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American
Eagles
More Than Just Bullion
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E
veryone loves gold coins. The
problem of course for most is the
cost of assembling anything close to
a top quality gold coin collection. In
the case of early U.S. gold coins, they
are scarce. In some cases they almost
impossible to find even in Mint State.
That problem of fnding Mint State
examples continues through the Cor-
onet Head types produced during the
mid 1800s and there are signifcant
rarities as well. If you try the gold dol-
lar or $3 gold piece, there are similar
difculties and even more recent is-
sues can be extremely expensive as is
seen by the fact that a Saint-Gaudens
double eagle collection now has four
coins in it likely to bring $1 million or
much more in the form of the ultra
high relief 1907, the 1921, 1927-D and
1933.
Looking for other gold collecting
options, the only other place many
can turn to are gold commemoratives.
There in the case of historic gold com-
memoratives there are not many coins
and the Panama-Pacifc $50 is going
to be very expensive especially in top
grades. In the case of modern gold
commemoratives, while many can af-
ford the collection, there is a reason-
able question as to whether you can
keep up with the new issues while
also acquiring some of the older ones
which in some cases are soaring.
That areas potential has been iden-
tifed by David L. Ganz in Rare Coin
Investing and Eric Jordan in Modern
Commemorative Coins.
All things considered, you have to
come to the conclusion that there are
challenges no matter where you turn.
But there is another area to consider.
These coins are the American Ea-
gle gold coins issued since 1986. The
American Eagle gold coins come in
ounce, half-ounce, quarter-ounce and
tenth-ounce sizes with face values of
$50, $25, $10 and $5. The face values
were intentionally placed at well be-
fore the value of the metal in the coins
so that people would not try to spend
them at the corner grocery when they
ran short of money.
The reason for face value at all is
that by having a legal tender value,
the round disk becomes a coin rather
than a medal. Coins are preferred in
the international markets.
If you dont believe that, take a look
at American Arts Gold Medallions.
With gold bullion in the strato-
sphere we are now at a crossroads.
Can you actually collect coins that are
intended solely to serve the investor
market?
The answer is yes. Collectors will
collect anything. However, this can
require nerves of steel because some-
times the market gets so crazy that
coins with mintages of a mere fraction
of others trade for the same price.
Since 1986 the United States has
American Eagles more than just bullion
Opportunity knocks
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issued a large number of gold coins
priced virtually at their gold value.
Thats why the American Eagles are
called bullion coins. The Mint issued
sold them to its network of authorized
purchasers, who then sold them to
investors for their metallic value. In
some years when demand was high,
mintages soared. In other years, when
demand was low, mintages contract-
ed. In the long term, these mintages
should have an afect on prices. The
scarce ones should be more than the
common ones.
When the price of bullion soars, as
it is now doing, nearly all of the coins
are treated as just so much bullion.
But collectors shouldnt lose sight of
the fact that some are much tougher
than others, making for further poten-
tial profts when the rest of the market
wakes up to that fact again.
Understanding what the American
Eagle gold bullions coins have to ofer
and why they have been overlooked
in many cases requires that we con-
sider the situation when they were
introduced.
For many years Americans had
been frustrated when it came to buy-
ing gold coins. For decades the restric-
tions imposed on ownership starting
with the Gold Recall Order of 1933 had
prevented Americans from buying any
gold coin dated after that date. It did
not matter if the coin was a Canadian
commemorative or an interesting is-
sue of another country, the prohibi-
tions were the law.
It might be little remembered to-
day, but it was illegal for Americans
to own gold until the last day of 1974.
This allowed Americans to purchase
modern gold coins without restric-
tion. If you wanted a gold coin con-
taining an even troy ounce of gold in
it, it had to be a Krugerrand of South
Africa, which was created in 1967 as
the frst coin made containing precise-
ly one ounce. The U.S. $20 came close
at 0.9675 ounces, but that is not what
gold buyers of the time wanted. They
wanted the convenience of knowing
that if gold was trading for $1,350 an
ounce, that was the value of the gold
in the coin.
Canada copied the idea in 1979
with its Maple Leaf.
Other countries followed. Ameri-
can gold buyers wanted to own Amer-
ican gold coins, but the government
was slow and indirect in granting that
wish. It seemed actively indiferent to
gold investors and their needs.
The introduction of the American
Eagle gold coins came as something
of a surprise then as it represented a
complete change in policy. But the
purpose was not helping investors so
much as attacking the apartheid gov-
ernment of South Africa at the time. It
became illegal to import Krugerrands.
There is no doubt that the 1984 Los
Angeles Olympic gold commemora-
tive $10 was an enormous success and
helped to pave the way for the Ameri-
can Eagle program. It was a simple
evolution of thinking on the part of of-
fcials of the 1970s who initially feared
that somehow gold coins would cre-
ate problems.
At least for ofcials getting to know
gold coins in the 1980s was getting to
like them and as the fears vanished,
eyes were opened to the idea that
there was money to be made by pro-
ducing gold coins. The report of the
U.S. Gold Commission in 1982 might
have ruled out a return to the gold
standard, but it helped open the door
to positive thinking about gold. More-
over, if Americans were going to buy
millions of ounces of gold every year
anyway, it might as well be American
gold.
By the time the American Eagle
program was introduced in 1986 the
public was really way ahead of of-
cials in terms of their view toward gold
coins.
The general view had changed in
the 1970s with rising gold prices. Gold
hit almost $200 a troy ounce at the
end of 1974, coincident with its legal-
ization. Just three years earlier it had
been $35 an ounce, an ofcial price
that had not changed since 1934.
Americans in large numbers dis-
covered that gold coins were capable
of moving in price and they wanted a
chance to be in on the action. This atti-
tude was reinforced when gold soared
from just over $100 in August of 1978
to $850 in January 1980.
That time seems to be very similar
to the present.
By the time the frst American Eagle
gold bullion coin appeared in 1986,
the price of gold had settled down to
the $400 level and most Americans
were already old hands at investing in
gold and that probably caused some
uncertainty as to what the reception
of the United States entry into the bul-
lion coin market would be like.
The extent of the American Eagle
gold bullion program probably sur-
prised many. The United States not
only issued a one-ounce gold coin, but
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it also issued fractional sizes as well as
a one-ounce silver bullion American
Eagle.
Few countries ofered such a selec-
tion and the Mint was not fnished as it
also ofered a proof version of the $50
and its popularity rapidly resulted in
proof versions of the other denomina-
tions the following year.
Clearly there was at minimum, an
audience of collectors interested in
proof gold coins.
The interest at least on the part of
collectors was certainly helped by the
fact that someone had an interesting
idea, which was that the silver Ameri-
can Eagle would use the A.A. Weinman
Walking Liberty half dollar design on
its obverse while the gold American
Eagles would all feature the famous
Saint-Gaudens double eagle obverse
and with a Family of Eagles reverse.
The lure of having the Saint-Gaudens
design on a proof gold coin was too
much for many to resist.
While the proofs were sold to col-
lectors, the American Eagles were
marketed as bullion coins and as such
many collectors didnt pay much at-
tention to them.
What was overlooked by most at
the time is the fact that realistically
the gold and silver coins of the United
States have historically been bullion
coins. The price of silver and gold was
basically stable and the coins of the
United States had a gold or silver value
that was very close to their face value.
If, however, the price of gold or silver
changed signifcantly then the United
States did not change the face value
but rather the amount of gold or silver
in the coin.
In the case of gold the classic ex-
ample was in 1834 when the amount
of gold was reduced slightly with the
$5 half eagle which was the largest
gold coin in production at the time
being reduced from 0.258 troy ounces
of gold to 0.242 troy ounces of gold.
Lest anyone think the change was not
needed, the fact is that gold coins had
been basically unable to circulate for
over a decade prior to the change.
If anyone received a gold coin they
would usually sell it to a broker and
that coin would end up being melted
in another country. That is the reason
the gold coins of the 1820s are so
tough as despite mintages that would
suggest they should be scarce, but
available many dates especially in the
popular half eagle size are almost un-
known, with very small numbers hav-
ing survived to the present day.
In fact a very similar situation would
happen with silver over time as the
amount of silver in the coins was re-
duced in 1853 and then increased 20
years later, refecting the price move-
ments of silver.
As another example, it is the silver
Trade dollar that most directly re-
sembles the modern American Eagle.
In 1876 the legal tender status of the
Trade dollar was revoked and that
meant it was no longer a dollar but
rather 420 grains of silver. With the
price of silver declining, the Trade dol-
lar which some had accepted as a dol-
lar, was rapidly selling for 90 cents or
less.
The history of American gold and
silver coins did not seem to matter
much in 1986 as the proofs would sell
to collectors while the business strikes
were being sold to gold buyers from
all over the world.
Like any other gold bullion coin,
the American Eagles were not treated
with much respect. The $5 in particular
became popular as jewelry while the
large $50 one-ounce coins were fre-
quently dumped with no care whatso-
ever in display cases or store windows.
That was in addition to the careless
handling that saw coins going from
hand-to-hand with no concern about
the impact the handling might have
on the coins grade.
At frst showing of their Ameri-
can Eagle $50 was more important
to most than whether the coin might
some day return from the Professional
Coin Grading Service or Numismatic
Guaranty Corp. with an MS-69 grade.
That of course changed. We have
already seen proof in that in at least
one case a 1998 $50 has been graded
at a major grading service as AU-58. It
is safe to assume there are many oth-
ers and possibly even in lower grades
which are unlikely to ever be sent in
for grading.
At least for some years the idea
that American Eagle gold coins were
bullion coins seemed to translate into
a general view that they were all cre-
ated equally and in equal numbers.
Even though there would be sales
totals announced at the end of every
year, few if any seemed to notice that
some years had much higher mint-
ages than others. The $50, which is the
most popular size for bullion buyers,
was the sales leader and remains that
way today.
The second most popular size is
the small $5 as it is one gold coin vir-
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tually anyone can aford. That has also
made the $5 popular for use in jewelry
although other denominations have
been used as well, but not in the same
numbers as the $5 and the jewelry use
makes the mintage totals of the $5
potentially suspect as indications as to
how many might really be available if
there was suddenly signifcant collec-
tor demand.
The $25 and $10 generally post far
lower sales totals. With indiferent han-
dling and few collectors to save nice
examples, there is a situation where
the possibility is real that some will
turn out to be in short supply. This is
not a prediction. It is a fact as a couple
dates have already jumped to price
levels far above their gold value.
A good example is the 1990 $25.
It had a mintage of 31,000 pieces
a stark contrast with the largest $25
mintage of almost 600,000. The 1990 is
up again to a current listing of $1,450
as opposed to the available date price
of roughly $774. Certainly those pay-
ing almost double the gold related
price are doing so for a reason and
that reason is that 31,000 mintage.
The 1991 is even more dramatic
with its lower mintage of 24,100. That
mintage has produced a price surge
to $2,075, making the 1991 at least for
now the key $25 American Eagle.
A similar situation can be seen
with the $10. The sales in 1986 of the
$10 were 726,031, but that number
had dropped by 1990 to just 41,000,
which slipped even further to 36,100
in 1991. Naturally the 1990 and 1991
are tougher than the 1986. However,
their current prices are hardly more
than bullion value.
Smart bullion buyers today might
look to purchase the scarce issues for
the current gold price.
The trend is less apparent in the
case of the $5 which has seen mint-
age as high as 912,609 and as low
as 165,200. There are a couple dates
like the 1988 and 1991 where we are
seeing some indication of potentially
higher prices, but collector interest in
the $5 so far appears to be modest,
possibly refecting the fact that small
coins in general have not been very
active in recent years.
There is another factor as well and
that is the mintage totals in the case
of the $5 are many times higher even
for the lowest mintage dates than
they are in the case of the $10 and
$25. That has an impact as it means a
greater supply.
For prices to rise to premium levels
the supply must be threatened and
that is far easier in the case of the $10
and $25.
That is also potentially the case
with the one-ounce $50. The $50 with
the highest sales of all denominations
naturally has the largest supply avail-
able of any specifc date. It would be
safe to suggest that while the most
heavily produced, the $50 also prob-
ably has the largest number of coins
that do not receive proper care.
While that might cause thousands
of any $50 date to fall to grades where
collectors are not interested, the fact
remains that the lowest $50 sales so
far were the 2001, which had sales of
143,605, more than 1 million pieces
lower than the highest year for sale.
Even so, current demand does not ap-
pear to be enough to dry up the sup-
ply of the 2001 or any other $50 date
for that matter so there are no pre-
mium prices for the bullion coins. That
could certainly change over time.
The situation is diferent with the
proofs. Premiums there come and go.
Buyers pay to put them in their Indi-
vidual Retirement Accounts.
Collectors are attracted to issues
like the 2006 reverse proof and the
availability of new proof issues after
what happened in 2009 cannot be
taken for granted.
Over time there are likely to be
dates with special collector value.
Generally speaking the probability is
that the prices of the proofs eventu-
ally will follow very directly their mint-
ages. It will be interesting to watch.
Some day many will be as much
interested in the mintage diferences
as you are. When that day comes, they
will realize that they missed a real op-
portunity to acquire a great collection
for just a bullion price.
The indications are clear based on
better $25 and $10 dates that there
are some better gold American Eagles
that are already bringing prices far
higher than their gold value.
This trend seems likely to continue
after the price of gold has had its day
and as more discover that American
Eagle gold coins are collection in their
own right that many can assemble
and enjoy.
For those wishing they could have
been around to get in on the ground
foor for Saint-Gaudens double eagles
or other historic coins of the past this
is your second and probably last op-
portunity to really assemble a great
gold coin collection.