The American Buffalo Gold coin is available in both proof and bullion coins for investment purposes.
The American Buffalo Gold Coin was introduced by the U.S. Mint in June 2006. The .9999 fine (99.99 percent pure) 24-karat gold coin is the first of its kind and was released in response to competition in the investing world from other countries. The coin was authorized by the Presidential $1 Coin Act of 2005 (Public Law 109-145), which also introduced a series of gold dollar coins featuring images of U.S. presidents. The American Buffalo Gold Coin is available in two versions as a gold bullion coin for those wishing to collect the coin for its gold value, or as a proof version for those wishing to collect the coin for its intrinsic value.
The Buffalo Gold Coin, designed to mimic a gold buffalo nickel, is legal tender in the United States at a face value of $50. However, its chief value is in the gold it contains. It is the only investment-grade gold bullion coin whose composition is guaranteed by the U.S. government. As an investment-grade bullion coin, it may be used in Individual Retirement Accounts (IRAs). According to the World Gold Council, gold has held its value in terms of purchasing power for over a century, with the value adjusted for inflation. Gold's price of $20.67 per troy ounce (a troy ounce is equal to 31.103 grams) in 1900 equates to $503 per ounce in today's market, not far from its December 2006 average of $524. With recent increasing concerns over the investment risks inherent in equities and bonds, many investors are considering adding gold to their portfolios to diversify and spread risk.
The American Buffalo Gold Coin is patterned after the original design of the Indian Head coin, or buffalo nickel, minted from 1913 to 1938. This nickel was succeeded by the present Jefferson nickel. The obverse (heads side) of the coin depicts the profile of a grim-faced Indian warrior facing right, while the reverse (tails side) features the left-facing profile of an American bison standing on a mound. Several months into production in 1913, the mound was replaced with a straight line of grass.
Sculptor James Earle Fraser, who studied art in Chicago and Paris, created the coin's design. Frasers sculpture End of the Trail earned him an apprenticeship with Augustus Saint-Gaudens, who designed the Indian Head $10 (eagle) and Walking Liberty $20 (double eagle) gold coins. Fraser used Lakota Sioux chief Iron Tail, Cheyenne chief Two Moons and a third unnamed man as his models for the Indians head, while the New York Zoological Gardens bison Black Diamond is believed to be the buffalo depicted on the coin. Fraser also sculpted statues of Thomas Jefferson, Meriwether Lewis, William Clark, Alexander Hamilton and Thomas Edison.
The American Buffalo Gold Coin is produced at the U.S. Mint facility in West Point, N.Y. Erected in 1937 as a storage facility for silver bullion, this location near the U.S. Military Academy gained official Mint status in 1988. The facility produced coins from 1973 to 1986 and began striking gold medallions in 1980. In addition to the American Buffalo Gold Coin, the West Point facility also produces the American Eagle coin in gold, silver and platinum and in both proof and uncirculated versions. The West Point facility also serves as a gold repository, second only to Fort Knox in the size of its collection.
The Buffalo Gold Coin is available as both a proof coin and a bullion coin. The proof coin differs from the bullion coin in that burnished gold coin blanks are hand-fed into presses fitted with special versions of coin dies. The coin is then struck multiple times with the dies to produce a softly frosted and highly detailed image.
The gold in the American Buffalo Gold Coins must be newly mined and from American mines only. Although produced at West Point, the coin does not bear the "W" mint mark used on the facility's American Eagle coins. According to the U.S. Mint, 171,500 copies of the coin were produced in 2008, with peak production times in August and September and no coins produced in either October or December.
American Buffalo Gold Coins can be bought and sold through major dealers of coins and precious metals. They can also be bought through many brokerage firms and participating banks. The sale price is the prevailing market price for gold, plus a small premium added to cover the cost of minting and distributing the coins.
The coins may also be purchased through the U.S. Mint directly. Purchased coins are normally shipped within one to two weeks at the standard shipping rate. There is an additional charge for overseas shipping as well as for expedited shipping, which delivers the order within two to three business days.
The U.S. Mint reported that 189,500 American Buffalo Gold Coins were sold in 2008. This was up from the 136,503 sold the previous year, but still well below the 337,012 sold when the coin was introduced in 2006.