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Proof palladium sellout virtually guaranteed

When the U.S. Mint puts the one-ounce palladium American Eagle proof coin on sale Sept. 6, should we call it a first year of issue?

It is the first collector version of the bullion coin.

This proof issue, though, comes a year after the bullion version debuted in 2017.

One year ago, bullion buyers grabbed all 15,000 available palladium bullion coins.

First year of issue almost always dazzles collectors.

Mintages usually are high.

The coins therefore often become common.

There are exceptions.

The 5.4 million mintage of the 1986 silver American Eagle bullion coin does not make it rare, but the coin sells for a big premium.

It is a first year of issue.

According to the APMEX website, it trades today for more than double the 2018 silver American Eagle.

Current price for one example of the 1986 bullion coin is $44.61.

The 2018 is $19.10.

A random year is an even cheaper $19.

For reference, silver bullion is $15.61 today.

While we don’t yet know how many proof palladium coins will be offered to collectors, it probably won’t be enough to prevent an immediate sellout.

Why?

Even though this is technically the second year of issue, that will probably make no difference to collectors.

It will be the first palladium coin offered directly to collectors by the Mint.

But the most important factor is the current selling price of last year’s bullion palladium coin.

With an ounce of palladium priced at $918, to buy the American Eagle investors need to pony up $1,603.20.

That’s a markup of 75 percent.

If anything will make the issue price of the 2018 proof palladium coin look reasonable, this is it.

Can a collector coin issued by the Mint actually sell for a price that is less than a bullion coin trading on the secondary market?

We’ll see, but it sure looks likely.

A proof platinum coin is marked up roughly 40-47 percent at similar prices. It is a sliding scale, depending on the metal’s price.

The higher the price of bullion, the percentage goes down.

If the palladium coin markup is 40 percent, it would put the issue price at $1,285.

That looks like a screaming bargain compared to secondary market prices of the 2017 bullion coin.

A one-ounce proof palladium coin will still be seen as a bargain at any value below the $1,603.20 bullion coin price.

Will the new palladium proof coin keep its value over the long term when so many other first years of issue fall after initial excitement wears off?

As long as the palladium bullion coins trade for such high markups, the answer has to be yes.

Buzz blogger Dave Harper won the Numismatic Literary Guild Award for Best Blog for the third time in 2017 . He is editor of the weekly newspaper “Numismatic News.”

 

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