The fractional gold American Eagles go on sale today to the Mint’s authorized distributors. They will in turn sell them to the secondary investor-collector market.
Because they are allocating supplies, we already know that the Mint thinks demand is higher than its ready supply.
The question that pops into my mind is where is the this demand coming from?
Are investors scrambling to buy fractional coins?
I wouldn’t think so. The mark-up for the smaller coins is higher. If you want to buy large amounts of gold, buying the smaller sizes is simply throwing money aware.
What about collectors?
Will they rush in right away to try to get examples of each size for their set?
It is possible. Collectors always like to be the first on the block to own something. The expectation that gold will continue to rise in value will not dampen that tendency.
How about non-collector buyers?
That is probably the heart of demand. TV offers and newspaper sales pitches all focus on genuine U.S. gold coins. The price point for the ounce has gotten too high for the average spur-of-the moment panic buyer, so the lower prices of the half, quarter and tenth-ounce pieces is a huge sales advantage – especially the tenth ounce.
There seems to be an unlimited supply of people who will send $100 to $200 for something. The gold value of the tenth fits comfortably at $125. Even with the mark-up, it is still within the range.
So who will do the buying of the fractional gold American Eagles?
We are about to find out.