Steer clear of ‘Burnished/’Uncirculated’ American Eagles (MS70 First Strike/Early release) and “off market, specialty mint items.”
Back in 2007, we penned a consumer alert posted at our blog site entitled, “Beware MS70, MS69, PF70 “Perfect” + “Certified” Gold & Silver American Eagles & American Buffalos” To this day, it remains the first result google produces when an individual searches MS70 Buffalos or MS70 Eagles – a result we’d like to believe has saved many would be precious metals investors from making an expensive mistake. That said, it hasn’t prevented certain members of the industry from continuing to offer these products, and despite our efforts, their ‘success’ has emboldened them as they have now begun to ‘innovate’ in this field, offering a whole new line of products that provide ambiguity in pricing and allow for higher dealer margins. So, it would appear that the time has come to revisit this article, and to expand to include the latest and ‘not-so’ greatest products we think precious metals buyers should be on guard against.
1. Burnished/’Uncirculated’ American Eagles (MS70 First Strike/Early release)
Where to begin. At the moment of this writing, you can buy these coins direct from the U.S. mint for $1475.00. The first coins with a 2015 date are set to be released in the coming weeks, so you’re going to start hearing about these more and more. So what is a Burnished/’Uncirculated’ American Eagle?
According to the U.S. mint:
“The term “uncirculated” refers to the specialized minting process used to create these coins. Although they are similar in appearance to American Eagle Bullion Coins, uncirculated quality coins are distinguished by the presence of a mint mark, indicating their production facility, and by the use of burnished coin blanks, which are hand-fed into specially adapted coining presses one at a time.
Each American Eagle Uncirculated Coin is carefully inspected before it is encapsulated in plastic. With its pristine finish now protected, each American Eagle Uncirculated Coin is placed in a protective outer box. A Certificate of Authenticity is included with each coin.”
In other words, put simply, they are all perfect. To be sure, I don’t fault the mint for making a product that is a more attractive strike than the traditional bullion coin. In fact, we even think purchasing these coins for aesthetic/owner enjoyment purposes is reasonable. As we often say to our clients, if you want to buy a coin or two to own for your own personal enjoyment, go for it.
Where we do find fault is if someone is trying to sell you one of these as an ‘early release’ or ‘first strike’, or perfect ‘MS70’ for a considerable premium to what the mint is charging that day. You can be sure that whatever that difference is, its going straight to the pocket of whoever is selling it to you.
To see what the mint is charging for these on any given day, visit here: http://catalog.usmint.gov/coin-programs/american-eagle-coins/?_ga=1.20401534.732613573.1408386463
Which leads us to our second, ‘Buyer Beware’ product:
2. Off market, specialty mint items. More and more, mints have begun cooperative efforts with dealers to develop unique and exclusive product offerings – what essentially amounts to modern commemoratives. The advantage to dealers in these products is that a would-be buyer has no basis of comparison. A dealer can deliver a sales pitch along these lines: “We have cooperated with mint x to develop a superior quality specialty product. Only 3000 coins were struck, so they are of inherent rarity.” They may even throw in some real motivators like, “These are selling out fast, and we already have commitments for 2000 coins, so if you don’t act now, they will all be gone.” Or, “With this kind of rarity, these are going to increase in value faster than the gold price, and your returns will be exponential.” We could go on, but you get the point. Our advice would be very simple here: If someone is offering you a product you cannot locate elsewhere, a product that you cannot make a cost comparison to ensure a competitive price, don’t walk the other direction, RUN.
