Thinking of Buying Gold? - Gold Eagles

By Bill Haynes


If you are thinking of buying gold and end up with 1-oz American Eagle coins, it would be difficult for anyone to say that you could have done better. These U.S. Mint products have become the most popular one-ounce bullion coins in the world.

Gold Eagles, as they are commonly called, were introduced in 1986, and they were unique to the U.S. Mint, being the first 1-oz bullion coins ever minted by the Mint. Further, they were the first 22-karat (91.67% pure) precious metals coins ever minted by the Mint. Because of the copper added to make the coins 22-karat, the gross weight of the 1-oz Eagle is 1.0909 oz.

Today, 1-oz Eagles dominate the new gold bullion coin market in the U.S., claiming some 80% of the market. Since their introduction in 1986, nearly 12 million have been sold. In 2008, the Mint sold 710,000, but through the first nine months of 2009 the Mint sold right at 940,000.

Eagles are bullion coins, which sell for the value of their content plus a small premium over spot. Spot is the price at which large commercial quantities of the yellow metal changes hands in raw form for 48-hour settlement. Spot gold is the benchmark for the price of this most senior of the precious metals.

During normal times, the Mint turns out four sizes: 1-oz, ½-oz, ¼-oz and 1/10-oz. However, the Mint has yet to sell any of the fractional-ounce Eagles in 2009 and is not expected to sell them until December. Investors wanting fractional-ounce 22-karat bullion coins now will have to buy Krugerrands.

The one-ounce coin is, by far, the biggest seller in total ounces of all four sizes. Some years, more 1/10-oz Eagles were sold than 1-oz coins; but in total ounces of metal, the one-ounce coin is the biggest seller.

The 1-oz Eagle carries a $50 nominal face value, which means that it could be used as money at a value of $50. However, because the coin is sold at the spot price of gold plus a small premium, the cost of one coin greatly exceeds the nominal $50 face value.

Gold Eagles were given legal tender status to make them "legal tender coins." There is a much greater demand for legal tender coins than for straight bullion products, such as 1-oz bullion bars. The ½-oz Eagles has a face value of $25, the ¼-oz $10 and the 1/10oz $5.

They are packaged twenty coins to a tube, twenty-five tubes to a Mint box, which weighs right at forty pounds. Most investors buy 1-oz Eagles in multiple tubes. However, it is becoming increasingly common for large investors to take delivery of Mint boxes.

Bill Haynes heads CMI Gold & Silver Inc, one of America's oldest precious metals dealers. See CMIGS' website for more information about gold investments. This article may be reprinted provided this signature remains intact, including the direct links to CMI Gold & Silver Inc.

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