ivana-cajina-HDd-NQ_AMNQ-unsplash_edited

We cherish independent and rational analysis. 

BFI Perspectives 

  • Scott Schamber

Much Ado About Nothing: There is More to Gold Than Just the 1oz American Eagle!

A long-time client and good friend recently forwarded me an article about the “supply shortage and high prices on gold”, especially as it pertained to the 1ozt gold American Eagle. The theme of the article centered around the question of whether we are experiencing a gold shortage at the moment, because the author was offered 1oz gold American Eagles for over $2,000/oz by his metals dealer in the U.S.

The author of the article explained how he had contacted his precious metals dealer in the US and found out that wholesalers were mostly out of gold and the US Mint had stopped taking orders at that time. The US Mint was making design changes to the American Eagle coins as well, which meant they shut down presses to change the dies on the stamping machines. This prompted the dealer to proclaim, “gold is scarce”.


Due to this scarcity, US dealers can charge upwards of 15% premiums above spot on the gold American Eagle! Using the spot price I saw at the time I wrote this article, a 15% premium could push the price of 1oz of gold near to the highs of spot prices we saw in August, 2020. $2,000/oz might even be a bit modest.


My reaction after reading this was quite bemused: Why is this a big deal, especially when you can get a much better deal on other 1oz coins?

Of course, I understand that the gold American Eagle coin is one of the most popular of the bullion coins out there. Since I started with Global Gold in 2017, it’s always carried the highest premiums of the coins we work with. The Eagle is enormously popular with US investors, which I also get, just as the Maple Leaf is for Canadians, the Vreneli for the Swiss, etc. I know that for US IRA (Individual Retirement Account) investors, the Eagle is one of the coins you can invest in according to IRA rules. And another benefit to paying a high premium on gold coins when you buy them is, if supply/demand and markets remain the same – that’s a big IF - you’ll tend to also get a higher premium back on your sale price.


But here lies the “problem” for me: why even bother looking at the Eagle when you can get other, perfectly fine and valuable 1oz gold coins for premiums as low as 4-6%, above spot. At least we can at Global Gold.


Yes, we too have seen some out of the ordinary supply issues since the beginning of 2021, but when we purchase Maples, Kangaroos, Britannias, or Philharmonics, we are still taking delivery in 3, maximum 4 weeks. Actually, where we saw longer delivery times was in larger silver bars, but even that has normalized lately.


If we talk about premiums on the 1oz gold coins in general, there are still actually quite a few good deals to be had. For example, we can offer all-inclusive premiums (our provider premium and our brokerage fees) on the American Eagles of 12.5%. but 6% on the Canadian Maple, 6.5% on the Austrian Philharmonic, 5.5% on the Britannia, and 6% on the Australian Kangaroo, and that’s at their highest.


Here’s something else to consider: if you really want to talk about deals, smaller gold bars, like the 1oz and 100gr (even up to the 1kg bars) can actually be even more attractive, with lower premiums over spot on coins. We at Global Gold aren’t seeing, apparently, the same scarcity issues on the other gold formats we work with, so we have plenty of access.


Considering it’s still a great time to top up, let us know if you would like to take advantage of lower premiums and better supply than what the American Eagle can offer, at least with us here in Switzerland. And if you are a US person with an IRA, we actually can refer you to some great partners that can help set up your IRA in a way that will allow you to invest in metals stored in Switzerland…and, with less expensive coins that are also accepted and compliant with IRA rules.


For help and more information, simply contact our advisory team at team@globalgold.ch.

Download PDF Version
.
Download • 424KB