Buying gold coins is one of the most popular ways to own gold. Coins allow individuals to increase their investment or collection in small increments, making them a flexible and cost-effective option. They are also easy to store and enjoy an active trading market.
Gold coins carry higher premiums over spot than bullion, but that is to be expected, given that coins have a numismatic value attached, along with the intrinsic value of the gold content. Regardless of the objective behind purchasing gold coins, the American Buffalo is a viable option for investors and collectors alike.
Background
The American Buffalo, also known as the “Gold Buffalo,” is a relatively new bullion coin from the United States Mint. The coin design is one-of-a-kind, and uniquely American, with two of the most recognized symbols of American culture and history engraved on each side. First minted and made available to the public in 2006, the American Buffalo has proved to be an immensely popular piece of bullion, attaining numismatic value due to the immediate scarcity caused by surging demand.
The American Buffalo has an annual mintage of 300,000, making them a very popular coin with collectors as well as investors. Each 1oz Buffalo has a face value of $50, and comes in original US Mint plastic; for multiples of 20, the coins arrive in uncut US Mint sheets.
Smaller denominations (1/10, 1/4, and 1/2 oz) of the Buffalo were minted once, in 2008, and proofs are available at the beginning of every year. Proofs of the gold Buffalo were sold for $800 in 2006, $899.95 in 2007, $1,410 in 2009 and $2,010 in 2010, making it an overnight sensation with bullion collectors.
Design and Purity
The Buffalo design depicted in the coin is based off of the widely-respected Indian Head nickel (type 1, issued in 1913,) originally created by American sculptor James Earle Fraser. The front depicts a Native American man in braids and a feather in his hair. The image, according to Fraser, combines visual elements of chiefs from three separate tribes.
The Obverse of the American Gold Buffalo
The Reverse of the American Gold Buffalo
The reverse depicts an American Bison, more commonly known as a buffalo. It is widely believed that the depiction of the animal was based on a buffalo named ‘Black Diamond’ that lived in Central Park in the 1910s.
The American Buffalo is made with 1 troy ounce of 24-karat (999.9) gold, mined from American gold mines and minted at the West Point Mint, near the famous New York military installation. In 2006, the first year of mintage, the American Buffalo was the country’s first and only 24-karat pure gold coin. The purity of the coin is guaranteed by the Government of the United States of America.
Rise of the Buffalo
Did you know that the American Buffalo was originally minted to compete with 24-karat (999.9 fineness) gold bullion coins from other countries? While the United States already had a popular gold bullion coin in the American Eagle, many coin buyers overlooked the 22-karat (916.7 fineness) Eagle for the purer Canadian Eagle (999.9).
The gambit seems to have worked: according to statistics by the US Mint, nearly 1.4 million American Buffalo have been sold since 2006, an average of almost 200,000 Buffalo per year (or 16,667 per month, 546 per day, or 23 per hour).
Such was the demand for the coin, the US Mint temporarily halted production and sale of the Buffalo in 2008. The Mint could not keep up with demand because many investors rushed to invest in the safety of gold during the housing crisis of the same year.