The U.S. Mint issues two different types of gold bullion coins -- the American Gold Eagle and the American Gold Buffalo. Both of these coins (in their large sizes) contain an ounce of gold, so what's the difference other than the designs? Why are there two of these gold bullion coins issued by the mint?
The answer lies in the use of gold coins as currency. In the 1500s, "British Sovereign" gold coins were minted of 23 karat (95.83% pure) gold. However, the coins wore down easily during circulation due to their softness, so in 1526 King Henry VIII of England declared that gold coins would be minted of 22 karat (91.67% pure) gold instead. Such a karat of gold was found to be sufficiently hard for circulation. This type of gold, usually mixed with copper, came to be known as "crown gold" (or "fine gold") and has been used for minting many different types of gold coins including the popular South African Krugerrand and the American Gold Eagle.
The American Gold Eagle coins were first minted in 1986 under the Gold Bullion Coin Act of 1985, and the American Gold Buffalo coins were first minted in 2006 under Public Law 109-145. These laws are coded in TITLE 31, SUBTITLE IV, CHAPTER 51, SUBCHAPTER II §5112 of the U.S. Code -- the same section mandating the minting of the American Silver Eagles. The law gives the Secretary of the Treasury the authority to mint two fifty dollar gold coins -- one containing 1 troy oz. of "fine gold" and the other containing "99.99 percent pure gold". These two coins are the "American Gold Eagle" and the "American Gold Buffalo" respectively.
So does this mean that the difference between the Gold Eagle and the Gold Buffalo is that the Gold Buffalo contains more gold? No. In fact, the "1 oz." version of the American Gold Eagle contains 1 troy oz. of gold in addition to the copper used to make the coin harder. On the other hand, the American Gold Buffalo also contains 1 troy oz. of gold, but does not contain the copper of the Gold Eagle. The idea behind minting Gold Buffalos in addition to Gold Eagles was to compete with other 24 karat gold bullion coins on the market.
So what's the difference? The American Gold Eagle is made of 22 karat gold, and the American Gold Buffalo is make of 24 karat gold. Both coins contain 1 troy oz. of Au -- the element gold. The American Gold Eagle was designed after other popular gold coins originally meant for circulation, and the American Gold Buffalo was designed to compete with other 24 karat gold coins such as the Canadian Gold Maple Leaf. Thus, the Gold Buffalo is much softer than the Gold Eagle, and should be handled with extreme care to better preserve its numismatic value.
Some of my other coin pages:
American Silver Eagles
American Gold Eagles and Gold Buffalos
Morgan Silver Dollars