Grab These Gold Coins While You Can
October 30, 2009 by Dr. Michael Cutler
There’s a new kind of stampede taking place these days. This one is into Buffaloes. The new $50 American Buffalo gold coin from the U.S. Mint, that is.
It seems fitting that, at the very time we are seeing gold setting record highs almost every day, the U.S. Mint is releasing the 2009 American Buffalo gold coins. The strength of these magnificent creatures is certainly reflected in the purity of the gold each coin contains.
These spectacular coins became available for purchase just a few days ago and smart buyers are scooping them up as quickly as they can. The last time the Mint released any Buffalo coins they sold out quickly and the premiums in the aftermarket skyrocketed. We expect the same thing to happen again.
If the design of the $50 American Buffalo looks familiar to you, that’s because the Mint copied one of the most popular coins it ever created—the famous “Buffalo nickel,” which was first introduced in 1913. The designer was James Earle Fraser, a student of Augustus Saint-Gaudens—the man tapped by President Theodore Roosevelt to create new designs for America’s coinage.
For the famous buffalo on the reverse of the coin Fraser based his sculpture on Black Diamond, a powerful-looking bison and popular attraction at the New York Zoological Gardens.
Three different Native Americans posed for the obverse of the coin. Fraser said two of them were Chief Iron Tail of the Lakota Sioux and Chief Two Moons of the Cheyenne. He said he could never recall who the third man was.
American Buffalo gold coins were authorized by Congress in December 2005, by a bill that became known as the Presidential $1 Coin Act. The act specified that the coins be struck in .9999 fine 24-karat gold, making them the first “pure” gold coins ever issued by the U.S. Mint. (The American Eagle gold coins contain nearly 10 percent alloy and thus are 22-karat gold.)
Although the original “Buffalo” coins were worth five cents, the new American Buffalo gold coins carry a face value of $50, or 1,000 times higher. They are legal tender of the United States, so in the unlikely event that gold prices ever collapse you will be able to exchange your $50 gold Buffaloes for the equivalent amount of Federal Reserve notes.
We don’t expect that to ever happen, of course. What is far more likely is that the price of gold will continue to rise. And the premium on the $50 American Buffalo gold coins will also climb. We can’t promise that they will be a good investment. But that has been the case with every other Buffalo coin the U.S. Mint has produced.
The U.S. Dollar—Hazardous To Your Wealth
Ludwig von Mises, the father of the Austrian School of Economics, once said, "Government is the only agency which can take a useful commodity like paper, slap some ink on it, and make it totally worthless."
Until recently, many investors felt safe investing in the U.S. dollar. But as they’ve seen the purchasing power of the dollar fall, this has changed. Thanks to the government’s massive trade and budget deficits, wasteful spending practices, and gargantuan creation of new money and debt, cautious investors increasingly are looking for ways to protect their wealth.
For more than 6,000 years, nothing has protected wealth better than gold. When this country was founded an ounce of gold would buy you one of the finest suits available. That was true in the depths of the Great Depression. And it is still true today.
If I am correct that the U.S. government and the Federal Reserve will continue to flood the world with massive amounts of new “money”—virtually all of it created out of thin air—the purchasing power of the dollar will continue to fall. Simply put, it will take more diluted dollars to buy the same ounce of gold in the future.
I always like to own some gold as “wealth insurance” in case of a crisis. But in times like these, I also like to hold gold as an investment. Not in speculative, highly leveraged gold options, futures or even mining shares, but rather in the metal itself. I’m pleased to note that gold out-performed every other asset class—stocks, bonds, real estate, even other commodities—in 2008. I probably don’t need to remind you that 2008 was the worst year for most investors since the Great Depression. But not for those who had the protection of gold in their portfolios.
As our government works overtime to print more money and create more debt, I take pride in knowing that the U.S. Mint is producing something of beauty and of lasting value. No matter what current or future administrations do, the $50 American Buffalo gold coin will stand the test of time. Unlike paper money, which loses value while the ink is drying, the American Buffalo is .9999% pure gold. We know it will protect your purchasing power better than paper. Gold always has.
The $50 American Buffalo and other coins produced by the U.S. Mint can be purchased through a group of National Dealers registered with the Mint. I’m proud to say that my firm, Asset Strategies International, has been a member of that group since 1986. A list of all 21 National Dealers appears on the Mint’s website at www.usmint.gov/bullionretailer.
Many local coin dealers can also order American Buffaloes for you. Look under “coins” in your yellow pages for a list of stores near you. Before placing an order, ask what the availability is and what the premium will be. That’s the amount above that day’s spot price of gold you will be charged. Also, what shipping and insurance will cost. Then, go with the best deal from the most reliable dealer you can find.
If you want a well-recognized, 24-karat gold coin, the American Buffalo is a great choice. But don’t wait until limited supplies mean higher premiums. Get your American Buffaloes now and hang on for the ride!