Beware proof gold and silver American Eagles including graded PF70, American Buffalos and Eagles graded MS70, and modern gold and silver commemoratives
Editor’s note: This post is an extended and updated version of a post first made in December 2013. Updated November 21, 2019.
For many years now we’ve published warnings against the purchase of a whole host of modern gold and silver coins offered to unsuspecting buyers as ‘rare’ or ‘unusual’ or ‘collectible’, with the promise of enhanced performance, advantageous tax consequences or added privacy. Given the volume of calls we’ve received from individuals recently who been persuaded to allocate significant sums of their retirement into these products – typically in very destructive fashion – we felt it was time once again to ‘sound the alarm’ and make every effort to inform investors and help them avoid falling into these crippling traps.
Products include, but are not specifically limited to:
US Mint Products:
Proof Gold Eagles (PF70*)
Proof Silver Eagles (PF70*)
MS70* American Eagles (Gold and Silver)
MS70* American Buffalos (Gold)
America the Beautiful Coins (5 oz silver)
Canadian Mint Products:
.99999 Gold Maple Leafs
Silver Wildlife Series Including:
Silver Arctic Fox (1.5 oz Silver)
Silver Arctic Polar Bear & Cub (1.5 & .5 oz Silver)
Silver Grey Falcon (1.5 oz Silver)
*As graded by one of two primary independent grading services – the Professional Coin Grading Service (PCGS) and Numismatic Guaranty Corporation (NGC)
There is nothing inherently ‘wrong’ with owning these products, save for the fact that they are prime fodder for dealers – especially those focused on IRA rollovers – to mark up significantly above fair value, potentially causing irreparable damage to you as the buyer, while lining the pockets of the seller. “First-Strike”, “Early Release”, “Flawless”, “Rare”, “Limited Production”, “PF70”, “MS70” are among the many misleading, overstated, and valueless descriptions that populate a number of dealer sites. Putting it bluntly: These coins aren’t special, they aren’t unique, they aren’t rare, and they most certainly are not worth the massive premium many retailers attempt to charge.
Read the US mint’s statement on First Strike and Early Release designations.
The reality is simple. Both the US mint and Canadian mint are creating undoubtedly beautiful coinage with their programs. The coins are exceptionally designed and produced in consistently high quality. And frankly, we are all for the notion of grabbing a few of these if you feel like you’d enjoy owning them as a collector. But not as a core holding. Sure, the mints release only a limited number of these every year, which by definition makes them of finite/limited supply. The only problem with that narrative: They come out with a whole host of new products each and every year. Far too often, a product that is popular one year is soon forgotten a year later. As such, invariably, the vast majority of these types of coins eventually float back to the underlying melt (gold and silver) value in the coin. Put another way, you should enter ownership of these types of coins with the expectation that any premium you pay above the melt value of the coin has a very good chance of evaporating. And when some dealers charge 50%+ markups for these coins, you can quickly see just how much damage can be done the moment ‘you drive the car off the lot’.
Here are some specific examples regarding these products, their current value, and what would be a ‘fair’ mark-up in our estimation as of the date of this post:
– Back dated proof gold eagles have, for the better part of 2019, sold for 2-3% premium to a standard bullion issue American Eagle. Anyone asking $40+ more than a standard bullion issue American Eagle for a Proof Eagle is charging you too much.
– America the Beautiful coins are currently selling for the exact same per ounce as a standard bullion issue Silver Eagle. So take 5 x the cost of the silver Eagle. Anyone charging you more than that is charging you too much.
– Proof silver eagles are readily available in the wholesale market. Anyone charging you over $40 per coin is charging you too much.
– Canadian commemoratives are readily available in the wholesale market at bullion prices. They are typically 1.5 ounce coins and should therefore be offered at minimal premiums to 1.5x the cost of a Silver Maple Leaf. Anyone charging you more than that is charging you too much.
This is not to say that even if you are offered a ‘fair shake’ on these products, we would recommend owning them. In fact, if you open a gold and silver IRA with us, our recommendations are very simple: Purchase standard bullion issue American Eagles and Canadian Maple Leafs. Nothing more. These products give you the absolute best chance to succeed should gold and silver spot prices advance, as they maintain competitive buy/sell spreads, and move directly with the underlying gold and silver spot prices – and we suspect if this is an investment you’re considering making, that’s precisely what you want…