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Price shock aside, do you want it?

This article was originally printed in the latest issue of Numismatic News.
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I learn a lot from poll questions. Sometimes, though, the intended meaning can be ambiguous even in a perfectly straightforward declaratory sentence.

This week’s question about whether readers plan to buy the new proof silver American Eagle for $45.95 generated a large response.

Some readers were taken aback by the new and higher price of the proof American Eagle. They said so. Some were so incensed that they declared they will not be buyers this year.

I can understand that. We all have our price limits. Nothing hurts a collector more than the idea that something that was once within his reach no longer is.

2011 U.S. Coin Digest: Bullion Coinage
2011 U.S. Coin Digest: Bullion Coinage

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The fact that no proof silver American Eagles were offered in 2009 means we had no intermediate step between the offering price of $31.95 in 2008 and the 2010 price. So the shock of a 50 percent price hike is all the greater.

Silver bullion, though, has been busy on world markets in the intervening months and it is an understandable price increase even as it is an unwelcome one for collectors.

One of the replies made me start asking myself questions. So what exactly in that one poll question response made me go huh? It was this:

“Where are the days when commem halves sold for twice the face value?”

Is this comment a marker thrown down saying the Mint has gone beyond a price that is twice intrinsic value for the American Eagle, or is it a yearning to buy a new commemorative literally for $1?

Naturally, I got out my calculator and found that the new proof American Eagle issue price is more than twice bullion value, but at roughly 2.5 times bullion value, is that beyond a reasonable limit?

I went back to 1986 when the first American Eagle proof was created. Silver was roughly $5.50 an ounce and the issue price was $21. That works out to almost four times intrinsic value, or 3.82 times if you want to be precise. By that yardstick, the 2010 issue is reasonably priced.

Take it another way. In 1986 the Mint charged $15.50 to cover its costs over and above bullion. This year’s coin is $27.95 more than bullion, or almost twice in dollar terms what it was in 1986. But then the cost of living has about doubled in that time, so it is mathematically in line with an assumption that the Mint’s costs of planchet fabrication, coin striking, packaging and delivery have also increased.

 So does the writer of the poll response want to go back to $1 new issue prices? I don’t really believe that. It is probably a sigh of nostalgia on his part. Collectors have certainly seen the prices of new issues escalate over the years if they have been active for any length of time.

The $5 price of a proof set in 1968 was a shock. It was followed by the shock of a $10 issue price for the first proof Eisenhower dollar in 1971. I don’t remember when the $20 barrier was first broken. It might have been by that first proof silver American Eagle in 1986. It doesn’t really matter, does it? What matters is whether you will buy the 2010 coin – or not.

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