Separate Precious Metals Markets?

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mam847's picture
mam847
Status: Member (Offline)
Joined: May 19 2010
Posts: 1
Separate Precious Metals Markets?

I am a new investor in gold and silver, and have recently opened a Gold IRA with a broker who has ads on the CM site.  That broker tells me that  American Eagle "proofs," gold and silver, is a market distinct from the generic bullion market.  They tell me that proofs are more stable but that over the long term they can increase in value 1.5 to 2 times that of generic bullion.  They also tell me that proofs are likely to continue to rise in value even when generic bullion drops, as CM has recently predicted in his piece on the prospect of the Fed Reserve discontinuing, at least for a time, their QE program.  My question is "Is this true?"  If my intent is to preserve my retirement funds, as it is,  are proofs the safest instrument?

Many thanks for any knowledgeable input,

mam847

Outcast 19's picture
Outcast 19
Status: Bronze Member (Offline)
Joined: Mar 23 2011
Posts: 46
Avoid Numismatic Coins

Collectable coins (and proofs fall into that category) are definitely a separate market; one that requires a good deal of knowledge and experience to succeed in trading.   An IRA is not a hobby.  IMHO, stick with plain old Krugerrands, Maple Leafs, or American Eagles.  In fact, gold bars could be a less expensive alternative for an IRA (in terms of premium).

BTW, two great places to learn more about PMs is www.kitco.com and www.apmex.com

Good luck.

DurangoKid's picture
DurangoKid
Status: Silver Member (Offline)
Joined: Oct 25 2008
Posts: 174
The problem with numismatic

The problem with numismatic coins is getting the value back.  Most dealers will not give you all the "collectible" value of the coin.  They want that for themselves when they resell it.  You can also forget about the strike cost of a coin over and above the spot price.  In some isolated areas you may not even get the spot price.  To a coin dealer, you are a wholesaler.  One dealer, who shall remain nameless, was trying to push Swiss franc coins on me.  A little reseach revealed first, Swiss francs are not fine gold nor anywhere near it.  Second, when you compare the value of the gold content to the asking price of the coin, ouch!  You're much better off buying Maple Leafs, Eagles, bars, etc.  Keep in mind also that as a small quantity supplier, you have very little bargaining power in the market.  If  you want gold, buy gold.  Hype about proofs or Swiss francs is just hype.  I don't believe a word of it.  Gold speaks for itself.

Another thing coin dealers don't tell you about is what happens to the value of your metals during a monetary crisis.  Bullion is NOT legal tender.  You have to trade for money to realize the value of the metal.  In a deflationary time, money is scarce.  In an inflationary time, money is worthless.  Holding metal is a strategy that works only when the monetary system stabilizes on the other side of a crisis.  During that crisis, you could take a beating by liquidating your stock of metal at the wrong moment.  If during a crisis everyone is selling gold to buy food to eat, it could very well become a buyer's market.  The value you get back from your gold could be a small fraction of what you first put into it.  Your gold could end up being a hedge for your grandchildren, not you!

PastTense's picture
PastTense
Status: Bronze Member (Offline)
Joined: Dec 13 2010
Posts: 47
Why exactly do you have a

Why exactly do you have a Gold IRA anyway? I think the consensus on this site is that you should own the physical gold (and silver) yourself and hold it in your own physical possession (as stated in forms like American Eagles. Maple Leafs, or Krugerrands).

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
PastTense wrote: Why exactly
PastTense wrote:

Why exactly do you have a Gold IRA anyway? I think the consensus on this site is that you should own the physical gold (and silver) yourself and hold it in your own physical possession (as stated in forms like American Eagles. Maple Leafs, or Krugerrands).

Why not do both?  If you legally sell your physical precious metals, you get hit with a sizeable tax.  With the IRA, you don't (yet).  If you have precious metals in your physical possession, you risk theft or loss.  With the IRA, that risk is next to non-existent.  With precious metals in physical possession, you have to get them to a buyer in order to sell them.  With the IRA, you simply make a call and fax the request (but granted, the process can take some time).  I personally prefer to spread my risks and sleep soundly as a consequence. 

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