Modern Coin of the Month: The 1988 American Silver Eagle
Posted by Jay Turner, NGC Grader and Attributor on 3/1/2006
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Collectors love big coins and coins struck in precious metal. That explains in part why the American Silver Eagle is so popular with collectors. In fact, of all modern coins, it is the most widely collected after the States Quarters, and certainly the most widely collected of current non-circulating U.S. coins. Despite its widespread popularity, this coin is often the subject of controversy.
Bullion coins, coins valued for their metal content rather than their face value, have long been used by investors seeking to add precious metals to their portfolios. For many years, both Canada and South Africa issued popular gold bullion coins. The U.S. Mint struck American Arts Commemorative Series gold medals between 1980 and 1984 in half ounce and one ounce sizes, as its first entrant into this niche. These medals were distributed directly to the public by both the Post Office and the U.S. Mint. They met with only moderate success despite the buoyant gold market of the era. In response, a plan for a gold bullion coin was developed in 1985 which culminated with the Congressional authorization of the American Eagle Program.
The legislation outlined a nationwide distribution network of dealers. These bullion coins could not be purchased directly from the U.S. Mint. Rather, investors, dealers, and collectors were to purchase them from a network of "Authorized Purchasers." This move helped assure both the wide availability and acceptance of these new bullion issues.
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Also included within the legislation was the American Silver Eagle, a one ounce .999 fine silver, one dollar denominated coin. Its obverse featured A.A. Weinman's artful rendition for the Walking Liberty half dollar. Each piece was to be guaranteed by the United States government for its weight, content and purity, making it the only silver bullion issue guaranteed by the U.S. Government.
Sales began in October 1986. The coins were sent to "Authorized Purchasers" in boxes of 500 coins, prepackaged with 25 tubes of 20 coins each. This is still the only form that Mint State Silver Eagles are released from the U.S. Government. Sales were brisk through 1986, and in two months, 5,096,000 coins were sold.
Some collectors inquire whether the Silver American Eagle is a coin or silver round. A simple explanation is that any piece issued by the Mint with a "face value" is a coin. The Silver Eagle does have a one dollar denomination, but even though it is denominated by the Government, it is never intended to circulate at face value. Rather it trades relative to its intrinsic metal price, which well exceeds its face value. There are many pattern pieces and commemoratives issued in the same way that are, in a numismatic sense, accepted as coins. Without hesitation, all American Eagles are indeed coins.
Regardless of whether or not collectors thought they were coins, Silver Eagles quickly became a hit. As collectors began to assemble date runs, condition also became a factor of prime consideration, as appears to be the case with most modern issues. Within the past few years, the majority of advanced Silver Eagle collectors honed their focus to certified coins, gravitating primarily to the elite MS69 and MS70 grade levels. Right away, the 1988 Silver Eagle emerged as the key date in MS70.
Mishandling accounts for the low population of MS70 coins. The coins come in boxes of 500, in tubes of 20 coins each, and handling during packaging is the source of numerous flaws. As I personally opening hundreds of sealed boxes of these coins for grading, I can attest to the condition problems. The tubes are often tight, which prompts Mint employees to jam stacks of coins into them rather forcefully. As a result, coins with wipes, scratches, hits, cuts, and other problems are the norm. These immediately preclude a coin from the MS70 grade.
While Mint packaging procedures cause a number of the condition problems, other issues regularly come into play including struck-through flaws and spots. If foreign debris comes between the coin blank and die during striking, a struck-through error will occur. Often these are too small to be deemed a true mint error, falling within the Mint's accepted tolerance for such flaws, but are detracting enough to limit the grade. Since silver is a relatively unstable metal, the planchets used to strike many of the Mint State Silver Eagles seem problematic. Often the planchets are improperly washed and develop milk spots which are unattractive and cannot be removed. This is similar in effect to spotting seen on classic silver coins such the Peace Dollar.
Even when perfect coins come out of the Mint, they don't stay that way. Only a small number of investors and collectors keep their coins in the original boxes of issue. When removed, they are handled by investors and collectors, imparting various flaws along the way. With all of these factors, it is no wonder that the scarce 1988 Silver Eagle certified MS70 by NGC can sell for thousands of dollars.
Many of the early Silver Eagle dates are hard to come by in top grade, but nonetheless they are hotly pursued. In fact, the Mint State Silver Eagle Set, 1986-Date is the second most actively collected set in the NGC Registry. For this reason, the 1988 American Silver Eagle is our Modern Coin of the Month.