A coin made from a precious metal such as gold, silver or platinum and kept as a store of value is called a bullion coin. These coins are available in different weights, usually in multiples of 1 troy ounce, which is a unit used for measuring precious metals and gemstones. Some heavier versions of these coins are also produced by government mints. The official gold bullion coin of the United States is called American Eagle Gold.
It all started in 1985, when the Gold Bullion Act authorized the American Eagle Gold. It was in the very next year that the United States Mint first released these coins in gold and silver. However, the platinum version of the American Eagle came into existence only in 1997. There are four denominations in which the gold and platinum bullion coins are available. These are one-ounce, one-half ounce, one-quarter ounce and one-tenth ounce. The American Eagle Silver bullion coin can be obtained only in the one ounce size.
Many investors are looking at bullion coins in general and the American Eagle in particular as a convenient and cost effective way of investing in the precious metals market. These are being purchased by first time investors wanting an easy and tangible means to incorporate platinum, silver or gold in their portfolios.
According to the United States Mint, what makes these bullion coins distinct from others in the same category is their government backing. The United States Government guarantees the weight, content and purity of these coins; no wonder the American Eagle bullion coins are accepted in all the major investment markets worldwide. The gold used in the manufacture is mined in the United States which enhances liquidity and makes these gold bullions more tradable.
A small premium is added to the market price of the gold or silver to arrive at the value of American Eagle bullion coins. This premium is added to accommodate coinage and distribution costs. One can purchase these coins from major coin and precious metals dealers, brokerage houses and banks.
The bullion coins often sell at a premium over the market price on the commodities exchange. This is because of the costs associated with storing and distributing the coins, despite their small size. The premium would typically depend upon the prevailing demand scenario, the type of coin and its weight.
There are some factors one would need to keep in mind before investing in American Eagle Gold coins.
Understand the difference
Before buying, one must clearly understand the difference between bullion coins and rare antique coins. The grade, rarity, historical significance and dealers’ margin would typically affect the value of antique coins. Unlike bullion coins, they cannot be taken as legal tenders.
The best way to buy gold bullion is from authorized dealers and brokers. You can check the track records of the brokerage firms you are acquiring your American Eagle gold bullion from. Ask for the return policy of the vendor. The best option would always be to buy directly from the mint.
Another good practice would be to compare the prices offered in the market before zeroing in on any broker. This way, you would be able to select a broker who can offer you the best premiums in American Eagle gold or silver bullions.