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In 1974 the late
President Gerald Ford signed a bill restoring U.S. citizens’
right to own gold in bullion form, a right which had been
suspended some 40 years prior during the Great Depression. So
when gold trading opened on January 2nd, 1975 (at
$175.00/ounce), Americans were finally, legally able to buy gold
in any form. Unfortunately, the forms of gold available were
gold bars (mostly kilogram and larger), odd-weight bullion coins
(such as the 100 corona, 50 peso, 20 franc, and 4 ducat, which
were official ‘restrikes’ of older-dated coins with the awkward
actual gold weight numbers of .9802, 1.2057, .1867, and .443
respectively), and a newly introduced coin, the 1-ounce gold
Krugerrand from South Africa.
The Krugerrand was first launched on a trial basis in European
markets in 1967. The idea was a one troy ounce (net gold content
31.1 grams) bullion piece, produced and guaranteed by a major
government mint, dated in its true year of issue, produced in
unlimited quantities, and sold for gold spot plus a small
markup.
In 1975, backed by a huge advertising campaign in major U.S.
print media, the Krugerrand quickly ran away with the lion’s
share of the U.S. gold bullion market. Its biggest advantage was
that its one-ounce size made it easy to price without a
calculator (which were large, awkward, and expensive back in
1975).
As a popular bullion choice, the Krugerrand wasn’t even
challenged until Canada launched the Maple Leaf in 1979, and
later when the Treasury introduced the U.S. gold Eagle in 1986.
Ironically, in the short time span between 1974 and 1986, the
U.S. Treasury went from enforcing the prohibition against gold
ownership, to enabling gold ownership by providing a bullion
coin for U.S. consumption.
But in 1982 China entered the gold bullion market with its gold
Panda, and the modern gold bullion coin era really began. Today,
many gold bullion coin choices offer changing designs, limited
editions, and possibilities for numismatic appreciation.
It all started with the Panda, and the 2007 China gold Panda
represents the 25th new design in the Panda series. This year’s
offering portrays an adult panda and cub munching on some
bamboo. The China Mint pioneered the idea of a bullion coin with
a yearly design change, the intent being to expand demand beyond
bullion investors, creating and capturing a collectors market
for a modern gold coin. Although in 1982 the market for Pandas
was primarily in the US, in this decade there has been great
interest in the series in China itself and among expatriate
Chinese gold buyers around the world.
This year, the Australian Kangaroo (Formally known as the
Nugget) transcends the program’s usual design parameters. The
Perth Mint is the source of some of the most interesting and
cutting-edge coin designs in many of their collector coin
offerings, but many of their previous efforts on the ‘roos have
resembled zoology text illustrations.
The year 2007 seems to have changed all that, bringing us a
fresh and dynamic Kangaroo-themed coin which finally shows
Kangaroo coin buyers what the designers and engravers at Perth
can do.
As for the old reliable U.S. gold Eagle, it continues to be the
most popular bullion coin sold in the U.S. As of the first week
in January, we have 2007 U.S. gold Eagles in stock in all sizes,
from the 1-ounce down to the tenth-ounce. The gold Eagle has
become the default choice for U.S gold buyers – convenient to
buy, easy to store, and simple to re-sell.
U.S. Mint Buffalo gold bullion coins are a different story.
The U.S. Buffalo coin was a hit when introduced in the summer of
2006. A faithful reproduction of the original Buffalo 5c design
in a 1-ounce .9999 pure bullion coin, the new Buffalo has a
rugged, detailed appearance with a lot of all-American appeal.
On their launch, sales were very good, mostly in 10 and 20 coin
lots.
But the Buffalo has not caught on with those who buy their gold
by the hundreds or thousands of ounces, and it's probably fair
to blame the packaging. The Mint was required by the wording of
the Buffalo’s authorizing legislation to release the pure gold
Buffaloes sealed so as to prevent damage to the soft gold
surfaces. Obeying the letter of the law, the Mint chose to issue
the coins sealed in flimsy plastic 16” by 12” sheets of 20
coins, sheets which are awkward to store and prone to coming
apart. As long as the Mint sticks with this flawed and bulky
packaging, the Buffalo is not likely to become a competitive
choice among bulk bullion investors.
The U.S. Mint plans to release the 2007-dated 1-ounce Buffalo
sometime in February, and we are taking advance orders for them
at this time. We understand that the smaller size Buffaloes
(presumably tenth, quarter, and half-ounce sizes) are to be
marketed as collector’s items through the U.S. Mint’s own
website, but final plans on that have not yet been announced.
The Perth Mint’s Lunar Series I is now complete with the
issuance of the 2007 Pig coins. Before 2007 is over, we expect
the first issue of Series II with new designs, starting with the
Year of the Mouse coin of 2008. Whether the Perth Mint intends
to stick with Series I’s 30,000 mintage limit on the 1-ounce
issues of Series II is not known at this time, nor do we know
what sizes of gold coins will be available in the series. Stay
tuned for details as we learn them.
Since 1988, the Isle of Man, in conjunction with the Pobjoy
Mint, has issued a regular series of gold bullion coins
picturing different breeds of cats. The series has huge
following among cat-fanciers, who are at this time awaiting some
word as to the issuance of the 20th year of the series for 2007.
But, as of this writing, we don't yet have an announcement by
the the Pobjoy Mint as to the design or particulars for the
series in 2007. We expect some word in February, and we will
stock the coins as soon as available.
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Where gold prices will go in 2007 is, of course, anyone’s guess,
although our bets are on ‘higher.’ Michael Metz, the chief
investment strategist at Oppenheimer & Company, agrees with us.
He was quoted in the business section of yesterday’s New York
Times as predicting a 20% rise in value in 2007, to about $750.
In a 1/14/07 NYT article by J. Alex Tarquinio entitled “How to
Catch a Falling Dollar (and Even Make a Profit),” Mr. Metz
speculates that a weakening dollar will encourage central banks
to reduce their dollar holdings and add to their gold reserves,
and that higher personal incomes in the booming Asian nations
will add to gold demand.
“The great theme of this century,” Mr. Metz is quoted,
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