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Fractional gold has purpose, or does it?

Since sales of fractional gold American Eagle bullion coins began in June, the tenth-ounce coins have moved out the door at a reasonable pace.

As of July 13, buyers had taken 300,000 of the small coins. They are popular as jewelry and they also are popularly used by promoters to entice novice gold buyer’s to get genuine U.S. Mint gold at a price that doesn’t choke a horse.

One-tenth of the present $1,200 price of an ounce of gold is much easier for novice buyers to part with than the cost of the one-ounce coin.

Obviously, though ,with sales approaching 700,000 pieces, demand for the one-ounce coin is not hurting. Savvy investors need no introduction to it.

Sales of the half-ounce coin at 31,000 pieces and the quarter ounce at 44,000 coins are betwixt and between. They aren’t the standard investment coin and they are not nearly as popular as jewelry. So what exactly are they?

In days when $2.50, $5 and $10 coins were needed to make change for gold $20s, the smaller sizes had a purpose.

With investment coins, you don’t need to make change, though I have seen the concept bruited about online as the fractional gold coins are tipped as needed when the currency system breaks down and change in gold will again be required.

Judging from current fractional gold American Eagle sales, perhaps that point is a rather hard one to make.

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One Response to Fractional gold has purpose, or does it?

  1. Mark says:

    Most of the online comments I’ve seen about the breakdown of fiat currencies recommend holding junk change, pre 1965 dimes quarters and half dollars as barter. While I don’t know if fiat currencies will break down, I do believe we are going to see very high price inflation whereby a pre 1982 copper penny might be worth 15 cents and a nickel close to a dollar. If that happens, gold and silver will be priced much higher in total dollar terms, but their spending capacity might not be much higher than today. They are more of insurance than a means to get rich. The best way to show it is in 1964, a gallon of gas cost about a quarter. A pre 1965 quarter has the about the same melt value of a gallon of gas today.

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