Eagles to jingle as Yule gifts

Two of this year's hottest Christmas gifts are about the same shape, and manufacturers are working overtime to keep up with long lines of customers. Oh, and your present may be overpriced, depending on where you shop. Other similarities between Bruce Springsteen's five-record concert album and United States-minted gold coins will probably be drawn by the promoters for both.

On Oct. 20, the American Eagle gold coin made its first appearance in a limited number of US coin shops. It gave coin colectors, investors, and sentimental folk a chance to own the first continuously minted legal-tender gold coin in 53 years.

Next Monday, Nov. 24the Treasury will follow up the gold coin with a silver version. Like the gold coins, they will have a face value that is lower than their actual selling price. The face value on a one-ounce silver coin is one dollar, but its selling price will be tied to the spot price for silver, now about $5.75 an ounce.

The American Eagle was not, of course, the first gold coin Americans could buy. Since restrictions on gold ownership were lifted in the early 1970s, Americans had their choice of South African Krugerrands (until they were banned by President Reagan last year), the Canadian Maple Leaf, the Mexican peso, and a few others.

As soon as they hit the market, though, the newly minted US coins were hot sellers. But they were not, as some reports said, sold out.

``You can still come in and buy one,'' said Paul Cain, a vice-president and metals coordinator at Shearson Lehman Brothers Inc. ``They are not sold out.'' Supplies of the smaller coins may be ``tight,'' but there are plenty of the one-ounce variety available, Mr. Cain says. The coins are also available on tenth-of-an-ounce, quarter-ounce, and half-ounce sizes.

Whether you're buying gold or silver coins, you're going to pay more than the price of the metal you see quoted in the newspapers or on television. The higher price represents a premium. Considering what goes into making, distributing, and selling a coin, a premium is fair. But you can control how much premium you pay.

Because of sentiment, patriotism, or the perceived beauty of the American Eagle, dealers have been able to tack on an extra premium.

Earlier this month, the one-ounce Eagle was quoted by one large dealer at $430.75. At the same time, a one-ounce Canadian Maple Leaf was quoted at $418.

But on the day these prices were quoted, gold was trading in bullion form in New York at $408.25.

While the Eagle will appeal to some people for patriotic, sentimental, or novelty reasons, for many investors it's overpriced.

``We're not looking for pretty stuff; we're looking at investments,'' says Bette Raptopoulous, senior metals analyst at Prudential-Bache Securities.

If you're investing, remember that an investment is something that eventually makes a profit. This means you have to find a buyer and sell it for more than you paid, including the premium. But this could be a problem with the Eagle. Because people tend to hoard gold coins, they often do not have a great resale value, says Jeffrey Nichols, president of American Precious Metals Advisors Inc. in New York.

``On the average, when a gold coin is sold, gold is taken off the market permanently,'' he notes.

The long-term value of gold and silver coins will be especially important if they are used as part of an individual retirement account (IRA). The recently signed tax reform bill permits the Eagle gold and silver coins to be included as part of an IRA, Shearson's Cain says. Other direct investments in precious metals are specifically prohibited in IRAs.

Whatever type of investment portfolio you put gold or silver coins into, they should not make up more than 5 to 15 percent of the total, most experts agree.

``But this depends on the person,'' Cain says. Coins ``may not be right for some people at all. But if you're younger and more aggressive, you may want to put in more.''

Because there is more demand for the fractionally sized gold coins, Cain says, watch out for an extra markup on these smaller pieces. It's fair to expect to pay a little more than one-tenth of the price of a one-ounce coin for a tenth-of-an-ounce coin, perhaps $48 when the one-ounce is going for $443.

Cindy Arenberg of the Industry Council for Tangible Assets, says, however, that some dealers have been known to promote ``deals'' of $95 for a tenth-of-an-ounce coin.

When choosing a gold or silver coin, compare the actual metal content. The US-minted silver coin, for example, may not be the best deal in this department, says Bruce L. Kaplan, a senior vice-president of A-Mark Precious Metals Inc. in Beverly Hills, Calif. A better buy, he believes, is the Mexican Libertad, because it contains more silver for the money.

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