When the US Government issued the 24 kt. pure gold $50 Gold Buffalo, it began a new era of gold coin investment.  Consider it is the 1st time for a US .9999 pure gold coin.  In addition, the design is one of the most popular in our coin collecitng history which attracts a huge buyer audience.  This results in a huge demand on quantity minted which tends to drive pricing up faster than most other modern minted coins. (more placed in collections . . . less available for trading)

The US Mint issued both a Proof and a Business Strike referred to as MS (mint state issue) which translates into mint as many as you want during 2006 and then they issued the same coin in a PROOF edition with a limited quantity of 300M. This attracts the collector because of lower mint quantities.

Nothing new yet . . . right?   WRONG!  The issue price of the PF Buffalo cost $800. shipped from the mint.  With a little knowledge . . . you can be a shrew gold investor and actually lever the gold market investment in your favor.

Send the proof gold buffalo to NGC grading in Florida.  If you send 10 coins you are historically assured of getting from 1 to 2 grade 70 which is perfect and the balance - a grade 69 (near perfect - you can't tell the difference with the naked eye).  Now place them on ebay and watch the results.  Perfect 70 sell for an average in the 1st 30 days of $1300 each.  With $800 to purchase, $10 to grade (join the society for a annual fee of $110) add on ebay selling commissions of about $30 and the result?   Profit on the 70 grade is about $350 dollars.  These are 1st Strike graded coins which must be graded within 30 days of issue!  (discussed later)


Profit on the grade 69 (your balance of coins is about  $50 to $75 dollars).  I will average them at (8) coins times $60 and (2) coins times $350.  Total profit is conservatively $1100.  ALL IN LESS THAN 30 DAYS!  

Keep in mind you can only do this initially, as these are 1st issue coins that must be sent immediately to NGC and they are returned 1st Strike.  (This creates a premium as 1st Strikes are only graded for the 1st 30 days after the release of the coin from the US Mint.

This grading level, fortunately or unfortunately was another attempt by the nuministic community to create a higher valued coin which seems to have  worked with the coin community.  I have my doubts about this somewhat recent grading level. Many of you rare coin collectors and those that are NOT into the modern coin collecting era, will frown at this choice by NGC.  For the purist, the 1st Strike grading may be a farce . . . but it is established and is bringing a premium so when in Rome "do as the Romans do"!

NOW, lets purchase (10) $50 Gold Buffalos MS

(no grading) or Kugerands, or American Eagles, etc and just trade them.  I did so with the following results:

10 purchased when gold was $590 each.    $5,900 total

2.5% comm to purchase   $147.50

Total  $6,047.50

10 sold when gold reached 650.    $6500

2.5% comm to sell   $162.50

Total $6338.50

PROFIT  less than $200 on a gold swing

of about 10%.  And the selling commissions
amounted to over $300.  Far more than
Ebay auction commisions!

The comparison is more than fair because both happened within a 30 day period.  The profit spread continues to be unfavorable even if Gold swings more than a
whopping 30%!!!!  

Nuministic Gold Investment  $1100

Gold Bullion Investment   $200

We did the same thing with the 2006  $50 Gold Eagles vs. gold coin bullion  and the return was not the magnitude of the Buffalo Gold Coin but still was double the return on the standard "buy / sell" gold bullion.

While gold can go up and down, the value of the gold coin tends to be a lot more stable and will return a better investment because of the nuministic or collector value.  The selling process of either investment is about the same.  Take a graded gold coin to any coin dealer or place it at auction when you want to sell.  The selling time is almost the same. 

In my opinion, not only is the investment in nuministic gold in our moder coin market more desirable, but add to this the "enjoyment factor" afforded to the collector.  The only problem you may encounter is the pain of selling it when that day arrives.   Sending the kids to college on nuministic gold investments may be better than trust funds, stocks or insurance programs.

What do you think? 

Hope you enjoyed the mental gold exercise regarding possible investment stragaties. 

You have to act at a specific time,

know where to grade the coins

and know how to place them at auction.

_____________________________________

Always buy the coins on the 1st day of issue

Upon receipt, send them immediately to the grading service

Place them at immediate auction
(with a reserve if you feel uncomfortable)   

I suggest you only place some at auction to reduce your investment cost and KEEP THE REST!!    You can't go wrong.

Please let me know your comments pro or con.  I value all aspects of gold coin collecting for investment or personal value.  Good Luck in collecting the coins you value.

David Mouser
US Mint & Coin