Buffalo Gold Coins:
New US Mint pure gold coins
Buffalo Gold Coins are the first pure gold coins (.9999 fine, 24-karat) ever struck by the United States Mint. Having a $50 legal tender value, 1-oz American Buffalo Gold Coins offer gold investors who prefer pure gold an inexpensive way to own pure gold coins.
Buffalo Gold Coins carry the same pricing structure as the Mint's 22-karat Gold Eagles, the world's best-selling gold bullion coins, making Buffalos as cheap as any new gold bullion coins being minted.
Although only 1-oz Buffalo Gold Coins presently are available, the Mint has indicated that it may add fractional-ounce Buffalo Gold Coins in future years.
Buffalo Gold Coins: a resounding success
First minted in 2006, Buffalo Gold Coins were an immediate success, with total sales of 323,000 coins in only seven months. By comparison, the Mint sold only 201,500 one-ounce Gold Eagles, the world's best selling gold bullion coins, for all 2006.
The success of the Buffalo Gold Coins probably was because of two factors: the immense popularity of the coin's design and huge promotions by telemarketers.
Gold Buffalo Coins carry the famed Buffalo-Indian Head design that graced the American nickel 1913-1934. The Buffalo-Indian Head design is as much identified with American coinage as is the Walking Liberty that graced the popular Walking Liberty half-dollars 1916-1947.
Gold Buffalo Coins highly promoted
With the Buffalo-Indian Head design being used on an American coin for the first time in seventy-two years, telemarketers jumped all over the coins. Most of the coins minted were sent to grading services where they were "slabbed," as putting a graded coin in a plastic holder is called. Then the telemarketers promoted, at huge markups, the "slabbed" Gold Buffalos as First Strike Coins.
Immediately following the coins' release, telemarketers promoted MS69 First Strike Gold Buffalo Coins at hundreds of dollars above the market for bullion coins. The MS70 First Strike Gold Buffalo Coins were hawked at $1500 premiums. Fortunately for investors, the promotions at those prices did not last long because many more Gold Buffalo Coins were graded than the telemarketers could sell.
Gold Buffalo Coin Premiums collapse
Premiums collapsed because so many Gold Buffalo Coins were graded that the dealers who sent them in cut prices drastically to recapture their investments. For a time, MS60 First Strike Gold Buffalo Coins could be bought at only $7 each above Gold Buffalo Coins in US Mint packaging.
By the spring of 2007, the second year of the Gold Buffalos' production, premiums on MS69 First Strike Gold Buffalo Coins had risen to only $15 each over regular Gold Buffalo Coins in US Mint packaging. The MS70 First Strike Gold Buffalo Coins, which had been promoted at $1500 premiums, could be bought at only $120 or so over regular US Mint packaged Gold Buffalo Coins.
Gold Buffalo Coin packaging
Although Gold Buffalo Coins are aimed at investors who prefer pure gold coins, the packaging of the coins is not suitable for investors. The Mint seals the coins in Mylar sheets approximately 16" X 12", twenty coins to a sheet, five horizontally by four vertically. Unfortunately, the packaging makes shipping and storage more of a chore than they should be.
Additionally, when small investors want less than twenty coins, the coins have to be cut out of the sheets. And, minimal handling often results in the coins coming out of the packaging. By contrast, the 1-oz Gold Eagles are packaged twenty coins to a tube, making them easy to ship and store. It is hoped that the Mint will change the packaging to a more investor-friendly method, but so far the Mint has sent no signals that it plans to do so.
The Mint knows that the initial packaging is not good. However, because the Gold Buffalo Coins have so far out sold American Gold Eagles, the Mint probably rationalizes that it has a winner with the Gold Buffalo Coins. So, why change?
If the American Gold Buffalo Coins' packaging were changed for ease of shipping and storage, they could challenge the Canadian Maple Leafs for the number one position for pure gold coins.
Buffalo Coins mint box
A "Mint box" of Buffalos contains 500 coins and measures 17-1/2" X 12-1/2" X 4". Unlike a Mint box of Gold Eagles, which is a rubber-like plastic, a Mint box of 500 American Gold Buffalo Coins is cardboard. Ideally, Gold Buffalo Coins would come individually encapsulated as are The Perth Mint Lunar Series coins, with the capsules put in tubes of ten.
Buffalo Gold Coins are an excellent addition to the US Mint's line of coins. However, because of their bad packaging, interest in the coins could decline rapidly as their "newness" wears off. Frankly, the Gold Buffalo Coins in their US Mint packaging are a nuisance to handle. CMIGS recommends that investors who want Gold Buffalo Coins go with the slabbed coins, despite the higher premiums.
If you would like to discuss investing in the Buffalo Gold Coins, call us at 800-528-1380. We take calls 7:00 a.m. to 5:00 p.m. MST. The minimum order for Gold Buffalo Coins is five coins.
