Big European banks continue to dominate the U.S. Treasury gold auctions, but the average American soon will be able to get a part of the national treasure as the result of a bill passed in the final moments of the 95th Congress.
At yesterday's auction of 300,000 troy ounces, the high bidders were the Swiss Bank Corp. of Zurich and the Dresdner Bank of Frankfurt. Other successful bidders were Republic National Bank and Philipp Brothers, a division of Engelhard Minerals & Chemical Corp., both of New York.
Successful bids ranged from $228.11 to $229.25 an ounce. The average price was $228.39, slightly above the London close. Gross proceeds were $68.5 million.
Despite record prices, demand is high. There were bids for 818,000 ounces at yesterday's sale. The Treasury will increase the amount of gold for sale to 750,000 ounces on Nov. 21. The minimum purchase at these auctions, conducted by the General Services Administration, is 400 ounces, but bids often are made in the tens or hundreds of thousands of ounces. A single institution has been known to buy $40 million worth of gold at one time.
This situation prompted Rep. Jim Leach (R-Iowa) to ask, "Why should we sit idly by and see our American gold purchased in 400-ounce bars mainly by large, foreign-controlled institutions while our citizens in turn are forced to buy imported gold coins primarily from South Africa?" Last year more than 1.5 million ounces of gold in the form of foreign bullion coins, the bulk of which were imported for American buyers.
Leach, together with Sen. Jessee Helms (R-N.C.), sponsored legislation mandating the striking and public sale of one million ounces of fine gold medallions in the year starting Oct. 1, 1979. The one-ounce and one-half ounce medallions will be sold at a "competitive" price; i.e., a small commission over the spot price of gold.
This marks the first time that the Treasury will strike gold medallions in large quantities and the first time their price will be pegged to the free market value of gold.They are not official U.S. currency, but it will be illegal to counterfeit them.
Called American Arts Gold Medallion, they will bear the likenesses of outstanding contributors to the arts: Marian Anderson, Grant Wood, Willa Cather, Mark Twain, Frank Lloyd Wright, Louis Armstrong, Alexander Calder, Robert Frost, John Steinbeck and Helen Hayes.
Two medallions will be struck each year over a five-year period. The amount of gold allocated for the medallions after the first year will depend on demand.