Don’t buy proof American Eagles on the secondary market just before federal income taxes are due.
This year the deadline is April 18.
Many individuals wait until just before filing to fund their Individual Retirement Accounts.
Those that choose to invest in gold coins create a bulge in demand that pushes up prices – temporarily.
Yesterday I was updating the American Eagle pricing on the front page of the monthly comprehensive Coin Market price guide.
Proof Eagles jumped ahead strongly.
The one-ounce coins were up by $130, to reach $1,635 each.
This is 8.6 percent more than last month.
You cannot blame the price of the precious metal. Gold actually dropped $15 between deadlines.
Proof Eagle buyers are basically paying a premium to meet an immediate, but artificial deadline.
This jump in price before tax deadline then works its way out of prices as we move further into the calendar year.
In an economy where the Federal Reserve has interest rates so low, that 8.6 percent is many multiples of the annual yield on certificates of deposit.
Consider the IRA process as two steps.
It is nice to be able to take a deduction on the proper line on the 1040 form and thereby reduce taxes.
That is just half the smart sequence of action.
The other half is to buy the proof American Eagle gold coins during the time of year when the tax time demand does not exist.
Take a look about six months from now.
Buzz blogger Dave Harper has twice won the Numismatic Literary Guild Award for Best Blog and is editor of the weekly newspaper "Numismatic News."
- Subscribe to our monthly Coins magazine – a great resource for any collector!