by Louis Golino for CoinWeek ……
By the end of October the U.S. Mint plans to complete the process of fulfilling orders for the 2012 San Francisco two-coin American silver eagle proof set. Sometime after that it will announce the final mintage for the set, which will play a key role in shaping premiums for the sets.
As of July 6, the day after the last orders were taken, a total of 251,302 set were ordered. That number is expected to change as a result of order cancellations, expired credit cards, and related issues. The Mint has not been providing updated figures since then in its weekly sales reports and is waiting until the last sets have been shipped.
Because the number is so close to the 248,000 mintage of the 2006 20th anniversary silver eagle sets, collectors are eager to see what the mintage of the San Francisco sets will be. The 2006 sets sell for about four times issue price today.
From the time it was first announced a lot of buyers tended to downplay the aftermarket potential for these sets because they were minted to demand. That seems to have ended up lowering demand for the sets and sales of them while they were available from the Mint.
But in recent weeks a very interesting situation has developed. On the one hand, raw sets and those graded PF-69 are not bringing a very strong premium. Plenty such sets are available and many dealers are offering discounts on them. That could change depending on the final sales number.
But sets graded PF-70, specifically those graded by PCGS and with the first strike designation, are selling for very strong premiums. And very few first strike 70 PCGS sets are available on the retail or wholesale market.
Two factors are at play here. First, the number of sets grading 70 is much lower than it was for similar silver eagle sets, especially at PCGS, where approximately 32% of the 2012 sets have received the top grade. Most collectors and dealers report receiving an even smaller percentage of 70 sets than that.
Second, the cut-off date at PCGS for first strike sets was August 25. The Mint fulfilled orders for these sets in batches, and not many of them were received in time to be first-strike eligible because of delays in processing the Mint’s orders.
Unopened boxes that are postmarked by or before August 25 are also eligible to be sent in for first strike designation, but news of the low percentage of coins receiving the top grade appears to have deterred many people from sending their sets in for grading.
The PCGS 70 first strike sets are now fetching between $500-645 on e-Bay, and to my knowledge only one major coin dealer has the sets in stock, Goldmart , which is a subsidiary of Legacy Precious Metals.
Nick VanderLaan , a manager at Goldmart, posted a market report on the PCGS discussion board on September 9 that alerted collectors to his views on the scarcity and market potential for PCGS 70 first strike San Francisco sets.
In his report and subsequent e-mails to clients, Mr. VanderLaan made the case that these versions of the sets were underpriced because in his view only about 3500-3800 such sets existed at the time out of a tentative mintage of about a quarter million sets.
He explained that unopened, first strike-eligible sets are almost impossible to find at the moment on the wholesale market. Second, he agreed with the view I expressed in this column when the sets were first released that the mint-to-demand approach ended up discouraging a lot of collectors and dealers from paying enough attention to these sets.
I recently spoke to Mr. VanderLaan. He noted that the key reason the PCGS 70 first strike sets are doing so well and are likely to continue to perform well is their scarcity compared to raw sets and NGC-graded sets.
As of October 1 there were only a total of 4,025 such sets compared to over 13,000 NGC early release 70 sets. The NGC sets are selling for $370-400. He also pointed out that by comparison there are 7,800 PCGS 70 25th anniversary sets. He also thinks the final number of San Francisco sets minted will come in under a quarter million.
In addition, he points out that the 2012 sets include the second rarest reverse proof silver eagle after (in theory) the 2011 coin, and the second rarest proof silver eagle (including those in the Making American History coin and currency sets) after the 1995-W proof coin. In fact, among reverse proof coins graded PF-70 with the first strike designation, the 2012 coins are so far twice as scare since the 2011 reverse proof coins, which have a population of 8,156 and are listed on the PCGS price guide for $625.
Mr. VanderLaan discusses these sets with fellow dealers who also believe they have more upside potential, though it is of course impossible to put a hard number on it. The holiday gift-giving period will also be a factor, and may lead to increased demand as well.
On October 3 a PCGS set sold on e-Bay for $470, and two days later, the same set sold for $540. More recently some sold for $645. I have only seen a handful of sets for sale on e-Bay recently.
The PCGS first strike sets that are in highest demand and which bring the highest prices are those with a special label signed by silver eagle reverse designer John Mercanti, whose new book on silver eagles co-authored with Miles Standish will be published by Whitman in November. The Mercanti labels are only available to bulk submitters
A review of the PCGS discussion board at Collector’s Universe confirms what I have heard from other collectors and the information from Mr. VanderLaan. Submitter after submitter lamented the unusually low number of 70 coins they received back from PCGS. That is true of smaller submitters and of larger ones.
One poster said he wanted to know what results large dealers received. John Maben noted on September 7 that of 51 two-coin sets submitted, he only received 6 70 sets back. He also noted that his best result was in the 30% range. Mr. VanderLaan of Goldmart said his company’s PCGS submissions were mostly in the 24-28% range, and only 21% for the first batch of submissions.
In addition, Mr. Maben’s Modern Coin Mart has sold out of PCGS 70 first strike sets. That confirms how few are available, especially since Mr. Maben’s company is the major market maker in these kinds of coins.
Goldmart still has sets available and is selling them for $450, which is slightly above wholesale. Mr. VanderLaan said his company tries to price coins as competitively as possible, usually just a notch above wholesale.
Buyers and submitters have speculated that either quality control at the San Francisco Mint was poor on these sets, or that PCGS was unusually tough in grading them. Whatever the real reason, those who bought already graded 70 sets, especially those from PCGS, when they were first available are doing very well.
In light of the factors discussed above, I would not be surprised to see the value of the PCGS first strike sets continue to increase, whatever the final overall mintage of these sets.
It appears that dealers and investors snatched up the limited supply quickly, and that they are waiting for higher prices before putting them on the market.
There may be lessons here for those who adamantly refuse to have their modern U.S. Mint coins graded, and who believe that first strike designations mean nothing.
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.