Are bullion coins legal tender?: Precious metals basics

No aspect of bullion coins is quite so important or quite so difficult to explain as legal tender status. Just what, in fact, constitutes a legal tender bullion coin is the matter of no little debate and seems to change from nation to nation.

Legal tender status for a bullion coin distinguishes it, at least in the mind of the collector or investor, from the many privately issued bullion pieces on the market. It is a badge of honor and legitimacy.

As an example, the American Arts Gold Medallion series of 1980 to 1984, though issued by the Bureau of the Mint under congressional mandate, was not afforded legal tender status. The distinction between “official,” which the medallions are, and “legal tender,” which they are not, may seem trivial to the point of an argument of semantics. However, the investors who were expected to purchase a minimum of a million ounces of the medallions every year stayed away in droves. The program was a failure.

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The American Arts Gold Medallions were designed with the investor in mind, the larger piece containing 1 ounce of fine gold and the smaller a half ounce. However, the pieces of 1980 and 1981 have a “medal-like” appearance. Obverses are portraits of the artist with the name above the bust. Reverses show a scene reminiscent of the artist with the legend american arts commemorative series and the date of issue around. The edges are plain.

In 1982 the pieces were altered to give them a more “coin-like” appearance. Reeded edges and rim beading were add­ed. Dates were moved into the field. The legend UNITED STATES OF AMERICA was added to the obverse and one ounce gold or one half ounce gold was added to the reverse.

In comparison to the Krugerrand, the later American Arts Gold Medallions certainly looked like bullion coins. The Krugerrand has a reeded edge and beading. The obverse has a portrait of Paul Kruger and SUID AFRICA • SOUTH AFRICA; the reverse the date, and the legends KRUGERRAND and FYN GOUD 1 OUNCE FINE GOLD around a springbok design.

Marketing attempts for the sale of the American Arts Gold Medallions included the name U.S. Gold, which was given the program by J. Aron & Co., the firm that contracted in 1983 to be the prime distributor of the U.S. Mint-produced gold medallions. The public did not respond to this marketing attempt. The Mint set up a telephone ordering system that was also unsuccessful.

The above is an excerpt from the eighth edition of the Coin World Almanac, published by Amos Media Company in 2011.

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