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American Eagles reflect politics of 1986

Almost a generation has passed since the American Eagle gold and silver bullion coins were authorized by the U.S. Congress in 1986. They quickly became popular investor coins.

That was the intention.

It would be nice to be able to write that Congress, listening to the voices of investors who wanted a U.S. gold or silver option graciously responded. What Congress really wanted to do was kick South Africa in the teeth.

In 1986, the apartheid racial separatist regime in South Africa was being subjected to increasing pressures to reform by various nations of the world.

One of the U.S. measures to ratchet up the pressure was to create an American alternative to the South African gold Krugerrand, which was the first popularly traded one-ounce gold bullion coin. A marketing campaign in the 1970s dubbed it the world’s best way to own gold.

So Congress authorized a coin that was a virtual copy of the Krugerrand. The Krugerrand contained one troy ounce of gold. The American Eagle became one troy ounce. The Krugerrand was .9167 fine, so the gold American Eagle is .9167 fine. Never mind that America didn’t ever strike coins using this old British standard. It used mostly .900 fineness instead.Forget too that the market was clamoring for a .999 fine coin.

The Krugerrand was 32.7 millimeters in diameter. The American Eagle became 32.7mm. Never mind that the old American double eagle (almost one ounce) was 34mm. Congress wanted everybody to understand that aside from ditching the portrait of  Paul Kruger and the springbok for Saint-Gaudens’ Liberty and Busiek’s Family of Eagles, the American coin was in every respect identical to the Krugerrand.

It worked. The Krugerrand almost vanished from the market helped by an import ban in the United States.

However, I never understood why Congress didn’t stay more true to American history and precedents while it was raiding the historical larder.

Congress insisted that the coins be called American Eagles. I wrote at the time that an “eagle” during the gold standard years was a $10 gold piece. Why not use the old $20, $10, $5 and $2.50 denominations increased slightly in weight to even troy amounts for the double eagle, eagle, half eagle and quarter eagle and avoid confusing the two?

Congress instead wanted $50, $25, $10 and $5. Even after 23 years, the idea that a quarter of $50 is $10 still grates on me, but it doesn’t seem to have hurt the sales of the coins any.

Congress did accept the historical denomination when it made the one-ounce silver coin a dollar. Why not $5 or $10? History aside, Canada had been embarrassed in the 1970s when its $5 and $10 Olympic coins saw bullion value drop below face value. Some people then tried to spend them. They were refused. It became a national problem resolved by the creation of a fund to buy the coins back. This was a problem the United States saw and then avoided.

American Eagles are products of politics and history available to Congress in 1986 and not of pristine market research.


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