Are Gold Buffalo Coins a Smart Investment?

American coinage has a rich history, both inside the United States and abroad. The fascinating designs found on many U.S. Mint coins have captivated global collectors for decades and provide a consistent lens into the heart and spirit of the American people. Aside from the American Gold Eagle, there are few coins that epitomize the popularity of the U.S. Mint as well as the American Buffalo. 

The coin has a relatively new history, especially when compared to its popular counterpart, the Gold Eagle. Experts in the U.S. Mint first released the American Gold Buffalo in 2007, and it’s been a staple of the mint’s offerings since. 

A growing number of investors are turning to Gold Buffalo Coins in order to build their precious metals portfolios. Are Gold Buffalo Coins a smart investment? Today’s blog will focus on some of the main elements investors need to consider when investing in Gold Buffalo Coins. 

Understanding Gold Buffalo Coins

To answer the question, “are Gold Buffalo Coins a smart investment,” you need to have a clear understanding of the history and context of the Gold Buffalo Coin. The 2005 Presidential $1 Coin Act stipulated that the U.S. Mint would be responsible for releasing up to 300,000 1 oz .9999 pure gold bullion coins per year. After some deliberation, mint experts settled on the design for the Gold Buffalo Coin. Inspired by the Indian Head nickel designed in 1913 by James Earle Fraser, the coin pays homage to our country’s long tradition of quality bullion coins with important cultural backgrounds. 

Specifications and Designs of Gold Buffalo Coins

On this bullion coin’s obverse, you’ll note a Native American’s profile. He wears feathers on his hair, which is tied at the side of his neck. The model used for the coin’s design was actually a combination of two Native Americans, Iron Tail and Two Moons.

Flipping the coin over, you’ll note the American Bison, a core symbol of early American history. The bison looks almost sad as it trudges forward along a rocky surface. Because of the fine gold used in the Gold Buffalo Coin, details are rendered in exceptional intricacy. Are Gold Buffalo Coins a smart investment because of their aesthetic appeal? Some investors certainly seem to think so, and the long history behind the culturally inspired designs of the coin add considerable numismatic value. 

The Pros of Investing in Gold Buffalo Coins

There are several justifications for the American Gold Buffalo’s popularity. Are Gold Buffalo Coins a smart investment? We’ve got a few reasons why this might be the case. 

Stability and Security

The long history of the Gold Buffalo Coin is one major reason why investors often answer in the affirmative to today’s question: are Gold Buffalo Coins a smart investment? Their enduring popularity is at least in part due to the stable price trends enjoyed by the coin, as well as its backing by the United States government. As a government-backed coin, the Gold Buffalo is guaranteed to be .9999 pure gold bullion and carries the stamp of one of the world’s most powerful institutions, the U.S. Mint. 

Gold as a Historically Stable Investment

Gold price trends have been historically very profitable for investors who manage to stick with the precious metal for a sustained amount of time. But even during the worst months in gold’s performance history, investors seem to view gold as a solid investment choice. Why is this? The answer lies in gold’s intrinsic value. Gold is considered a non-correlated asset. This means that the value of gold is not directly dependent on the strength of the stock market. The spot price of gold changes day by day, so be sure to track the market before investing. 

This intrinsic value has made gold an exceptional asset for thousands of years. Even Ancient Greeks knew that gold was worth more than most metals because of its scarcity. During times of financial insecurity, there’s a reason why millions of investors put their cash into gold coins or bars. 

The Government Backing of Gold Buffalo Coins

The fact that these coins are produced and guaranteed by the United States government helps to give them an additional layer of security. First, the backing of an official government ensures that you’re getting what you pay for. No American Gold Buffalo will come with less than .9999 fine gold, as the American government’s massive minting apparatus ensures a level of consistency through all mint runs. 

Perhaps more importantly, the backing of a government provides the coin with significant recognizability. All gold coins have reputations. Are Gold Buffalo Coins a smart investment because of their recognizability? This isn’t the only reason why investors choose Gold Buffalos, but it certainly helps to have a coin you can trust and that buyers know when it comes time to sell. 

Potential for Profit

The long-term price appreciation of the Gold Buffalo has contributed to its profit potential. Are Gold Buffalo Coins a smart investment for long-term profiting? We’ll cover the value appreciation associated with these coins below. 

Appreciation in Value over Time

In addition to their security and government backing, Gold Buffalo Coins offer an unprecedented appreciation history. Are Gold Buffalo Coins good investment for long-term speculators? Evidence suggests that this is probably true. The coin was first released and sold from the U.S. Mint for $800 in 2007. By 2011, the coin’s value had risen to $2,010. 

Are Gold Buffalo Coins a smart investment for numismatic reasons? The growing numismatic or collectible value of the American Gold Buffalo has helped to boost its popularity and liquidity on the secondary market. Some older variations of the coin might sell at an additional premium if the piece is in exceptionally good condition. 

Diversification of Investment Portfolio

Gold Eagles can also be a good way to diversify your portfolio. Experts recommend diversification as a way to minimize the susceptibility of your portfolio to rapid shifts in the market. Gold, silver, and other bullion products have long been tools to help investors balance risk. The American Gold Buffalo serves this purpose very well. But are Gold Buffalo Coins a smart investment for diversification? Their high gold content (.9999) means that these coins are excellent for stacking pure gold while maintaining numismatic value in your portfolio.

The Cons of Investing in Gold Buffalo Coins

There are also significant downsides to investing in Gold Buffalo Coins. But are Gold Buffalo Coins a smart investment despite the risks of fraud and high premium costs? We’ll take a much closer look at the disadvantages associated with Gold Buffalos in this section. 

Upfront Costs

To start, let’s ask an important question for those investors with limited capital. Are Gold Buffalo Coins a smart investment for low-budget investors? We’ll discuss why the Gold Buffalo isn’t a great choice for investors working with little cash in this subsection. 

The Premium over Spot Price

Because of exceptionally high demand, American Gold Buffalos come with a relatively high premium over spot price. The U.S. Mint is known for some high premiums on their gold products, so this shouldn’t come as a surprise to investors who are familiar with the United States’ national mint. Even the American Gold Eagle, a staple for gold bullion investors, comes with a hefty premium.

The Potential for Fluctuations in Spot Price

Fluctuations in spot price are always possible with gold. Both silver and gold are relatively volatile markets, at least in the short term. Smart investors are able to hold out on selling their coins during bear markets. Some investors who are really looking to increase their stacking profits might even buy more gold when the price is low. After all, “buy low and sell high” is a time-honored mantra for intelligent investment. Are Gold Buffalo Coins a smart investment for short-term profits? Maybe, but we tend to think that investing in gold for short-term speculation is a bold strategy. Most investors should plan to hold onto their investment for a substantial amount of time before selling. 

Potential for Scams and Fraud

Even with a coin backed by the government mint of the United States, it’s always possible to accidentally purchase a fake or counterfeit American Gold Buffalo. Doing your research to spot the fakes before you pay is the best way to ensure the value of your investment. But are Gold Buffalo Coins a smart investment, despite the risk of buying counterfeits? We tend to consider the exceptional appreciation potential and backing of the U.S. Mint to help mitigate the minimal risk of counterfeit purchases. 

Fake or Counterfeit Coins

Are Gold Buffalo Coins a smart investment if they’re not from the U.S. Mint? Absolutely not. In fact, we don’t even consider a gold coin to be a ‘coin’ unless it is produced by a government mint. You should be aware of counterfeiting efforts to keep your investment both genuine and valuable. 

Spotting a fake coin shouldn’t be difficult. Research the American Gold Buffalo’s mint marks, security features, and small details to make sure that any coin you purchase looks the same. Professional coin certification can also guarantee the condition and authenticity of your coin if you’re unsure and want a second opinion. 

Unscrupulous Dealers or Brokers

Always be on the lookout for sketchy bullion dealers. Unfortunately, there are many companies out there looking to make a quick buck off of a new investor with limited buying experience. Always vet the quality of a dealer by reading reviews and customer testimonials before purchase. You should also look to do business with companies that are clear and honest about the total cost of their coins and bars. 

Hero Bullion is always direct in our pricing model; we let you know exactly how much you’ll be charged before checkout. While “are Gold Buffalo Coins a smart investment” is a good question, you should also ask if the company you’re buying from is a worthwhile investment! 

Factors to Consider when Investing in Gold Buffalo Coins

Why are Gold Buffalo Coins a smart investment? Your research isn’t over once you find a Gold Buffalo that is a good investment for your financial future and goals. If you plan to invest in and profit from Gold Buffalos, you’ll need to closely monitor the gold market and track the amount you pay for your authentic gold coins. 

Market Conditions and Trends

As we’ve already explained, the precious metals market is extremely volatile. Prices can shift from day to day, so it’s important to develop a system to monitor long-term price trends. Doing so helps you to remember when selling your Gold Buffalo Coins might be a good idea – or when it’s a good time to buy. You always want to buy gold low and sell it high. Are Gold Buffalo Coins a smart investment given current market conditions? Your research is always going to be the only way to answer this question. 

Spot Price and Premium over Spot Price

Are Gold Buffalo Coins a smart investment, even considering their high premium cost? The high premium prices associated with these gold coins are certainly troubling for investors with minimal investment money to spend. Still, it might be worth paying a bit extra for the brand recognition, design beauty, and price appreciation potential of the American Gold Buffalo.

Consumers who want to know, “are Gold Buffalo Coins a smart investment” should carefully track the spot price of gold over time. 

Quality and Authenticity of the Coins

The condition and quality of the American Gold Buffalo coins you buy will help to answer the question, “are Gold Buffalo Coins a smart investment?” Generally speaking, the highest prices on the secondary market will always go to coins that are in extremely good condition. Professional grading companies can help you certify the value of your investment when it comes time to sell. But when you’re trying to buy your first Gold Buffalo, look for coins marked as BU – this is the best possible condition for a bullion gold coin.

Tax Implications

If you hold onto your coins for over a year before selling, you’ll have to pay a capital gains tax. Otherwise, the profit you make from the sale will be added to your total income and will need to be claimed when you file your taxes. These are important concerns for someone wondering “are Gold Buffalo Coins a smart investment,” as high tax costs can quickly eat into your profits. 

Final Thoughts: Are Gold Buffalo Coins a Smart Investment? 

Are Gold Buffalo Coins a smart investment for you? Many investment experts consider Gold Buffalos to be some of the best coins to come out of the United States Mint, and the long-term value appreciation of these coins is a testament to the beautiful artwork of the U.S. Mint. Long story short, this coin has tremendous potential for investors willing to put the time and effort into researching their options. 

Do you have questions about investing in gold or buying Gold Buffalo Coins? Contact Hero Bullion to learn more about what we can do for your gold, silver, and platinum portfolio. After all, there’s a reason why so many consumers consider Gold Buffalo Coins a premier investment vehicle.