A new gold coin, the American eagle, has the potential to attract U.S. investors away from foreign coins if it is properly marketed, coin dealers predicted yesterday.
The first gold coin to go into general circulation in this country in 53 years was approved this week by the House of Representatives, after the Senate passed a similar bill Nov. 14. President Reagan, who banned imports of the South African gold krugerrand and asked the Treasury last September to design a coin to replace it, is expected to sign the legislation. The four coins, with face values of between $5 and $50 and containing between one-tenth and one troy ounce of gold, are scheduled to go on sale Oct. 1, 1986.
Since the sale of gold bullion in this country was reauthorized just over a decade ago, the government has issued a number of commemorative medallions and collectors' coins. Some, like the gold and silver coins sold in conjunction with the 1984 Olympic games, were very successful. About $72 million worth of Olympic coins were sold, yielding $130 million in profits to the Treasury because the coins were minted with reserve gold valued at $42 an ounce.
Other governmental attempts to sell gold to collectors have been less than successful. Between 1980 and 1985, only 1.7 million ounces of gold medallions commemorating such great Americans as Louis Armstrong and Frank Lloyd Wright were sold, well short of the maximum projected mintage of five million ounces. The medallions were marketed directly by the government and required a buyer to determine the price by telephone, send a postal money order and wait months for delivery.
The legislation passed this week specifies that the marketing of the U.S. eagle be very different. Coins will be available directly from the Treasury, but also from banks, bullion dealers, coin shops and other outlets that decide to offer them. Wholesalers will be given discounts.
Making the coins readily available to customers is essential, said George Parola, manager of the precious-metals division of Deak-Perrera International in New York.
Parola predicted the U.S. eagle easily could capture 50 percent of the market within a year. Between three million and four million ounces of gold coins and medallions are sold annually in this country, according to the House subcommittee on coinage.
The coins will be legal tender, worth their face value if offered for payment. However, they cannot be bought for their face value. The price of a $50 gold piece will be equal to the market price of an ounce of gold plus a small premium; a $5 coin will cost one-tenth as much.
The price of the coins will be competitive at about a 3 percent premium with the Canadian maple leaf -- which now accounts for about 70 percent of gold coin sales in this country -- and the krugerrand, as well as the Mexican onza and a few other foreign coins. The legislation sets the price for the coins at the cost of newly mined U.S. gold plus a small charge for minting, marketing and distribution.
In order to be successful, the U.S. eagle will have to have liquidity and continuity, said Jeffrey Christian of J. Aron's commodity research group, who expressed caution about the coin's chances.
"It must be the same every year, not like the Chinese panda gold coin that changes face periodically ," said Richard Lambrecht, special service manager of the precious metals division of American National Bank of New York. Continuity is necessary to have the coin regarded as legal tender and not a collector's item, said the dealers.
The design of the $50 one-ounce coin is specified by law. It will feature a design "symbolic of Liberty" on the front and on the back, a family of eagles. The designs of the other coins will be set by the secretary of the Treasury.