Time to look at Eagles for scarcity

As the American Eagle moves into its second quarter century and as a number of collectors are wondering why they can’t put rare coins into their Individual Retirement Accounts, the suggestion has been floated (by me) that collectors ought to consider, and dealers who supply the coins should be encouraged to look at the mintage figures of uncirculated Eagle coins.

Lest anyone forget the nature of the mischief that caused the problem, in August 1981, Congress added section 314-b of the Economic Recovery Act (now section 408(m) of the Internal Revenue Code). The practical effect was to ban gold and silver coinage in self-directed individual retirement accounts.

(Before that, collectors could put collector coins in their IRA accounts; those who do it for income find themselves in the situation where the purchase of a coin (disapproved) causes the entire account to be labeled one that is in the process of “distribution,” which imposes a number of restrictions on them, including taxes and a prohibition against further contributions.

American Eagles (gold and silver) are permitted to be included in the account because Congress made clear that American Eagles could be put into the retirement plan contrary to the general rule.

Here’s where that becomes interesting. Silver Eagles (containing an ounce of silver) have been around for 25 years. To the person who is looking for growth potential in these rare coins, certain mintages could most powerfully ally with your investment desires to invest in rare coins.

Let’s look at the 1-ounce silver (dollar) coin which has handed all if the statutory coins are included. Maximum mintage is more than 39 million pieces for the 2011 silver Eagle) while the 2010 date comes in at 34 million. Obviously, neither is rare by any definition.

Let’s look at them first simply in chronolocal order since the series began in 1986:

1986 5,393,005
1987 11,442,334
1988 5,004,646
1989 5,203,327
1990 5,840,210
1991 7,191,066
1992 5,540,068
1993 6,763,762
1994 4,227,319
1995 4,672,051
1996 3,603,386
1997 4,295,004
1998 4,847,549
1999 7,408,640
2000 9,239,132
2001 9,001,711
2002 10,539,026
2003 8,495,008
2004 8,882,754
2005 8,891,025
2006 10,676,522
2007 9,029,036
2008 20,583,000
2009 30,459,000
2010 34,764,500
2011 39,868,000

Now let’s sort these dates by mintage in ascending order from lowest to highest. You can see that the 1990s saw many low-mintage years:

1996 3,603,386
1994 4,227,319
1997 4,295,004
1995 4,672,051
1998 4,847,549
1988 5,004,646
1989 5,203,327
1986 5,393,005
1992 5,540,068
1990 5,840,210
1993 6,763,762
1991 7,191,066
1999 7,408,640
2003 8,495,008
2004 8,882,754
2005 8,891,025
2001 9,001,711
2007 9,029,036
2000 9,239,132
2002 10,539,026
2006 10,676,522
1987 11,442,334
2008 20,583,000
2009 30,459,000
2010 34,764,500
2011 39,868,000

Overall, 281,861,081 1-ounce silver coins have been struck.

Look at mintages of Morgan dollars (1878 to 1921) and then the silver eagles with mintages of under six million (10 of the 25 struck). Those are likely the ones with the best opportunity to have collectible value in the future beyond bullion content. There are no guarantees, of course, but if there is a hobby in 25 or 30 years, you can be sure that collectors will be bidding up the values of rarer coins as compared to the more common ones.

Will the 2011 silver Eagle jump to collector minds in the future as common just as 1921 Morgans do to the minds of present-day collectors?

There are many other Eagles, gold and platinum, that also fall into this low mintage area. Check out my new book The Essential Guide to Investing in Precious Metals,” which Krause Publications published on Dec. 28.

I hope you will find it a guide to the future.

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