How long will it be before 2014-W proof gold Kennedy half dollars trade at bullion value?
The current issue price on the U.S. Mint website is $1,240. The bullion value is $968.25.
The $271.75 difference is what covers Mint costs and gives it a profit.
The secondary market does not care about this. Once the coins get into private hands, value is determined solely by perceived value between buyer and seller.
Perceived value of gold coins with high mintages usually adjusts over time to not much more than bullion price.
Is the Kennedy half dollar high mintage? For a gold coin, yes. In round numbers it is 60,000. Check the weekly Mint Statistics page to get a precise figure.
Buyers have ponied up $75 million, again in round numbers, to order these coins.
But as every collector who orders these coins knows, not every coin is equal to every other coin.
There is the matter of the grading labels that create tiny subsets of the larger body of coins.
There is the matter of grading. A Proof-70 will usually be priced higher than a Proof-69 over time.
But what about the coins that do not have a special label, or do not make -69 or -70 grade designations?
There will be some of those.
As the initial market ardor cools for these coins and more and more are delivered by the Mint (Remember, the Mint had 40,000 ready to go as of Aug. 5) the weight of supply will begin to test the limits of collector enthusiasm.
That means a Kennedy selling for gold value is probably not very far off. It won’t have a slab, or it will be graded Proof-68 or less.
Smart buyers might not mind that to obtain the coin at a discount to issue price. After all, what is wrong with a Proof-67 or Proof-68 coin? For that matter what is wrong with a raw gold Kennedy?
If enough of these coins begin to trade for bullion value, it might open a door to a new opportunity.
Why not make the coin an annual gold bullion issue?
The half dollar is dead as far as having a role in circulation goes, but it might have new life it its new gold form.
As a familiar design of a defined quantity of gold at a convenient price point, it could just find a market niche in the United States market in the years ahead.
But I am getting ahead of events.
First we must wait for the trading of the current coins at bullion levels to begin.
Buzz blogger Dave Harper is winner of the 2014 Numismatic Literary Guild Award for Best Blog and is editor of the weekly newspaper "Numismatic News."