Charleston Voice: Gold and Silver American Eagles: Big Sellers in a Sluggish Economy

Tuesday, February 18, 2014

Gold and Silver American Eagles: Big Sellers in a Sluggish Economy

Like most Americans now, are you frightened by the direction our country is going? We're powerless politically to get our liberties restored or back on track. We watch our buying power diminish and our jobs moribund or on shaky footing.

Tell you what: Start now to cheer yourself up.

At least give the mental discouragement a kick in the ass and out of your soul. Although you might be unfamiliar or know nothing about doing it, do it anyway just in case we're right: Go out and buy just one (1)American silver eagle coin. Date doesn't matter. It'll be your first baby step to give you back your optimism by helping yourself and family. You'll feel good for doing something.

Gold and Silver American Eagles: Big Sellers in a Sluggish Economy

By Al Doyle on February 16, 2014 8:07 PM

by Al Doyle for CoinWeek ………

Merchants from mom and pop stores to national chains are fighting a losing battle with lower sales volume. Are there any exceptions to the general trend? Stock what people want, and they’ll beat a path to your door or web site.

So what is hot in the current retail environment? Take a look at recent mintage figures for one-ounce gold and silver American Eagles if you want to find items that are selling briskly. Some might point to falling bullion prices over the past year as the main reason, but sales were on a sharp upswing well before the metals declined.

The series debuted in 1986, and the novelty of the first U.S. Mint-made bullion coins meant high mintages until 1988. Annual production figures remained in narrow ranges during several stretches after that initial burst of excitement.

Does a sequence of 243,100, 221,633, 200,636 and 189,148 sound like a relatively constant (if declining) trend? Those numbers are the mintages for the 1993 to 1996 one-ounce gold Eagles. Production exploded to 1,468,530 in 1998 and 1,505,026 in 1999 thanks to Y2K-motivated demand before crashing and resuming the previous pattern.

Gold Eagle mintages were at 143,605, 222,029, 237,510 and 140,616 in 2001, 2002, 2006 and 2007. Those figures sandwich the 416,032, 417,019 and 356,333 one-ouncers struck from 2003 to 2005. The story is similar with other popular bullion coins, as gold was out of favor with the general public.

It has been a totally different scenario since 2008, when 719,000 gold Eagles were struck. That number rose to 1,315,500 in 2009, 1,143,000 in 2010 and 857,000 in 2011. That final figure doesn’t represent a sudden decline in gold buying. The U.S. Mint relies on outside suppliers for planchets, and periodic shortages due to substantial worldwide demand shut down the bullion coin presses at times. The Mint could have sold hundreds of thousands more one-ouncers if they had the product.

Mintages don’t reflect all the demand for gold Eagles. Dealer inventories combined with “recycled” product from estates and gold owners who cashed in their holdings play a significant role on the supply side.

“When it comes to gold, Eagles are absolutely number one in sales,” declared Louis Fogleman of The Coin Shop in Farmington, N.M. “Congress did something right when they required Eagles to be made from newly mined U.S. gold. People like American coins that create American jobs.”

“A pretty high percentage of people who come in here knowing what they want in one-ounce gold ask for Eagles,” observed Bill Burd of the Chicago Coin Co. on the city’s southwest side. “Premiums for Eagles are higher than they are for bars and Kruggerands, and we explain that to people.”

Thanks to their much lower price, one-ounce silver Eagles have a far broader customer base than their gold counterparts. The series is quite popular as a date set or gift item, and it isn’t uncommon for customers to buy one or more 20-piece rolls in a single purchase.

As with gold Eagles, mintages for the silver version display a revealing pattern. Annual runs of 5,004,646, 5,203,327, 5,840,110 and 5,540,068 from 1988 to 1990 and 1992 reflect the stable (or dull?) precious metals market of those years. Mintages dipped to 4,227,319, 4,672,051 and 3,603,386 from 1994 to 1996. Date collectors will have to pay somewhat higher premiums to obtain those keys to the series. Mintages for 1997 and 1998 show a similar pattern before Y2K and more general interest in silver boosted annual production to the 7.4 million to 10.5 million range from 1999 to 2007 before the demand bomb detonated.

The 20,583,000 2008-dated silver Eagles vastly exceeded the previous record of 11,442,335 in 1987. That was just the start of the historic surge, as annual mintages reached 30,459,000, 37,764,500 and 40,020,000 from 2009 to 2011. Those figures could be a good deal higher if periodic shortages of planchets didn’t occur.

“Even though silver Eagle premiums are higher than one-ounce rounds and higher than they were in the past, they seem to be the mainstay in the silver market,” said Marc Watts of Gaithersburg Coin Exchange in Gaithersburg, Md. “People are building date sets, and investors want [500-piece] boxes.

Premiums on the 1996 have risen lately. People are comfortable with Eagles. They make nice gifts.”

“If you want the biggest bang for the buck, buy one-ounce rounds or 90 percent,” Fogleman advised. “Most people buy some Eagles and some of the other silver products.”

With its higher premium, the silver Eagle is something of a low-budget premium product. Burd explained why his customers willingly pay more.

“People are in love with the silver Eagle,” he said. “If their mind is made up, you’re not going to sell them something else.”