Third time not the charm for American Palladium Eagle?

In Italian, there is a proverb that translates into English as “There is no two without a three.” But when it comes to the U.S. Mint’s 2019-W American Palladium Eagle Reverse Proof one-ounce coin launched on September 12, that coin was widely expected by collectors and numismatic observers not to sell as well as the 2017 bullion version and the 2018-W Proof coin of the same series. The first (which retail buyers had to purchase from coin companies) sold out its entire mintage to its network of authorized purchasers on the first day it was available, while the second went to unavailable status within minutes at the Mint’s website.

In addition, while the 2018 palladium coin was a major success for the Mint, the 2017 coin resulted in a substantial loss, most likely because of the small premium charged to dealers for bullion coins as opposed to much-higher premiums for collector issues. But both coins were a big success for those who purchased them, as their premiums have continued to increase, especially for the 2017 coin if purchased for a small premium over then-spot of about $950 in September of that year.

The success of the 2017 issue for buyers was due to a combination of its status of premier issue of a new series in a new metal; the beauty of Adolph Weinman’s obverse and reverse designs* rendered in stunning high-relief for the first time; and the continuing rise in the palladium spot price over the past few years, which is currently at an all-time a little over $1,600.

As for the 2018 Proof coin priced at $1,387, it was widely expected to be a quick sellout because of the success of the first issue, and the fact that the Mint can sell 15,000 coins through its web site very quickly if the demand is there. Not to mention that quite a few buyers missed out on getting the 2017 coin before its market value spiked most likely because they did not know the mintage would be only 15,000 or thought there would be time to get it at the initial price because they did not expect palladium spot to keep going up. Those buyers were eager to make sure they did not miss out the second time.

Reverse Proof

In the run-up to the release of the new Reverse Proof palladium, there did not seem to be nearly as much enthusiasm within the numismatic community as there was for the previous palladium issues. There was a widely-held view that the coin, though sure to be very attractive and a piece that buyers of the first two coins need to keep their sets complete, would be a much-slower selling coin and probably never sell-out of the maximum mintage of 30,000 coins with an initial household limit of one coin. The two main reasons are the doubling of the potential mintage compared to that of the 2017 and 2018 issues, and the fact that with palladium near $1,600, the coins debuted at $1,987.50 — a very high price point for most buyers, especially for a coin with a mintage most observers considered too high.

As for why the Mint chose such a high maximum mintage, that is not clear but probably had something to do with the instant sellout of the 2018 Proof, which left some buyers without a coin and likely left some Mint officials thinking they could have sold more if they had simply made more coins.

In addition, there appeared to be no discernable wholesale market for ungraded examples of the 2019 coin as a result of these dampened expectations for sales, nor reports of dealers offering to purchase coins from their customers for a premium, as happened with last year’s Proof version, which has continued to maintain a strong premium over its issue price and spot palladium, especially in examples graded Proof 70.

On the various message boards and online forums devoted to modern coins, few collectors said they planned to buy the Reverse Proof coin right away — with many saying they planned to take a “wait and see” approach focused on whether palladium spot declines, or if they can obtain the piece below Mint cost later. Some people did say they would pick one up right away with no plans to sell to make sure they got a coin that was not a return.

And several observers pointed out that there are fewer than 15,000 collectors of the series, and more likely something like 10,000 or fewer since many buyers of the 2017 and 2018 coins bought multiples to sell whether they are dealers or individual sellers. Moreover, the previous issues are still available for sale, though the bullion coin is harder to find.

First-Day Sales

First-day sales of the 2019 Reverse Proof came in at 9,086 — a little higher than predicted by many collectors in the weeks leading up to the release, who thought the number would be more like 5-7,000 or so. For a major release like this, first day sales typically constitute a substantial percentage of total sales, and a number representing a little under 30% of the maximum authorized mintage suggests a sell-out is unlikely barring a considerable decline in spot prices.

On September 17 the Mint released the sales total through September 15, which was 16,690, which means the Mint has already sold more of this issue than the 2017 and 2018 coins.

There is little doubt dealers and some flippers will make a profit from buying raw coins from the Mint, having them graded, and selling their Reverse Proof 70 coins for a nice premium. Before the launch, several dealers were pre-selling 70s for $2,500-$3,000, or higher, for certain labels.

Leasing and Batches

An additional factor worth considering is that the Mint may not end up striking the maximum mintage of 30,000 coins if sales slow down considerably as widely expected. The Mint typically mints such coins to demand by producing them in batches based on their initial sales estimate and how the coin performs after being launched. In the specific case of palladium coins, the Mint (based on information in prior annual reports and as first suggested in the feasibility study conducted in advance of the launch of the palladium program) leased palladium in 2017 and 2018 rather than purchasing all the metal for planchets in advance. The Mint did not respond to a request to confirm whether it currently leases palladium.

The 2008 Annual Report states:

The Mint leases platinum and palladium to avoid the effects of fluctuating metal costs as a result of the changes in market prices. The Mint leases platinum for a fee of 1.2 percent of the asset’s value and leases palladium for fees that range between four and 10 percent. The Mint takes physical possession of the metal to manufacture the bullion coins. Upon sale to the customer, the Mint purchases the metal from the lessor on the same day for the same market price. In FY 2018 and FY 2017, the Mint paid $535 thousand and $507 thousand in leasing fees for platinum. In FY 2018 and FY 2017, the Mint paid $890 thousand and $438 thousand in leasing fees for palladium.

It appears unlikely the Mint leased palladium for the 2019 coin based on how large an expense that would have been with spot at $1,600. One forum poster stated on September 13 that 14,952 coins were left after first day sales of 9,086, suggesting, if correct, that 24,038 coins were minted. That number could not be independently verified and seems like a risky bet for the Mint given the widespread expectation of lower sales.

A final factor is the household limit of one, which was lifted the day after launch day. Dealers who need coins for their inventories are expected to acquire them from that point, and the total sales for the first week should be a decent indicator of where the final sales number will end up.

On eBay, sales 24 hours following the Mint release were rather sparse and were all 70-graded pieces in the $2,500-$3,000 range and a couple of 69s for $1,875-$2,250, but within days, some 69s sold for under Mint price. Large numbers of returns also seem likely given the poor initial secondary market for the coins. This was vastly different from the situation following the launch of last year’s Proof, or after the 15,000-mintage of the 2017 coin was made public.

Looking Ahead

At this point, the longer-term market value and demand for the Reverse Proof palladium coin is simply impossible to even begin to estimate, as so much depends on future palladium spot prices and the final mintage of the coin. Buyers looking to get a raw coin for under Mint price, or a 70 for a small premium, may get their chance.

The new palladium will also be a test of whether collectors will continue embracing U.S. Mint coins with a Reverse Proof finish, or whether they want something different, such as a new finish never used before. The legislative language is somewhat unclear in that regard since it states that each issue must feature a different finish than “the preceding year” rather than “years,” which would allow it to go back to a Proof coin in 2020. One thing that is virtually certain is that there will be no more bullion versions as those are not profitable because of how the Mint sells bullion coins.

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*The obverse of the American Palladium Eagle features Weinman’s famous Winged Liberty design that first appeared on dimes issued from 1916 until 1947 that was reprised in 2016 for the gold centennial series.

The reverse carries an image of an American Eagle perched on a rock clutching an olive branch that first appeared on the gold medal he designed for the 1907 American Institute of Architects highest award.

Louis Golino is an award-winning numismatic journalist and writer specializing primarily in modern U.S. and world coins. His work has appeared in Coin World, CoinWeek, The Greysheet and CPG Market Review, The Numismatist, Numismatic News, FUN Topics, The Clarion and COINage, among other publications. His first coin-writing position was with Coin Update.

In 2015, his CoinWeek.com column, “The Coin Analyst,” received an award from the Numismatic Literary Guild for best website column. By 2017, he received an NLG award for best article in a non-numismatic publication with his “Liberty Centennial Designs,” which was published in Elemetal Direct. In October 2018 he received a literary award from the Pennsylvania Association of Numismatists (PAN) for his article, “Lady Liberty: America’s Enduring Numismatic Motif,” that appeared in The Clarion in 2017.

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