Gold Buffalos vs. Gold American Eagles

Discussion in 'Commodity Futures' started by DrPepper, Nov 8, 2009.

  1. I saw a 1 ounce gold Buffalo for the first time a couple of weeks ago. I understand that they are 24 carat gold rather than 22 carat found in American Eagles, which makes them shinier, but softer. My coin dealer was selling them for $52 over spot, compared with $45 over spot for gold American Eagles. The Buffalos were also sealed in plastic with writing from the US mint on them. Any thoughts as to whether or not Buffalos are a better investment than Eagles? I was initially averse to buying Buffalos due to unfamiliarity. However, I now like the idea of the unique appearance, higher carat and sealed package.
  2. Assuming $1,100 spot price for gold, when you buy an AE gold coin you are getting $1,008.37 worth of gold for $1,145 dollars.

    With the Buffalos you are getting $1,100 worth of gold for $1,152

    So basically you are getting an extra $100 worth of gold in the buffalos, or almost 1/10 oz of gold extra. (8.33% more gold actually)

    Never ceases to amaze me that people will pay premiums for something they recognize even though its not worth the extra. I always buy generic when I buy. If you ever have to use it, you can be that people will not give you full spot price if there is only 91.67% gold in the AEs vs 100% in the buffalos.
  3. A $50 gold American Eagle is 1.0909 troy oz. You still get 1 troy oz. of gold in it. A Buffalo is 1.0001 troy oz.

    The only difference between Buffaloes & Eagles are purity and design.
  4. don't know about the current world, but it seems like in the past, the Kruggerrand (sp?) had a smaller premium over spot than most other gold coins.

    Don't know why anyone would want to pay a significant. Just get reliable 1 ounce gold bars from a reputable place Buy some "junk" siliver coins.

    But no one is going to return your premium once you buy these coins.

    There are a number of online sites that offer gold stored in audited vaults, like or others, without the major premiums Or you can buy precious metal ETFs or mining company stock.

    And in a bad time, large gold coins that might be faked (as recently announced in China) are not the most desirable thing when trying to trade for food, etc.
  5. zdreg


    to paraphrase wendell willkie
    buy only real coins.
    if they are not real don't buy them
  6. Please try to speak of matters that you actually know something about.
  7. that is the rub, there are a couple of posts bouncing around on ET now, about Chinese fakes - heavy/gold clad I believe with a base metal that is similar in density to gold.

    I would thinl long and hard about going out and purchasing any kind of gold now, unless I had serious verifications it is truly investment grade gold.

    Personally, storing up some junk silver (in USA, dimes/quarters/half dollars/silver dollars - pre 1965), that are about 90% silver and are too worn to have investment coin value. A few bags buried in the basement is not too bad.

    They are a lot more useful in a crisis for buying needed supplies (who will be taking a $1,000 gold coin for basic purchases???), and if silver crashed, they are still worth the coin value.

    But each to their own. Probably good to have a mixture of things - gold, silver, some foreign stable currencies (maybe Swiss/Norway), a little platinum, etc.. I think EVERYONE should start with a non-perishable year's supply of food - perhaps well-stored grain, honey, etc.
  8. One ounce Gold Buffalos come in sheets sealed in plastic with writing from the US mint on the plastic. It would be hard to replicate.
  9. jprad


    Well, aside from what Anaconda's mentioned regarding the weight offset for each coin, there's one other advantage that more than makes up for the premium you're balking at...

    US gold coins are taxed at a 15% capital gains rate while all other forms of gold (including ETFs) are taxed at the higher collectible rate of 28%.
  10. Yes, but not hard to remove the coin and substitute a heavy-clad fake. And with certification, no less!

    For $1,000+, there are plenty of clever people who will think up ways to cheat the system. That is a year's wage in some countries. And since most people are unsophisticated, I can imagine that it is not so hard for some to do.
    #10     Nov 11, 2009