2017 palladium American Eagle: Collectible bullion
As we approach the two-week mark since pre-sales began for the 2017 palladium American Eagle $25 high-relief coin, I have some observations about the emerging market for this coin.
It is not often that the U.S. Mint creates a new type of American Eagle, so the arrival of the palladium American Eagle is undoubtedly a significant numismatic event.
Plus, 15,000 is not a very high mintage for a bullion coin, not to mention one struck in high relief, and the first bullion coin of that type ever and the first non-gold high relief ever, too.
Sales of the coin appear to be quite good, especially of Mint State 70 coins, which went fast last week. This past Monday afternoon more top-graded examples hit the market, priced initially in most cases at $1,249, and they also went fast.
Late Monday most dealers increased their price for the MS-70 examples from $1,250, to $1,450 to $1,500* depending on label and payment method, a 60%-plus premium over the spot value.
I can understand the desire to have a coin of the finest grade for such an historic piece, but I would want to know how these coins grade, i.e., what percentage of the coins submitted are getting the MS-70 grade at NGC and PCGS, before buying one.
Raw coins come with risks too, especially since palladium is the most volatile of the four major precious metals used to strike coins (the others being gold, silver, and platinum).
Palladium has been on a tear this year, hitting a high not seen since 2001 and performing better than any other commodity. But most things don’t go up in a straight line for long, so sure enough Monday saw a decline of a good $30 or so in palladium, creating a nice temporary opportunity for a better price on the raw coins.
But the key point is that most buyers of this coin understand palladium is a commodity that can rise or fall sharply. They are not buying it as a bullion investment, since bars and foreign palladium coins, as Bill Gibbs noted recently, are cheaper.
They are really buying the coin as a collectible even though it is technically a bullion issue. Such buyers focus on how it is a first-year coin in a new metal that should acquire a higher premium with time that will help protect its value against the vagaries of palladium spot values.
In addition, the Adolph Weinman design is widely admired and many wanted to see how it looks in high relief and on larger palette than silver dimes or the 1/10-oz. gold version.
This all suggests to me that most are buying
to hold, not to flip. Of course, only time will tell if this “strong hands” argument
turns out to be valid.
*I saw an MS-70-graded coin sell for $2,000 on eBay that had a label hand-signed by Artistic Infusion Artist Thomas Cleveland, who recently signed a deal with PCGS to sign labels.