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Gold Eagles as Pocket Change?

2021 1/10-ounce $5 gold American Eagle. (Images courtesy United States Mint.)

2021 1/10-ounce $5 gold American Eagle. (Images courtesy United States Mint.)

A perhaps unusual perspective on coins recently made by Reserve Bank of Malawi Governor Dr. Wilson Banda should be taken seriously. 

Speaking on the practicality of circulating coins, Banda said, “A good example is precious metals – which has high value and can be broken into small pieces – which can be compared to grain/cattle, which have small value but occupy a large space and have a bigger weight.” 

Off-the-rails thinking based on an agrarian economy, or perhaps higher denomination coins should circulate more? 

With the spot price of gold hovering at about $1,800 an ounce and a $5 gold American Eagle (GAE) having an intrinsic value of about $200, it might make more sense to carry the coin than another mix of coins and bank notes adding to the same value. The 2021 GAE has a premium at the time this article is being written, showing that the collector market for the same items may make it impractical to use them as cash. 

Yes, I understand this doesn’t take spot price fluctuations into consideration, either. Right now the value of bullion and intrinsically valued coins is in flux, much of this being due to the value of the dollar on world markets, renewed concerns about variations of COVID and Treasury bond yields continuing to trend downward. As Kitco recently put it, “silver prices remain on the defensive.” 

Coins better defined as collectible rather than as being bullion value-driven are holding steady, while the scarce to rare market sector continues to move upward. It’s been a surprisingly good year for new U.S. Mint issues, this often being where beginning collectors get their feet wet. Be it the shallow or the deep end of this pool, the interest in coins remains strongly positive.