About the Buffalo Gold Coin

In 2005 Congress passed the Presidential $1 Coin Act, which authorized the United States Mint to issue a 1-oz. 24K investment (bullion) gold coin. That coin is the American Buffalo Gold Coin. It rapidly became a favorite of investors---so much so that, for a time in late 2008, the Mint had to suspend sales because they could not keep up with demand. It's a form of gold bullion that is well worth a look by anyone who is interested in investing in precious metals.

Identification

The Buffalo gold coin is made of 24K gold (.9999 fine or pure). The 1-oz. coin has a face value of $50. It features the head of a native American on the obverse side and an American bison (buffalo) on the reverse. The U.S. Mint began issuing the Buffalo gold coin in 2006, and plans to continue minting it indefinitely.

History

The origin of the American Buffalo gold coin dates back to 1913, with the introduction of the buffalo (or Indian head) nickel. The images for this 5-cent coin were created by artist James Earle Fraser. The Buffalo gold coin uses the same design, modified for the larger $50 denomination. The 1913 coin was originally struck showing the bison standing on a mound. The design was later changed to remove the mound. The Buffalo gold coin uses the original version with the mound.

Function

The purpose of the Buffalo gold coin was to compete with foreign 24K gold investment coins. At the time of its introduction, the American Eagle 22K (91 percent) gold coin was not doing well, as investors preferred pure gold coins available from foreign mints. The Buffalo gold coin was the first 24K gold coin ever issued by the United States. As of 2008, the U.S. Mint expanded its offerings to include a 1/10-oz., 1/4-oz., and ½-oz. coin. The latter was the first issued in the two-coin Prosperity Double set, which included the Buffalo and Eagle designs.

Features

American Buffalo gold coins can be purchased from a variety of sources. You can order them directly from the U.S. Mint (see Resources). Because they are legal tender, the coins are also available through the Federal Reserve system. Your bank or credit union can order them from the Federal Reserve (if they don't do so already). In addition, many coin and bullion dealers carry the Buffalo gold coins. The U.S. Mint has a locator tool on its website to help you find dealers. The American Buffalo coin is usually priced at the daily (or spot) price of gold bullion, plus about a 4 to 5 percent markup.

Considerations

Gold is a popular investment vehicle because of its historical record of retaining value. It is seen as a safe investment and a hedge against inflation. In addition, it is a form of precious metal that is allowed in Individual Retirement Accounts (IRAs). Gold is not an entirely risk-free investment, though. Before you choose to invest, follow the gold market for a time. As with any other investment, you don't want to buy when gold is at a very high price; you will be much better off if you wait for a downward trend.

Resources

• Dealer Locator from the U.S. Mint