The Coin Analyst: San Francisco Silver Eagle Set Launch A Success
by Louis Golino for CoinWeek…..
When the U.S. Mint first proposed issuing a special American silver eagle proof set marking the 75th anniversary of the San Francisco Mint in the spring, most collectors were excited about the new coins. They were especially intrigued by the prospect of the first “S”-mint reverse proof coin in the series.
But collector enthusiasm for the sets was dampened by the Mint’s plan to try a new approach for distributing a high-demand product. The sets would be issued to demand, and orders would be taken for a one-month window from June 7 through July 5. There would be no household limit, and for the first time, the Mint would use a sales odometer on its web site (www.usmint.gov) so buyers knew how many sets were being sold. It was updated each day about 3:00pm.
Many people were concerned that issuing the product with no mintage limits and using a relatively long sales window would put a lid on secondary market values for the sets. That appears to have deterred some collectors and flippers from buying a set, or buying as many as they normally would.
In addition, there was a lot of griping about the $150 price tag, especially in light of low silver prices. The combination of unlimited mintage, a one-month sales window, and a higher price point than most collectors had hoped for, led some people to suggest that this could be one of those Mint products that sells for less than issue price down the road. Most people felt that the sets had better prospects for appreciation than that, but less than that for limited mintage offerings.
Now that the launch of the San Francisco sets is over, most collectors appear to be pleased with how the Mint handled this program. And the “mint to demand” aspect seems to have resulted a lower, rather than a higher, mintage than most people expected.
The final mintage number will not be known for some time, but as of the day after sales ended, i.e., July 6, the semi-final sales number is 251, 302. By comparison, the 20th anniversary American silver eagle sets, sold 248,000 units in about two weeks in 2006. Those sets, which had an issue price of $100, today retail for approximately $400-450. About six months after their release, they briefly traded for several hundred dollars more than that. They had a household limit of 10 sets.
A lot of people are pleased that sales of the San Francisco set did not reach 300,000 or more, as many predicted or expected given the new distribution model.
There is an emerging consensus that secondary market values for these sets should be quite solid, but at the same time, most people feel it will take some time for them to reach their full value potential, which may discourage flippers, and may be a large part of why sales were not higher.
In other words, according to this perspective, there is a lot less potential for quick profits on these sets compared to, for example, the 25th anniversary American silver eagle sets, which sold out of their 100,000 mintage in 4 ½ hours. But those who buy and hold should do fine given the huge interest in American silver eagles.
I think the comparison with the 25th anniversary sets is probably apt, though one should be careful not to automatically assume that the new sets will parallel the price history of the 2006 sets. Only time will tell.
But there is an interesting twist with respect to secondary market potential for graded San Francisco sets.
On the one hand, the Mint’s quality control has improved a lot in recent years, especially for silver eagle products, and there is likely to be a relatively high number of sets that receive the top grade of PF70, although there will also probably be sufficient demand for 70 sets to give them a decent premium.
But on the other hand, graded sets that have the first strike/early release labels may acquire a higher premium than some people expect. There is no need to re-hash here the never-ending debate about whether those labels are accurate. The bottom line is that in many cases the market gives such labels a value premium, at least on the retail side, whether or not that is justified.
The first batch of orders are expected to ship in late July, whereas later orders are expected to ship between late July and mid-October. At this point it is not clear how many sets will be eligible for the first strike/early release labels, but it will probably be less than the full mintage of the sets, and may only be 150,000, or about 60% of the total, which are the sets that should ship in late July. The sets were produced in batches, based on sales numbers, which is the reason for the long delivery window.
Unless the grading companies decide to accept first strike/early release orders for a longer than the normal one-month period, as they did with the 2010 bullion versions of the five-ounce silver America the Beautiful coins, this means many of the sets that ship in August-October will not be eligible for those designations. And only some portion of those sets will actually be sent in for grading, and only some of them will include requests for the first strike/early release labels. At NGC early release is free of charge, but at PCGS first strike requires an additional fee.
PCGS accepts sealed boxes for an unlimited period for first strike labels, but the box still needs to be postmarked by a certain date, which will be posted online at their web site. So far both PCGS and NGC have only provided information on special labels for these sets and some submission instructions, but as far as I could determine, they have not yet set a cut-off for first strike and early release.
One of the interesting aspects of the set’s launch is the extent to which it has drawn attention to the role of secondary market value projections and estimates in the purchasing habits of collectors, flippers, and dealers. In print coin publications and online blogs throughout the launch of the sets, countless people weighed in on what they believed the sets would do after sales ended.
As usual, purist collectors professed not to care what the sets will be worth in the future because all they really care about is the coins and keeping their collections updated. But most people clearly had this issue on their minds when deciding whether to get a set and how many to order. Even purists probably prefer not to lose money.
The Mint deserves praise for responding to the complaints and concerns of collectors who were shut out of the 25th anniversary sets, and for making the ordering process smoother than usual except on the first day, and even fun, as many people seemed to derive a lot of pleasure from tracking the online sales odometer and speculating about final sales numbers.
A collector named Dan, writing in the coin blog, Mint News Blog on July 4 aptly summarized the set’s launch as follows:
“I think the limited offering was a success. Many people who could not otherwise order on Day 1 (due to work, service or other obligations) were able to order at least one set. Others who’d have preferred a fixed mintage and have the resources available to order multiple sets of the household minimum in order to make a quick buck were probably the most disappointed. The Mint will have to decide on balance which approach is the best and how successful they were. This could be the model for limited edition sets for some time. I for one would like to see a counter for most if not all of their products. I would also like to know whether the counter decrements (counts down for canceled or returned sets). It would also be nice to know how many extra sets the Mint produces to account for replacements and what it does with any surplus sets (if any).”
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.