Friday, CMIGS began shipping the year’s first 2009-dated US Mint Buffalo Gold Coins. Before the release, there was speculation that the mintage would be low because the Mint did not produce them until late in the year.

However, as of this writing, the Mint’s web site shows that 86,000 Buffalo Gold Coins have already been sold. Further, wholesalers have placed second orders with the Mint and were given no indications that the coins are in short supply. This seems to indicate that the Mint produced a large quantity before releasing them, and I’m now guessing that mintage of 2009 Gold Buffs easily will exceed 100,000. In 2008, the US Mint sold 172,000; in 2007, 167,500 coins were sold. In 2006, the first year they were minted, the Mint sold 323,000.

As discussed on our web page about Gold Buffalo Coins, packaging remains a problem. Of greater concern is that promotions of First Strike coins have already surfaced.

We caution against paying high premiums for so-called First Strike coins. Actually, since our 2006 expose of First Strike coins, most promoters now call them Early Release coins. By either name, we warn investors not to buy them at high premiums because the premiums on such coins do not hold up in the secondary market.

CMIGS has 2009 Gold Buffaloes in original packaging for immediate shipment. Buffs carry premiums a few dollars higher than the US Mint’s Gold Eagles.

The U.S. Mint just announced that it will begin taking orders for its 1-oz American Buffalo gold coins October 15. CMI Gold & Silver Inc. will take orders for Gold Buffaloes now but does not anticipate having the coins for shipment until the last week of October.

Right now, Gold Buffaloes are priced the same as new 1-oz Gold Eagles. If demand exceeds supply, Buffs may pick up premiums as did 1-oz Gold Eagles during the 2008 financial crisis.

The Gold Buffaloes present an interesting situation. Federal law requires the Mint to produce Buffs every year, but the law does not state the quantity. Further, the Mint did not disclose the number of coins it plans to produce. However, the announcement said that “should demand exceed supply” the Mint will institute “allocation procedures.” Considering the how the Mint worded its announcement, it may not be planning on turning out many Gold Buffaloes.

If the Mint produces only 50,000 to 100,000 Buffalo gold coins, they could be really good buys, with premium potential in future years. Premiums could come from them being a low mintage year as well as from telemarketers promoting them. Telemarketers love to hype low-mintage coins. Of further interest is the Mint’s announcement about fractional ounce Gold Eagles.

Ordinarily, by October the Mint is gearing up for next year’s coins. Actually, in past years in late October and early November, the Mint has stopped selling current-year coins so as to dedicate all efforts to the following year’s production. This year, however, in December the Mint will take orders for 2009-dated fractional-ounce Gold Eagles for the first time this year. As with Gold Buffaloes, mintages of fractional-ounce Gold Eagles coins could be small.

Meanwhile, gold buyers wanting fractional-ounce gold coins should consider the fractional-ounce Krugerrands, which only recently became available. They are priced at government-issued fractional-ounce coin prices. However, the quantity for immediate shipment is not large as the importer has not been bringing in large quantities. The next shipment from South Africa is expected later this month.

If you would like to discuss buying Gold Buffaloes or fractional-ounce Krugerrands, call us at 800-528-1380. Our brokers take call 7:00 a.m. to 5:00 p.m. MST, Mondays through Fridays. If you would like to know more about doing business with CMI Gold and Silver Inc., visit our Doing Business with CMIGS page.

For the first time in twenty-five years, fractional-ounce Krugerrands are being imported into the U.S. in large quantities. And, the news gets better: the coins are priced at the standard premium for fractional-ounce government gold coins. As buyers of fractional-ounce gold coins know, these coins, when they were available, carried huge premiums in the secondary market after the financial crisis of 2008.

The first shipment is expected to hit the U.S. about September 24, and we expect to begin shipping to buyers the following week. Note: that is what we anticipate. We have absolutely no control over when the coins will arrive, but if the shipment time of these fractional Rands goes as recent imports of one-ounce Krugerrands have gone, the coins should be here as anticipated.

Three sizes will be available: ½-oz, ¼-oz and 1/10-oz. We anticipate the biggest demand for the 1/10-oz Rands and are going to attempt to carry a large inventory of them, which means we will be able to make prompt shipments to buyers—unless the demand is bigger than we anticipate.

We have not been told how many fractional Rands are being imported, and the importer does not know if the South African Mint will turn out additional fractional Rands in the near future.

On another note, as this is written we have ten Specials posted on our Specials Page, all of which are gold items. Generally, the items we put on the Specials Page are lesser-known gold or silver investments, forms of gold or silver that we cannot offer on a regular basis because we cannot always get them.

Still, they are good investments because they are priced much lower than if we had to go into the market to get the items. A good example: Austrian 100 Corona gold coins, which were standard gold bullion coins along with Krugerrands and Mexican 50 Pesos in the 1970s, are put on our Specials Page when available. The Specials Page offers investors opportunities to buy low premium gold.   As the items on the Specials Page are sold, they are removed.

If you would like to discuss buying the fractional Rands or any of the items offered on the Specials Page, call us at 800-528-1380. Our brokers take call 7:00 am to 5:00 pm MST, Mondays through Fridays.

With the sharp drop in the price of gold, Krugerrands are scarce because few investors are willing to sell. Further, for a while the U.S. Mint was not able to supply enough 1-oz Gold Eagles. So, a major wholesaler began importing, for the first time in decades, new Krugerrands.

Yes, 2008-dated Krugerrands are for sale. However, they sell near the same price as new 1-oz Gold Eagles as the wholesaler’s cost is about the same for Krugerrands as it is for Gold Eagles.  So, when the situation is Gold Krugerrands vs. Gold Eagles, I recommend that gold buyers wanting 1-oz gold coins go with Gold Eagles, not 1-oz Gold Krugerrands.

When gold again moves up in price—and it will shortly after the bullion houses get finished with their manipulation—the premium on secondary market Gold Krugerrands will fall as sellers return to the market.

It is estimated the some 25 million 1-oz Gold Krugerrands call the United States home, and for decades Krugerrand sellers more than met the demand for the coin, causing the Krugerrand to be the low premium “bargain” gold bullion coin. I believe that situation will return as the price of gold moves higher.

Meanwhile, 1-oz Gold Eagles have maintained solid premiums (except for the Y2K selling throughout 2000 and part of 2001). So, don’t buy Gold Krugerrands at Gold Eagle prices when Krugerrand premiums are likely to shrink when sellers return.

Investors seeking low premium gold coins should consider the Mexican 50 Pesos Centenarios (1.2057 oz) and the Austrian 100 Coronas (.98 oz). Although the coins are not now promoted and therefore not well known with the public, these two coins are well known in the coin and bullion industry and can be easily liquidated. Although Centenarios and 100 Coronas are not always available, they are worth an inquiry. One-ounce gold bars and 10-oz gold bars are other low premium options

The U.S. Mint recently announced that it would ship no more 1-oz Gold Eagles until January 2008. This policy has become the norm for the Mint toward year-end when it shuts down production of current-year coins to prepare for minting the ensuing year’s coins. The announcement resulted in an immediate jump in the premiums on 1-oz Gold Eagles.

However, just before Thanksgiving the Mint told its authorized distributors that they will get at least one more chance to buy 2007-dated 1-oz Gold Eagles before year-end. That announcement resulted in premiums on 1-oz Gold Eagles dropping back to normal levels. However, if the authorized distributors sell out their “reloads” before year-end, premiums will jump again. If the distributors’ coins last to year-end, premiums can be expected to stay at normal levels.

Only five U.S. distributors are eligible to buy coins from the U.S. Mint. (Gold Eagles are distributed via the classic manufacturer, wholesaler and retailer system. The Mint is the manufacturer; the authorized distributors are the wholesalers; and firms such as CMIGS are the retailers.) Because the distributors lose sales when they run out of Gold Eagles, when the U.S. Mint makes what has now become an annual announcement about ceasing production of 1-oz Gold Eagles, the distributors jack up their prices to compensate for potential lost sales.

Gold’s price volatility also has impacted premiums on Gold Eagles in the secondary market and on Krugerrands, which are the quintessential bargain coins and trade only in the secondary market.

Big moves to the downside always bring bargain hunters into the market. These are investors who buy only on price drops. They want low prices. So, because Krugerrands carry the smallest premiums of the widely known 1-oz gold bullion coins, many bargain buyers prefer Rands. In this way, price volatility increases the premiums on Rands.

A final note about premiums: The U.S. Mint sells Gold Eagles at percentage markups over spot (London spot, for Silver Eagles as well as Gold Eagles). The higher the price of gold climbs, the higher the absolute markup.

Today, twenty 1-oz Gold Eagles carry premiums of about $40 to $45 each. (Secondary market 1-oz Gold Eagles usually always carry smaller premiums than new coins; however this is not always the case. Big demand sometimes depletes the inventories of secondary market wholesalers. When that happens, to have coins for their customers secondary market wholesalers have to buy from authorized distributors.)

When gold traded at the $300 level, twenty 1-oz Gold Eagles carried premiums of about $17. With gold in the $800 area, those premiums climb to $40 - $45. This, of course, makes Krugerrands even more attractive to bargain buyers.