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Bullion Sure; Eagle Also Collectible
By Paul M. Green, Numismatic News
January 24, 2013

This article was originally printed in Numismatic News.
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What’s the key to a set of silver American Eagles? If you said the proof 1995-W you would be right.

The silver American Eagle series began in 1986 as a supposedly convenient method of trading silver bullion in a convenient weight of 1 troy ounce.

But naturally collectors being collectors, they want to grade them and assemble them into sets over the years. And the Mint being the Mint, it made collector versions to sell to hobbyists to pad its profits.

So is the American Eagle a collectible coin or a bullion coin? It is both, but naturally in these pages the collectible aspect takes priority.

Of course, with any new series, it takes a while for a set to grow to include enough coins to become interesting. The silver American Eagle definitely reached this point in 1995 or shortly thereafter.

A proof 1995-W silver American Eagle was created to mark the 10th anniversary of the program. The only way collectors could buy the silver coin was to buy the full proof set, which included West Point gold coins in the ounce, half-ounce, quarter-ounce and tenth-ounce sizes. The original issue price was $995, quite a chunk of change for average collectors.

As a consequence, only 30,125 were sold. After months of doing nothing, the price of the set and the proof silver 1995-W began to rise in price.

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The silver coin alone is now at $3,600 in Coin Market.

The price increase had to be caused by added demand from collectors and dealers and not silver speculators.

The 1995-W is certainly a special case, but the fact is that an assortment of other dates have also shown price increases. They are certainly not on the same level as the 1995-W, but realistically if any business strike silver American Eagle is priced at more than its silver value you have to pause and consider the reason as the only good reason is that the date is tougher and demand from collectors is forcing the price to higher levels. That would mean that at least some are approaching the silver American Eagle not as a collection of bullion coins but rather as a collection of silver dollars, which is technically what history will suggest that they are.

In fairness it is certainly not surprising that many have approached the silver American Eagle as simply a bullion coin and not as a collection of silver dollars. After all, the silver American Eagle was introduced as a bullion coin and very few hobbyists during their early years of production took the time to consider the bullion coins (as opposed to the proof collector versions) as anything more than speculation on the price of gold and silver.

Realistically, the silver American Eagle had been something of a surprise addition to the bullion coin program in the first place. The big news in 1986 was gold as except for commemoratives the United States had produced no gold coins since 1933 and even the idea of gold commemoratives was new, having been introduced in 1984.

The American buyers of gold had in particular been troubled by their inability to purchase any gold coin dated after 1933 for decades. That had changed with the legalization of gold ownership on Dec. 31, 1974, but the idea of having an American gold bullion coin as opposed to one from Canada or South Africa or China was appealing to many.

Things had not been as difficult in terms of silver. There had never been restrictions on the buying and selling of silver. As silver rose to $50 an ounce in 1980 Americans cheerfully traded in U.S. 90 percent silver coins and even 40 percent silver half dollars and 35 percent silver war nickels.

There were also privately produced silver rounds, bars and ingots so it would have been hard to make the case that there were no options in silver. That said, the experience of silver rising in price over the course of a few years to a price of $50 had certainly made many Americans far more conscious of the possibility of silver investments and that almost certainly helped to set the stage for the idea of a silver American Eagle in 1986.

Even though the stage was set, it still was something of a surprise to learn that the United States would be offering not just gold bullion coins but also silver. The primary political motivation in Washington, D.C., was to provide Americans an alternative to the gold South African Krugerrand, which because of apartheid policies, that country was being pressured to change policies. These politicians even copied the .9167 fineness of the Krugerrand for the American Eagle so nobody would miss the point rather than adopt a .999 fine composition.

The American Eagle gold ounce, one-half, one-quarter and one-tenth ounce coins would be the prime focus of the program..

Silver was not involved in international relations, so fortunately the specified fineness was .999, which is what investors were used to trading in a weight of one troy ounce. There had been some talk of simply reviving the Morgan dollar as a bullion coin, but its odd weight of .7734 ounce of silver and a fineness of .900 was just what the doctor ordered for the 19th century and not modern silver investors. Fortunately, the Morgan suggestion didn’t get far.

The coin was given a face value of one dollar to make it a coin rather than a medal. The face value chosen was much lower even then than the price of bullion, but that was the intention. To have given the coin a face value of $5 or $10 would have opened the door to people trying to spend them and the U.S. Treasury did not want the confusion that this might cause.

A national retailer doesn’t need a frazzled mom trying to buy baby formula with a coin unfamiliar to cashiers and be forced to put up signs “No $10 coins accepted.” That would be no way to launch a new bullion coin.

Rather than give the new coin a completely new design, the Mint selected the A.A. Weinman Walking Liberty half dollar obverse design. That added to the interest as the Weinman Walking Liberty half dollar design is enormously popular. It had been the result of a design competition in 1916 when the Mint director described the design as, “The half dollar bears a full-length figure of Liberty, the folds of the stars and stripes flying to the breeze as a background, progressing in full stride toward the dawn of a new day, carrying branches of laurel and oak, symbolical of civil and military glory. The hand of Liberty is outstretched in bestowal of the spirit of liberty.”

If getting attention from the nation’s coin collectors was the goal, the use of the Weinman Walking Liberty half dollar and the Saint-Gaudens double eagle obverse on the gold coins was possibly the best idea that could have been used as when those two designs are concerned collectors tend to get interested in a hurry.

The annual offering of a proof silver American Eagle was also clearly geared for the nation’s collectors and there were simple mathematical considerations. If you want the nicest possible examples of the Weinman design on a Walking Liberty half dollar for an MS-65 you will pay well over $100 for even the most available date and in the case of a Proof-65 the cost is likely to be closer to $800. Certainly for those simply wanting a nice example of a famous design the silver American Eagle was an immediate alternative and one that would appeal to collectors.

Even with the attempts to interest collectors, the fact that the silver American Eagle was being called a “bullion coin” was not something that would encourage much interest on the part of collectors as bullion coins historically are seen as having basically no numismatic value with in some cases extended mintages (and restrikes), making their only value the metal they contain.

What the whole matter was overlooking was U.S. history. Basically all U.S. silver and gold coins were bullion coins, which simply worked a different way. In the case of early U.S. history, the face value was fixed but the amount of gold and silver could change. That was seen in the 1834 reduction in the weight of gold coins and later in the 1853 weight reduction of silver coins.

Interestingly enough, in 1873 as the price of silver declined because there was too much thanks to the Comstock Lode the amount of silver in silver issues was actually increased.

The modern bullion coins simply work a different way as the amount of the precious metal whether silver or gold is fixed but the price is not as it can go up or down based on the price of silver or gold at that time. That said, it is awfully hard to make the case that the historic coins of the United States were anything other than a different type of bullion coin and that was seen repeatedly in U.S. history as the first Bust dollars were exported for their silver. Later in the 1820s no gold coins were circulating as they were all being sold to brokers who would export them for their bullion and similar patterns were regular parts of the history of gold and silver coins.

The one major difference, of course, in the coins of the past and today’s bullion coins is simply that today’s silver American Eagle does not circulate. That, however, does not mean they could not circulate. They are legal tender for one dollar and if you are willing to take one to Pizza Hut or anyplace else, they will almost certainly be glad to credit you with one dollar. But because people are not fools, this is not likely to happen often.

In fact there is one very clear case in U.S. history where a coin of the United States worked exactly the same way as today’s silver American Eagle would work. That was the Trade dollar. The Trade dollar was never really intended to circulate in the United States as its prime purpose was to be exported to China. They did, however, circulate for a couple years as silver dollars.

In 1876, however, the Congress revoked the legal tender status of the Trade and that technically made them no longer one dollar but rather simply 420 grains of .900 fine silver. Of course they said “Dollar” and although in theory they were not to be produced for domestic use that happened.

A number of people accepting them as one dollar only to be told when they went to use them that they were not good for full stated value, but something less. That something less became less than 90 cents and in at least one case there is a report of banks only taking them at 75 cents. In fact the owner of a silver American Eagle is at least protected in that they are legal tender for $1. That said, at least for a time the Trade dollar actually was circulating in precisely the way a silver American Eagle might with a value based on the price of silver at the time it is used.

The initial sales of the silver American Eagle reflected that the idea was popular with just under 5.4 million business strikes selling along with nearly 1.5 million proofs. The following year the proof total would drop to just over 900,000 while the business strike total soared to over 11.4 million. The proof decline probably showed that at least some initial buyers simply wanted an inexpensive nice example of the famous Weinman design.

The initial demand was a typical manifestation of what happens with the first years of many other issues. The drop in collector proof demand during the second year is also fairly typical. The doubling in the regular bullion coin mintage shows it caught on as a bullion investment vehicle . That said the collecting opportunity was possible as at least initially the proof silver American Eagles came from San Francisco as well as the business strikes, but the business strikes did not have a mintmark.

Certainly some fluctuation in collector demand for silver American Eagles was to be expected. After all, this was the experience of the Eisenhower dollar series of less than a decade earlier. However, where the Ike series featured an assortment of changes as it went along, the American Eagle was much more stable in its early years. It found a place with collectors even as they were distracted by large numbers of commemoratives and other offerings.

Over time, it would also have become much more clear at least to some that not all silver American Eagles were created in equal numbers. In fact that was quickly apparent with the decline in proofs and the rise in business strike mintages in the second year, but additional years saw additional numbers thrown into the mix better enabling potential collectors to determine which dates were likely to be better over the long haul.

It should not be too surprising that the first indication that some dates had the potential to rise to higher prices came in the proofs. After all, sold at premium prices, the proofs were clearly the one silver American Eagle potentially of interest to collectors as silver buyers are not likely to pay a premium for their silver.

Some of the lower mintage proofs have now safely moved to much higher prices. Good examples are the 1993, 1994 and 1995 which have traded as high as $200-$230, though they did not remain that high.

The 1995-W is a unique story as it was basically ignored by many at the time of issue because they weren’t expecting it, couldn’t afford it, or simply were mad at the Mint for creating it. It should be remembered that in 1995 collectors were being bombarded with offers, especially for the huge Atlanta Olympic Games commemorative coins.

The low 30,125 number that sold made the 1995-W something of the modern day equivalent of the 1895 proof-only Morgan dollar. It has a literally 100 percent survival rate, but those who did not include it as part of their regular collection are now regretting that decision and the more the price of the 1995-W increases the more many can no longer simply ignore that it exists as it is easily the key to a silver American Eagle collection.

The real question in the case of silver American Eagles has been the business strikes and would collectors turn to them as a potential collection. The jury is technically still out on that question because prices vary so little despite large swings in mintages. There are some indications that some of the business strikes are slowly climbing to premium price levels.

Certainly from the start with the comparison between the 1986, which had a mintage roughly one-half the size of the 1987 total, there was the potential that some dates would be seen as better than others. While there is little difference between the two dates pricewise, a look at the 1996 at $62 shows that there is a point at which collectors will pay significantly more than what they will pay for a common piece.

Over the years we are likely to see such trends continue if collectors increasingly treat the business strike silver American Eagles as a collection. In theory their prices should be directly related to their mintages although we cannot be 100 percent certain of that fact as the vast majority of the coins have had no special care, but also because they are bullion coins, they are not likely to be banged around, but instead spend their times in plastic tubes. They have not actually circulated. Some have been handled and dumped in display cases and treated in other ways that a grading service is not likely to view kindly. That may eventually see some dates being tougher or more available than expected at least in some grades.

Right now if you check to find out what grade you might want in a business strike silver American Eagle you will learn that virtually every date is available in MS-65. The prime grade for collecting seems to be MS-69. In grading population reports the numbers slabbed with this grade vastly outnumber those in MS-68 or MS-70. In the case of the MS-70, it can be expected that they indeed are much scarcer than MS-69, but in the case of MS-68 you cannot help but conclude that the lower numbers of slabbed MS-68 coins is not because they are scarce so much as they are mistakes where those who submitted the coins to the grading services expected that they would earn an MS-69 label.

If you really want the best in a silver American Eagle collection the grade you need is MS-70 as they likely will be the premium coins in the future based on the results of those that have already been graded.

Collecting trends are certainly clear. The proof silver American Eagles along with the 1995-W already appear to have a solid collector base. The business strikes are still finding their way as collectibles, but it does appear that some collectors have reached a very logical conclusion and that is that the silver American Eagle is a desirable modern day silver dollar. That makes a collection but only possible but one that might well prove to be a surprisingly good idea to pursue in the future, especially if you are demanding in the grades of the coins you choose to put aside.

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