American Gold Eagle Coin (Video Transcript)

Welcome to the “Know Your Investment” Series!  Here, we will be discussing each individual precious metals investment that TRADEway offers, their characteristics, and the benefits that each of them have to offer as well.  Today, we’re going to be discussing one of the most popular bullion coins in the world!

The American Gold Eagle Coin has a rich history in design, collectability, and value, but before we dive into the characteristics of this particular coin, let’s take a look at how this coin changed the world of precious metals investing just a few decades ago.

Following the popularity of the South African Krugerrand, which was released in 1967, the demand for bullion coins increased dramatically across the globe.  However, at this time, it was STILL illegal for US citizens to own gold!  Can you imagine that?  Imagine being an American citizen and NOT being able to own gold for your own protection, because it was illegal!  So something had to change in order for the American people to benefit from this new type of coin.  You see, in 1934 FDR signed into law the Gold Reserve Act of 1934, which is what made it illegal to own gold. 

Thankfully, the repealing of this act occurred in 1974 when President Gerald Ford signed Public Law 93-373 in August of 1974, and became effective on December 31st of that year, and when this happened it drastically increased demand for a U.S. bullion coin.  So again, thanks to Ford, the American public could LEGALLY own gold, and the U.S. Mint was now being pressured to mint a bullion coin similar to the South African Krugerrand. 

After gold became legal in the United States, literally millions of coins sent out of the country in the 1930s came flooding back in.  Why is that?  Well, it’s because all of the sudden, people outside of the U.S. saw an opportunity to make a profit on coins that were now in high demand, thanks to the legalization of gold ownership in America!  In the following decade, the U.S. Mint began producing many of the coins we see today.  After over four decades of illegal gold hoarding, U.S. citizens were now capable of once again buying new gold, and protecting their family’s future with a very tangible asset.  

So in 1934 we came to a point in American history where citizens hoarding gold ILLEGALLY was the norm, and then we came to a time in 1971 when our currency was officially turned into a fiat currency, which means it wasn’t attached to anything, and then from there we went back to the legalization of gold ownership in 1974, which was the first time in 37 years citizens could own gold!  This ultimately ushered in a new era of gold investing, and it didn’t take too long after President Ford’s bill for the U.S. Mint to take advantage of this huge market which at the time had a LOT of room to fill.  

This of course led to the American Gold Eagle Coin, THE official gold bullion coin of the United States, first authorized by the Gold Bullion Coin Act of 1985.  The U.S. Mint has struck over 13 million of these coins since they were introduced onto the market in 1986 and sales have continued to rise higher each year since.  

Because the term "eagle" is also the official United States designation for pre-1933 ten dollar gold coins, the weight of the bullion coin is typically used when describing American Gold Eagles (e.g., "1/2-ounce American Gold Eagle") to avoid confusion.  This is particularly true with the 1/4 oz. American Gold Eagle, which has a marked face value of ten dollars, just like the original ten dollar coins of times past. 

These coins are guaranteed by the U.S. government to contain the stated amount of actual gold weight in troy ounces.  By law, the gold must come from sources in America, alloyed with silver and copper to produce a more wear-resistant coin, making these gold coins particularly durable compared to many of their counterparts.  What’s fascinating is that due to this added alloy for durability, it slightly dilutes the coin’s purity.  So what does this mean?  It means that American Gold Eagle coins, of any denomination, is actually going to come out to be 22 Karat gold, compared to 24 Karat purity that most other gold bullion coins carry.

This 22 karat gold alloy is not arbitrary, and is actually an English standard traditionally referred to as "Crown Gold."  Now, Crown Gold alloys had not been used in U.S. coins since 1834, because the gold content dropped to a standard of 0.900 fine for U.S. gold coins around 1837.  But when American Gold Eagles came on the scene in 1985, the gold fraction was increased again to .9167 (or 22 karat).  This is interesting, for the reason I stated a second ago, because of the fact that most other bullion coins come with a purity of .9999 (or 24 karat), making them more pure.  However, even though the American Gold Eagles are less pure, due to added durability, the Gold Eagle still contains a full troy ounce of gold, like the others, but is merely diluted slightly by this “crown gold” alloy, again to increase durability. So if you buy a 1 oz. American Gold Eagle, you’re still getting just as much gold metal as you would be if you purchased a more pure, 24 karat gold coin that’s also 1 oz. The purity doesn’t change the amount of gold in the coin!

Now, let’s talk about these multiple denominations in the context of trade for a second.  I am personally one that advocates buying silver if you’re concerned about a possible future scenario in which you may need to use your precious metals for trade in order to purchase things.  However, there are a lot of people out there that just simply prefer gold, and I don’t blame them, gold is amazing!  And it can be used for trade as well.

So, in this context, if you are a person who believes that future trade is a prime reason for buying gold, here’s something to think about:

The smaller the denomination is, the better!  So, if you know you want gold, and you know that you want the American Gold Eagle Coin, because it’s the most recognizable and popular coin in the world, you may consider buying the 1/10 oz. or maybe the 1/4 oz. denominations because they’re 1. more affordable than the full ounce of gold, which is currently around $1,280, and 2. they’re considerably smaller, making them more portable which is a HUGE factor when it comes to trade.  Just to put it in perspective, the 1/10 oz. coin is roughly the size of a dime, maybe even a little smaller.  

So the American Eagle series CAN be utilized for both preserving larger sums of your money overtime, while inflation erodes the dollar, AND for those who are more interested in buying in smaller increments, and accumulating for the sake of trade in the future, the smaller denominations are a very viable option.  And of course, you can accomplish both preservation and future preparedness at the same time!  So this coin, of any denomination, is really a great choice for anybody, especially if you’re already interested in gold.  

The history of American coinage is very rich, and we are very fortunate as investors to have them accessible to us for personal protection.  The American Gold Eagle Coin will always be one of the most renowned coins in the world, and will most likely be the most popular bullion coin for some time.  All of this is why the American Gold Eagle series is a GREAT place to start for any investor on ANY level, and why this coin remains to be the most popular gold bullion coin in the world.  I hope you’ve enjoyed this video, and I’m excited to have you join me in the remainder of the series!