A Primer on US Coins #5: Bullion Coins

Crossposted at Dailykos.com

(Sneak preview for Politicook members, one of the advantages of being on this site).

The United States is a recent entry in bullion coin production. England started producing bullion coins in 1489! The US started in 1986 with the Silver and Gold Eagles, with nominal face values of $1 up to $50.

Bullion coins are designed not to be circulated, but rather held for their intrinsic value. Except in rare situations, they have little collector value. One notable exception is the 1995W Proof Silver Eagle, worth around $5000. This is because only about 30,000 were minted, and Proofs for this series generally run in the hundreds of thousands.

Since bullion coins are not speculative, other than for their metal content, they are eligible for holding in tax sheltered retirement accounts, unlike collectible coins. Well know bullion coins from other countries include the Chinese Panda, the South African Krugerrand, and the Canadian Maple Leaf. There are others, but this series is about US coins.

As I said, the Silver Eagle (along with the Gold Eagle) was the first US bullion coin. It is 99.93% silver and 0.07% copper, thus higher in silver content than standard US coin silver at 90% / 10%. The coin is 40.6 mm in diameter and has a mass of 31.01 grams, working out to one ounce Troy of fine silver. Silver is today (23 October 2008) down to $9.35 per ounce Troy, according to Bloomberg.com. Unlike gold and platinum US bullion coins, only the one ounce size is minted.

This is a strikingly beautiful coin, since it uses the design that A. A. Weinman created for the Walking Liberty Half Dollar (see previous installments). The reverse is a rather nice heraldic eagle, hence the term Silver Eagle.

Both normal strikes and proofs can be purchased directly from the Mint or from dealers. Pawn shops are often pretty good places to find bullion coins.

Here are pictures of the coin (this one is a Proof, normal strikes are uniform, that is, the background and images are not in such contrast):

Obverse of US Silver Eagle
Designed by A. A. Weinman
1986 – Present

Reverse of US Silver Eagle
Designed by John Mercanti
1986 – Present

The United States produces two three series of gold bullion coins. The first series is called the Gold Eagle, and comes in four denominations (all of the dollar values are pretty much meaningless, but if the value of gold ever falls below face value, they will at least be worth that). They all have the same obverse and reverse (except for the size identification) designs and are 22 karat gold (91.67% gold, 5.33% copper, and 3% silver). The denominations are:

$5, 16.5 mm diameter, mass 3.393 g, which comes to 0.10 ounce Troy in fine gold. Today the gold in them is worth $71.07.

$10, 22 mm diameter, mass 8.483 g, which comes to 0.25 ounces Troy in fine gold. Today’s value is $177.68.

$25, 27 mm diameter, mass 16.966 g, which comes to 0.50 ounces Troy in fine gold. Today’s value is $355.35.

Finally there is the $50 one, 32.7 mm diameter, mass 33.931 g, which comes to one ounce Troy fine gold, worth $710.70.

Originally, only Proof strikes of these coins could be bought directly from the Mint, but regular strikes had to be purchased from dealers. The Mint had deals with several large distributors, and they in turn sold them to other dealers, who then sold them to the public. I do not know the politics behind that. If anyone does, please explain in the comments. This policy evidently has changed, since the online catalog from the Mint offers both proof and regular strikes to the public.

These coins are also very attractive. The obverse design is the beautiful Saint-Gaudens one used on the double eagle circulating coin (see earlier installments), arguably the most beautiful US coin design. The reverse is a nest of eagles. I post only pictures of the $50 one, since the others are identical except for denomination lettering and size. Here is the picture:

$50 Gold Eagle
Obverse designed by Augustus Saint-Gaudens
Reverse designed by Miley Busiek
1986 – Present

The second gold series is recent and is designed to compete with the Canadian Maple Leaf, in that it is a 24 karat (0.9999 fine) gold coin, a first in US mintage. Since it is not intended for circulation, being very soft is not a disadvantage, and many investors prefer 0.9999 fine gold to alloy.

The coin is the design used on the Indian Head Five Cent piece from 1913 to 1938 (see earlier installments) by James Earle Fraser. It has a diameter of 32.7 mm and a mass of 31.11 g. This comes to one ounce Troy, worth $710.70 today. The mint also issues a coin of half the mass, but only in a special set. There is talk of doing the same insofar as smaller sizes go as is done with the Eagle series, but that has not yet happened.

Here is a picture of the coin:

$50 Gold Buffalo
Designed by James Earle Fraser
2006 – Present

The Mint could not keep up with demand for this coin recently and suspended sales in September of this year. With the price of gold easing, I look for them to get started again soon.

There is actually a third gold bullion series, but it will expire. In the last installment I talked about the Presidential Golden Dollar series, and there actually is a gold bullion companion series. These are half ounce Troy 0.9999 fine coins, worth $355.35 today. These coins have too many varieties to list pictures of them all, but are designed to honor the spouses of corresponding Presidential Dollars. I was unable to find the diameter of the coin, but its mass has to be 15.555 g, which is equivalent to 0.5 ounce Troy.

You historians are already saying, “But, but, but some Presidents had no spouse!”, and you are correct. In those cases, a depiction of Liberty from a coin design of the period in which the particular President served is used instead. The one set of pictures from this series that I include is from the one that corresponds to Andrew Jackson:

$10 First Spouse, Jackson’s Liberty
Obverse designed by John Reich (this design was originally on the Half Dollar during Jackson’s time)
Reverse designed by Justin Kunz
Series 2006 until we run out of Presidents

The last series of bullion coins that the United States produces is in platinum. This is a very complex series, with various reverses, differing from regular strikes and proof strikes, and four sizes. All are composed of 0.9995 fine platinum, and so are very soft. An aside about platinum:

Most people are familiar with platinum jewelery, which is very hard. Actually, this is normally a 90% platinum / 10% iridium alloy, and is indeed hard (the standard kilogram and standard meter in Paris are made of this alloy because of stability and wear resistance). In pure form, and 0.9995 fine is pretty pure, platinum is easy to bend and scratch. You chemistry laboratory types can back me up on that.

This series comes in the following denominations:

$10 nominal, 16.5 mm diameter, 0.10005 ounce Troy, giving 0.1000 ounce Troy fine platinum. Today’s value is $84.35.

$25 nominal, 22 mm diameter, 0.2501 ounce Troy, giving 0.250 ounce Troy fine platinum. Today’s value is $210.88.

$50 nominal, 27 mm diameter, 0.5003 ounce Troy, giving 0.500 ounce Troy fine platinum. Today’s value is $421.75.

$100 nominal, 32.7 mm diameter, 1.0005 ounce Troy, giving 1.000 ounce Troy fine platinum. Today’s value is $843.50.

All four sizes share a common design for the year and type, just like the gold eagles. The reverse differs within a type only by the lettering for weight and denomination. Here is a picture of the most common one:

$100 Platinum Eagle
Obverse designed by John M. Mercanti
Reverse designed by Thomas D. Rogers, Sr.
1997 – Present (with reverse design variations)

That is pretty much the story on US bullion coins. Next time I will talk about the properties that make a “good” coin, and whilst there are some in common between circulating and bullion coins, there are also some significant differences. In the installment after that, I will discuss the coin manufacturing process. Other ideas for topics are always welcome.

As always, comments and questions are welcome.

Warmest regards,

Doc

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