In more than two decades as a gold coin dealer, Luis Vigdor has seen many new gold coins issued. But never has he seen a gold coin whip up so much initial public interest as the new American Eagle coin, to be issued next month by the U.S. Mint.
"It's electrifying," said Vigdor, senior vice president of Manfra, Tordella & Brookes Inc. in New York, one of the nation's largest coin dealers. Between 300 and 500 calls are coming in daily from people interested in buying the coin, he said. "That's much more than I have ever seen for any other new coin."
From coast to coast, coin dealers are echoing Vigdor's words. Spurred by a recent surge in gold prices and the prestige of a new American currency, investors and others are eagerly lining up to buy the Eagle--the first U.S. gold coin tied to the gold market and the first general-circulation American legal tender gold coin in more than 50 years.
Initial demand is so strong that many dealers confidently predict that the American Eagle will almost overnight become the best-selling gold coin in the United States and possibly the world, surpassing the Canadian Maple Leaf, now the top seller with about two-thirds of worldwide and U.S. sales. Some dealers worry that the U.S. Mint may not produce enough Eagles to meet the initial demand.
"The Eagle is going to place other coins into a second-class category," said Mark Goldberg, an owner of Superior Stamp & Coin in Beverly Hills. That could hurt sales of other leading coins, such as the Chinese Panda, South African Krugerrand and Mexican 50 peso, dealers say.
"We expect that in the first year the Eagle will become the premium gold coin in the United States," said Michael J. Brown, spokesman for the U.S. Mint.
The success of the Eagle, some experts say, could stimulate more nations to issue gold coins, partly to create markets for their gold. Already, Japan, Australia and Luxembourg are preparing to issue new coins this year or early next year, and Brazil is expected to follow.
"If the U.S. coin is successful, within the next three years you're going to see a lot of countries with their own gold programs," predicted Barry Stuppler, president of Gold & Silver Emporium in Encino and president of the California Coin & Precious Metals Assn.
Investors have waited years for a continuously issued American gold coin with legal tender status. The United States minted its last gold coins used as currency in 1933, the same year it went off the gold standard. The United States issued legal tender gold coins to commemorate the 1984 Summer Olympics and the recent restoration of the Statue of Liberty; but those were one-time issues, treated as numismatic coins, or collectors' items, as opposed to bullion coins, such as the Eagle and Maple Leaf, which fluctuate in value with the price of gold.
Resurgence in Prices
A major reason for the interest in the Eagle is the overall resurgence in gold prices, due largely to jitters about renewed inflation, sluggish U.S. stock and bond markets and fear of gold supply reductions by South Africa. The price of gold for current delivery closed Wednesday at $431.50 an ounce on the Commodity Exchange Inc. in New York, up 30 cents from Tuesday's close. That is more than 25% higher than its price in early July and is near the metal's highest price since March, 1983.
But experts cite other reasons why the Eagle will outsell other coins, at least in the United States. One major reason is patriotism. "The largest market in the world has been in the U.S., and most U.S. customers will buy it (the Eagle) in preference to other products," said John H. Lutley, co-managing director of the Washington-based Gold Institute, a trade association.
Also, dealers cite the coins' attractive design, which will make the Eagle desirable in necklaces, cuff links and other jewelry. The Eagle's front side has roughly the same Liberty design as used by sculptor Augustus Saint-Gaudens on the $20 gold pieces issued from 1907 to 1933. Some aficionados consider those the most beautiful gold coins ever produced.
Status as Legal Tender
Another reason is the coins' status as legal tender. That direct backing by the U.S. government will boost investor confidence. Moreover, its legal tender status will make sales of the coin exempt from sales tax in several states, including California.
Sales of the coin will also be stimulated if the new tax overhaul bill is approved by Congress and President Reagan. The bill contains a provision that will allow investors to use U.S. gold coins as investments in individual retirement accounts. Until now, commodities such as gold have not been permitted for IRAs.