American gold bullion

American bullion gold coins and bars

When it comes to precious metals, American bullion coins are the most popular in the world (sorry, Krugerrands). There are some things, however, that investors generally don’t know about the planet’s favorite investment. With this article, we hope to rectify the situation.

So sit back, relax, and enjoy as we reveal four significant but little known facts about American-made bullion.

Fact One: American Eagles are the only coin type guaranteed by the U.S. government.

Many new investors don’t realize that the government of the United States itself guarantees that every American Eagle bullion coin — whether gold, silver, or platinum — will contain a specific content, weight, and purity of the relevant precious metal.

This has always been true with U.S. precious metal coinage. However, since modern circulated coins are made of baser metals, it doesn’t matter if one is a tenth of a gram off — so the precious metal guarantees are rarely enforced. Therefore, those of us at the investment level have largely forgotten them.

But high-level bankers and financiers are well aware of this ironclad guarantee. That’s one reason why U.S. bullion has become the world standard.

Fact Two: All the gold in American bullion comes from the U.S.A.

Did you know that every state in the union has gold deposits? This makes it easy for the U.S. Mint to meet the above requirement, as specified in the Gold Bullion Coin Act of 1985.

According to said legislation, all gold used in any U.S. bullion coins must be from “newly minted domestic sources.” The U.S. Mint must strictly comply with this regulation, until we either run out of domestic gold (not likely) or until the Congress eases the legal requirements of the 1985 Act.

Fact Three: American gold bullion coins aren’t pure gold.

This may come as a bit of a shock, but many gold bullion coins (not to mention gold coins in general) are not 24 karat gold. The American Eagle, Britannia, and the Krugerrand — the gold standards, if you will — are of 22 karat purity: that is, they’re “only” 91.7% pure.

There’s a reason for this, and it’s not because the mints involved are stingy. You see, pure gold is extremely soft — so soft that it can easily wear away during handling. In order to protect the coins against wear, the Mint adds an alloy metal such as copper or silver (or both) to harden the gold.

American Gold Eagles contain about 5% silver and 3% copper. So, does this mean that they don’t contain their claimed weight in gold? Not at all. They actually weigh more than the stated weight, because you not only get the weight in gold, you get the additional 8.3% from the hardening metals.

Fact Four: Bullion coins have no true numismatic value.

Whatever the precious metal involved, bullion is designed mostly as a hedge against inflation. It’s not intended to have any value as collectible coinage, no matter what some vendors claim. In fact, it’s deliberately struck in such a way that it doesn’t (or shouldn’t have) numismatic value at all.

So if you’re investing for numismatic value, perhaps you’re better off purchasing that ultra-rare AU 1877 Indian Head Cent rather than American bullion in any form. However, unless you know what you’re doing as a collector, we recommend you stay with bullion.

Did you know that most people waste a lot of money when they invest in American bullion by making one (or more) of these seven common gold investing mistakes?  Find out how you can avoid all seven mistakes here.

Which fact did you think was most important? And tell us what YOU think by commenting below.


Tags: ,