almost safer to purchase proof silver eagles becuase they usually will be graded PF69 or higher and they seem to have less quality issues (from the U.S. Mint) than the uncircualted silver eagles. The only precaution is to avoid any proof eagles that have spots, toning or haze because they will greatly reduce their investment values. The 1993 P ($135-$145), 1994P ($173-$259) and 1995P ($189) are all good years of proof silver eagles to buy. The prices listed are for ASE from U.S. Mint with box and COA. Those that are graded by PCGS or NCG as PF69 or PF70 will be higher. Since proof silver eagles for these 3 years are the lowest in mintages: 1994P (372,165), 1995P (395,4000) and 1993P (403.625), I believe they will continue to be popular and if one can purchase them at close to wholesale prices, they would be tremendous investments.
Among uncirculated ASE, 1994 will be a tough year second to 1996 only becuase it has the second lowest mintage (4,227,319). However there seem to be tons of graded MS69 ASE for 1994 readily available on ebay. The problem is to find a spot-free one. Since there are so many of them, one should shop around before purchasing one. The price realized for a 1994 NGC MS69 ASE is about $26 to $40 with prices steadily going up, for the 1994 PCGS MS69 ASE it is about $99 to $152, for 1994 PCGS First Strike ASE, MS68 is selling around $30 to $59, First Strike MS69 is selling around 159 to $289. The reason there is such a wide price range is because (1) Quality of the actual ASE may be differrent; (2) Not enough price realized for 1994 PCGS First Strike MS69 ASE can be found. The 1997 is also a tough year since it is the one with the third lowest mintage in the ASE series (4,295,004). A 1997 NGC MS69 ASE is around $21 to $26, a PCGS MS69 is around $23 to $ 37, a PCGS First Strike MS 68 is around $38 to $47, a PCGS First Stirke MS69 was sold for $78.01. For some reasons, the 1999 PCGS MS69 ASE are selling a lot higher than its counterpart in NGC. A 1999 NGC MS69 ASE is currently sold for $24.50 to $26.50, but a 1999 PCGS MS69 is sold around $55 to $105. Therefore it may confirm my belief that it is not very easy to obtain a PCGS MS69 grade for ASE minted in some years. In the same token, I had yet seen an uncirculated ASE being graded MS70 by PCGS. Therefore, I truly believe many NGC MS70 ASE will actually be graded by PCGS as MS69. I read somewhere that PCGS simply doesn't grant MS70 to regular issues of ASE. However, saying just that, I remember seeing some 2006 ASE from the 20th Anniversary Set were being graded as MS70 by the PCGS. I have to confirm this before I can report this to you. If any readers out there can contribute to this "NO PCGS MS70 ASE" myth, please drop me a note.
Now after studying all the ASE available for sales on ebay in the last month, I find something very interesting and would like to share with you. The toughest ASE to obtain in PCGS MS69 are not that of 1996, 1994 or 1997, there seems to be tons of them around on ebay. The toughest one to find are that of 1993 and 2000. They almost do not exist. On the other hand, there are many NGC MS69 ASE readily available for 1993 and 2000. I do not believe the PCGS price guide truly reflects the difficulty in obtaining these two ASE in PCGS MS69 condition. One can locate a 1993 NGC MS60 ASE easily for around $19.50 to $31 (with a $25 median price). I had only seen two 1993 PCGS MS69 ASE for sale so far on ebay, one was sold for $91 and another one was a Buy It Now with price set at $165 with no taker. So I think the real price for a 1993 PCGS MS 69 ASE lies between $90 to $ 150. A 2000 NGC MS69 ASE can be easily found for around $20.50 to $28.50 (median prices of $24), a 2000 NGC Ms69 First Strike ASE was sold for $78.25, one 2000 PCGS MS69 ASE was sold for $68.95 and a Millennium PCHS MS68 (not MS69) was sold for $86.78. Therefore I come to the conclusion that it is extremely difficult to find any PCGS MS69 ASE for 1993 and 2000 and I believe if one can find a problem free 1993 or 2000 PCGS MS69 ASE, they will be truly sleepers for future investment gains. (*This is only my personal theory and fellow investor/collect should use their own judgment in making their final purchasing decisions.)
(10) Paying for the Grade or for the Rarity
It always bothers me as a collector that so many investors/collectors will pay such a high premium for high grade coins (MS70 or PF70). For even common ASE in either uncirculated or proof condition if they are found in these top grades, sky is the limit for how much they will fetch. This simply defies the rarity factor because in numismatic market rare coins always command higher premium in the long term than its comman counterparts. Unfortunately, with the PCGS population report and the promotion of dealers, many high-grade common-date ASE have become "rare coins". It is very hard to predict the future investment potentials for these coins. In some cases I think the high grade are justified for high premium especially for year when there not too many high grade ASE can be found (such as the 1993 and 2000 ASE graded MS69 by PCGS). However, when you keep seeing MS70 ASE on the same year are kept advertised by the same dealers it makes you wonder how rare they really are. Therefore for beginning investors they should not get too carried away with high-grade coins and forget the other price factors such as mintage, demand and supply, intrinsic value (precious metal melt value) for the coins in which they invest their money, otherwise they will easily fall prey to some dealers' promotional gimmicks.
The above are just a few observations I got from bidding on ASE in the past month. I may have simply missed the BIG picture. However, my conclusion is that among the three types of eagles (platinum, gold and silver), the ASE will remain the most popular and affordable and therefore the one series that will bring the best return in investment if one can select the ASE wisely. The main drawback is that it may be simply not east to find any problem-free ASE on ebay. Therefore, one should always proceed with caution and patience and do not get too carried away in the moment of fierce ebay bidding. It may also not be a bad idea to purchase some of the products directly from the U.S. Mint since lately there are a lot of good investment products (such as the 2006W ASE) and they actually offer a 30-day money back money guarantee (which is better than any ebay dealers). However, if you see something you truly like in the U.S, Mint, do not hesistate, order it right then. I missed a lot of opportunity due to my hesitations. Currenly, most of the uncirculated eagles (silver, gold, platinum) are almost sold out at the U.S. Mint. I believe both the 2006 uncirculated gold and platinum eagles will be one of the best investments for years to come due to their very low mintage and the special "W" mint mark. Unfortunately, almost every single one of them (except the one oz. gold eagle and the unc. gold set) are sold out at the U.S. Mint. Among the products currently available at the mint, I believe the 2006 platinum $10 (1/10 oz.) and the $25 (1/4 oz.) proof eagles may be the sleepers because I believe their final mintage may be the lowest in their series. Currently the 2004 $10 platinum proof eagle is selling between $ 600 to $1,000, if the 2006 replace it as the key in the series, its price will be doubled from its current selling price of $220. I know I am supposed to talk about ASE but I just can't help in putting my two cents.
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