Shopping for GOLD

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kemosavvy's picture
kemosavvy
Status: Martenson Brigade Member (Offline)
Joined: Oct 13 2008
Posts: 254
Shopping for GOLD

i consider myself late to the game as gold has shot up over the last few days, but i'm ready to take the plunge. i called up www.goldline.com and had them give me a rundown on gold prices and buying info. since i'm a pessimistic skeptic (and miserable bastard all around) i thought i'd get the general thoughts of the crowd to help me with my first purchase.

1. what is a good price on america gold eagle?

2. go with collectible or bullion pieces?

steve

.'s picture
.
Status: Silver Member (Offline)
Joined: Oct 22 2008
Posts: 167
Re: Shopping for GOLD

Hi Kemosawy,

Here's an interesting link that has a chart showing current e-bay prices. 

 http://www.24hgold.com/english/home.aspx

Look on the left hand side for a link to Gold Coins and Bars.  There is also a link to Silver Coins and Bars.

This shows the % amount people are willing to pay over spot to obtain physical.  I think ebay premiums are too high.  I just recently purchased from Kitco and their premium for gold bars was much lower.

If you do purchase be prepared to wait up to 6 weeks for delivery.

Shop around.

 Good Luck!

 

.'s picture
.
Status: Silver Member (Offline)
Joined: Oct 22 2008
Posts: 167
Re: Shopping for GOLD

Hey Kemosavvy,

   Buy gold bars.  The owner of the coin shop used to say to me when I would comment on how beautiful a certain coin was he would reply, "that's just two drops in the rain bucket".  If it comes down to a crisis situation the intrinsic value of the coin won't matter.  It's just about the metal at that point.

 

MarkM's picture
MarkM
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Joined: Jul 22 2008
Posts: 845
Re: Shopping for GOLD

From another miserable bastard,

What are your objectives?  Wealth preservation, black market currency, asset appreciation?

I came late to the game as well.  I have been buying Krugerrrands locally from a jeweler/coin shop.  Look around, you may find one near you.  The bullion would be hard to use as a currency.  You pay more over spot for coin.  I preferred to find some I could hold NOW rather than take delivery later.  I don't trust anything these days.

GR8TFUL's picture
GR8TFUL
Status: Bronze Member (Offline)
Joined: Oct 13 2008
Posts: 79
Re: Shopping for GOLD

If you're not only late to the gold game, but new as well, I'm guessing that you're not going to be investing enough $ to want, need, or be able to buy gold bars.

Assumming this is true & you're primary concern is wealth preservation, DEFINITELY buy bullion. Do NOT buy collectible coins!!! I suggest American Eagles, Canadian Maples, Kugs, & Pandas, in that order. And if you're concerned with the song & dance the salesman gave you re: gold bullion perhaps being confiscated while collectible coins won't be, then do this:

Don't buy online or from a company far, far away who has to ship to you & whom you have to pay via check, wire transfer, etc., thus leaving a paper trail. Instead, find a gold dealer in your area, pay cash, & don't sign #$%*! Yes, you may be able to get a slightly better deal from one of the larger online dealers, but anonymity is worth something.

PS: A local dealer might only allow you to buy $10,000 without filling out paperwork. If so, & you want to buy more, simply bring a couple of trusted friends or family members along with you & have each of them buy $10,0000. Problem solved!

PSS: While you're at it you should also get some silver, too. Harder to store, but easier to buy groceries with! ;-)

kemosavvy's picture
kemosavvy
Status: Martenson Brigade Member (Offline)
Joined: Oct 13 2008
Posts: 254
Re: Shopping for GOLD

Ok,

so i now believe that an 80gold/20silver split is best for me. wealth preservation is my goal. and the messages are mixed here from posters, coins or bars seems to come down to personal choice, i'm leaning towards bullion. i checked out 24hrgold.com and found premiums on silver to be quite high compared to gold, as much as 35%+. reasoning? also why is the 1kg gold bar selling at a discount of 13%, is there an explanation? i got a quote of somewhere in the $900's for an american eagle. i think i may jump on that.

and yes, i'm tip-toeing into this purchase with a little less than $7K, because my step-father has been purchasing gold liberty coins en masse since the 70's but he is a purple heart wearing vietnam vet conspiracy theorist, i've been living my whole life thinking this guy was a kook ....and ...i'm now starting to realize ....our mentalities are not that far off from each other's. as you can see i'm a little hesitant to check into 'kook city' where we buy gold as investments.

Burke's picture
Burke
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Joined: Jan 10 2009
Posts: 4
Re: Shopping for GOLD

I was mentioning silver on another post, so here's my simple take: Silver is an easier pill to swallow for a retail investor and hence there's a ton of retail demand. 1 ounce of silver is $12.00 , while an ounce of gold is $900.00. Dealers can easily charge you $18.00 for the silver and many purchasers wont blink, because its only $6.00! You can get an awful lot of silver for the price of just 1 oz of gold and I think thats what a lot of retail buyers think about. If you pay an 8% premium to buy gold, on one ounce thats $72...

 A 1 Kg gold bar should NOT be trading at a 13% discount. You need to make sure when purchasing a bar that it is genuine good delivery bar (Credit Suisse, Johnson Mathey, etc) with a serial number, etc. Have it weighed and if you're very worried have it assayed.  However since you have 7k you want to put to work, coins or small bars of 50g - 250g are the best option. Bars are always cheaper than coins - but I would be very suspicious of someone  willing to sell you a bar at a discount to spot price - given the huge demand now for physical metal.

B

mainecooncat's picture
mainecooncat
Status: Gold Member (Offline)
Joined: Sep 7 2008
Posts: 488
Re: Shopping for GOLD

Hey Kemo,

Regarding the silver premium, I was finding the same thing regardless of where I looked. However, locally in shops I was finding slightly better deals on silver than on-line but better deals on gold on-line than in the shops. Don't know why this is?

One site I was on (forget which), the fella was offering up the idea that more and more people where now buying junk silver with the express purpose of it being used as legal tender in the near future -- legal tender that would be worth considerably more than face obviously when it finally came into use.

GR8TFUL's picture
GR8TFUL
Status: Bronze Member (Offline)
Joined: Oct 13 2008
Posts: 79
Re: Shopping for GOLD

The article below appeared in today's Wall Street Journal; it may provide some insights as to your options in investing in gold.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Gold shined in 2008. Could 2009 be as bright?

Of all the major assets -- stocks, corporate bonds, cash and others -- gold was one of last year's few standouts. While so many investments collapsed amid the turmoil, the price of an ounce of gold posted a gain of about 4.3%.

[Gold illustration]Chris Gash

So far this year, the rare metal is up about 0.7%, after a rally Friday put it back in positive territory. And longer-term concerns are emerging that aggressive, untested government policies aimed at righting the flailing economy could ultimately fuel a further rise in gold prices.

When that might happen, no one knows. But for investors who want to hedge against potential economic turmoil, "buying gold is a very good idea for 2009," says Chuck Butler, president of EverBank World Markets in St. Louis.

The case for gold is this: The government is pumping trillions of dollars into bailouts and stimulus plans, a purposefully inflationary policy aimed at reversing current deflationary pressures. If inflation results, or if the dollar weakens as the supply of dollars necessarily increases under the stimulus plans, gold is a likely winner because it hedges against inflation and fiat currencies.

The opposing view: "The inflation argument hasn't been seen yet in government data, and once the economy catches gear, the [Federal Reserve] will pull the money back out of the economy," negating any inflationary pressures, says Tom Pawlicki, a precious-metals analyst at MF Global, who says he's "not friendly on gold."

Though gold is generally thought of as a physical asset, these days investors have a variety of options. Here are a few of them, along with the inherent pros and cons:

Bullion

This is the pure metal, typically cast as bars or coins in weights ranging from a single gram to one kilogram.

Bars like those minted by Credit Suisse and Pamp Suisse trade at a slight premium to gold's market price and are generally the least expensive way to own physical gold. Coins such as the American Eagle often include a collector's premium that can increase the cost slightly. Rarer coins can fetch substantially more.

Local coin shops generally sell bullion, though it's also widely available -- often at a smaller markup -- through a variety of online dealers, including Apmex.com and BostonBullion.com, among others.

Pros: Though this is conspiracy theory, if the government ever confiscates gold or limits its ownership -- as happened in the 20th century -- possessing gold in physical form offers some means of retaining control of your wealth in an economic disaster.

Cons: Risk of theft or loss if you keep gold at home. If it's in a bank safe-deposit box, you won't have access in an emergency if the bank is closed. And safe-deposit boxes aren't insured in the event of a disaster.

Pooled Accounts

These are sort of like a gold bank account in that your gold is held in a vault. The markup per ounce is usually less than 1% of gold's current market price, making this cheaper than owning physical bullion.

Depending on the provider, pooled accounts are either "allocated," meaning that specific, numbered bars are allocated to you, or "unallocated," meaning you're assigned a sum of gold, though not specific bars. Allocated accounts charge annual storage and insurance fees. Unallocated accounts generally don't. Kitco.com and EverBank.com offer pooled accounts.

Pros: Perhaps the most secure form of owning gold, since the metal is kept in a vault and the inventory is regularly audited. You can also request that your gold be sent to you, though you'll typically pay delivery and fabrication charges.

Cons: Annual fees in allocated accounts can add up over time, while some unallocated accounts are held in the company's name, meaning that if the firm goes bust, creditors can grab the company's assets -- including your gold.

Exchange-Traded Funds

These trade like shares of stock on a stock exchange, with each share representing some fractional portion of an ounce of gold. For instance, each share of the SPDR Gold Shares ETF represents 0.1 ounce, and thus trades at about a tenth the price of gold. The shares are typically backed by physical gold held in vaults in London, New York and Zurich and audited regularly.

Pros: Relatively cost-effective ownership, since you're not paying insurance and storage costs. Nor do you take physical possession of the metal, so there are no fabrication costs or risk of loss or theft. Buying and selling are instantaneous.

Cons: Taxes. The government treats gold as a collectible, and thus capital gains on a gold ETF are taxed at a flat 28%, nearly double the long-term capital-gains rates on stocks.

You also pay the ETF's management fees -- roughly 0.4% -- which depletes your account. You can't request that gold be fabricated into bars. And if the government ever does confiscates gold, "some people think ETF gold could be seized," says Leo Larkin, an analyst at Standard & Poor's Equity Research.

Mining Stocks

With publicly traded mining companies, you don't own the metal but you do own shares of companies digging holes in the earth. This is the most leveraged gold play, since a rising -- or falling -- gold price is spread across hundreds of thousands or millions of ounces the company has in the ground.

Pros: More bang for the buck. Mark Johnson, portfolio manager for the USAA Precious Metals & Minerals Fund, estimates that "you probably have to put two times as much money into bullion or ETFs to get the same exposure to gold as you do with mining shares."

Cons: Exposure to all sorts of corporate and geopolitical risks, based on the countries in which a particular gold miner operates. And because mining is so energy intensive, rising energy prices can negate some of the increase in gold prices.

straight's picture
straight
Status: Silver Member (Offline)
Joined: Aug 25 2008
Posts: 103
Re: Shopping for GOLD

kemosavvy, I am in Australia and you can buy Gold here easily.  Australia is a huge miner of gold.

When i say 'you can buy Gold here easily' i mean you as well as me.  Supply is not nearly as tight here, even when i read it is tight in America, it seems to be fairly easy to get here.  In Oct 08 the wait for gold was posted at 4 weeks for smaller bars, but the reality was different.  In reality the wait was at max 2 weeks.  If you wanted silver in bigger bars, say 15kg, then supply was uninterrupted.  If you dealt with a particular dealer and had an ongoing relationship with him the wait was shorter!

I shop at http://www.ainsliebullion.com.au/ click on daily price to get a list of sell and buy prices.  An email to them or a call will secure the deal. 

Ainslie will allocate the gold or silver to you and store it at no cost, they will store it in a vault [the same vault i use for my silver and gold] allocated directly to you in the denomination you purchase. They don't charge storage as they want you to sell to them when you sell, they are traders so they make money by trading.

Ainslie have been in the same central Brisbane spot for many years and i have no trouble working with them.

You can simply email them or call them and wire them the money and they will post the gold to you or store it in the old reserve bank vault [a vault which is not in a bank, it is a huge underground vault which used to be the vault to the Queensland Reserve, but it is owned by a non-listed company], so you are not exposed to the banks at all.  You can buy and sell your gold with Ainslie, so if you want to sell you simply email them or call them and tell them you want to sell some of of your gold or silver.  It is simple, it is out of the US, and the storage is outside the banks.

I have another place, a coin dealer, in Brisbane that will sell you silver coins at the spot price.  Thats right, they will sell Australian and international silver coins at the daily spot price [i paid spot price for large sterling Canadian Olympic coins].  I tend to buy Silver rounds by the kg.  Silver rounds are 1966 round [we now have a multi facited 50c] 50c coins with 80% silver.  Australia also has earlier sterling silver [90%+] coins which you can buy by weight.  buying those coins is harder from your country, however if you look locally you might find dealers selling bags of early silver coins by their silver weight, at spot.  If you like the Canadian Olympic coins [which sell on ebay over spot], then you could deal directly with these guys. 

One other thought, I did a google search on gold and silver traders and found a scrap metal trader, a medium sized one, in Brisbane who had a number of gold coins, florins and rands, which he sold to me at spot.  no premium.  Scrap dealers are doing it VERY tough at the moment and if they have come across PM coins in the past they will probably be keen to sell now.  it might be worth a try in your local area.

Good luck.  If all that fails, you could take Schiffs advice and buy directly from the Australian [Perth] Mint.  It is owned by the Australian government [West Australia] and will sell you bullion and coins in either allocated [they charge for storage] or unallocated [no charge] deposits.  They are more expensive than Ainslie [you could try 'the australian bullion company' in sydney as well] but you might be more assured by a government owned company.

Good Luck.  The above options might be important if demand ramps up in the US as demand seems to be lighter and supply better in Australia.

 

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
Re: Shopping for GOLD

straight,

If you noticed, kemosavvy's post was dated over a year ago.  There is no widespread supply shortage presently that I'm aware of.  Also, I'd be interested in the name of your Australian coin dealer selling silver coins at spot, unless they are limited edition, undesireable coins or lower purity coins.  I sincerely doubt they would be selling more desireable silver coins such as American eagles or Austrian philharmonics at spot.  Also, with regards to the Perth Mint, there are front end costs, back end costs, and annual administrative costs above and beyond any premium over spot.  For that reason alone, I don't think Perth Mint certificates are a wise choice.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Shopping for GOLD
kemosavvy wrote:

i consider myself late to the game as gold has shot up over the last few days, but i'm ready to take the plunge. i called up www.goldline.com and had them give me a rundown on gold prices and buying info. since i'm a pessimistic skeptic (and miserable bastard all around) i thought i'd get the general thoughts of the crowd to help me with my first purchase.

1. what is a good price on america gold eagle?

2. go with collectible or bullion pieces?

steve

Don't worry bout it. Gold is so cheap right now. Hold your nose and jump. In a few months you'll be so happy you did!

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Shopping for GOLD
Davos wrote:
kemosavvy wrote:

i consider myself late to the game as gold has shot up over the last few days, but i'm ready to take the plunge. i called up www.goldline.com and had them give me a rundown on gold prices and buying info. since i'm a pessimistic skeptic (and miserable bastard all around) i thought i'd get the general thoughts of the crowd to help me with my first purchase.

1. what is a good price on america gold eagle?

2. go with collectible or bullion pieces?

steve

Don't worry bout it. Gold is so cheap right now. Hold your nose and jump. In a few months you'll be so happy you did! (Same advice in 2010...see this is an old thread...)

tomadkins's picture
tomadkins
Status: Bronze Member (Offline)
Joined: Sep 9 2009
Posts: 33
Re: Shopping for GOLD

Hi,

I purchase from www.the-moneychanger.com

They usually charge 3.5% over spot.  They ship within 1-2 weeks.  They will confirm on the phone their availability.  They have a free daily market commentary.

Silver/gold for me is about 90/10. 

Over time, all premuim disappears.  It is the intrinsic value of the metal content that will drive your results.

There is much more available gold than silver now.  When gold rises to "outrageous" rates of $2-3K, the sheeple will then discover silver.  The percentage increase in silver will be much higher.

As for wealth preservation/barter:  silver is the obvious choice.  A 1 oz Krug will be much too valuable for trading.

I would recommend 90% silver.  Bags of old US coins.  They are accepted on sight (no assay req'd), the cheapest form of silver (currently) to buy, and are US coinage (i.e. money). 

If you buy rounds from some source, you may need to be assayed...unless you have silver from an accepted and "known" mint.  This means:  you may NOT receive the spot price when you want to swap your silver...because the actual silver content of your holdings may need to be verified.

Think ab the folks who had 400 oz gold bars...until they were assayed and found tungsten.

In any event, either metal is much better than any paper.  I do think you will need some paper (for now), but metals are the better position.

For perspective:  paper is being produced like crazy...as you already know.  Consider these old charts from the St. Louis Fed:

http://goldsilver.com/newsletters/newsID/3592/

Then listen to the explanation of the gold cycle by Mike Maloney (RichDad advisor):

http://goldsilver.com/player/id/67/cID/2/

I think his logic is credible.

In any event, I think metals are part of the necessary preparation.

Regards,

tomadkins

Denny Johnson's picture
Denny Johnson
Status: Gold Member (Offline)
Joined: Aug 13 2008
Posts: 348
Re: Shopping for GOLD

My recent research leads me to believe that Tulving may be the best place to buy if a paper trail is not a concern. Using Maple Leaves as an example.

Buying:

Canadian Maple Leaf BU 1 Oz .999/.9999 Pure Gold Coin - Dates Our Choice       Spot +$29.95

2010 Canadian Maple Leaf BU 1 Ounce Gold - .9999 Pure - Brand New Coins         Spot +$34.95

Selling:

Canadian Maple Leaf 1 ounce 24KT-.999 And/Or .9999 BU                                Gold Spot +$10

A $20 buy-sell spread.

Free shipping, free insurance, 20 coin minimum.

I'd like to hear if anyone disagrees w this opinion.

pinecarr's picture
pinecarr
Status: Diamond Member (Offline)
Joined: Apr 13 2008
Posts: 2244
Re: Shopping for GOLD

My question is about buying 1 oz. gold coins of lesser purity (American Gold Eagle and Krugerrands, at 91.6% pure) vs those of higher purity (Canadian Maples, Chinese Pandas, Austrian Philharmonics, and Australian Kangaroos, at 99.9% pure).  I.e., why would one buy the former when they can get the latter?  Do people realize that when they puy American Eagles or Krugerrands, they are getting less gold?  Once I realized American Gold Eagles were a lower % gold, they went down in value, in my perspective. 

But am I missing something?  Are there other factors that I and others should be considering? 

Thanks!

markf57's picture
markf57
Status: Bronze Member (Offline)
Joined: Aug 25 2008
Posts: 62
Re: Shopping for GOLD

pinecarr:

You are missing something. An American Gold eagle is not 1 oz., it is heavier. It contains 1 oz. of pure gold. Since it is 91.6% pure, it takes more totla weight to add up to 1 oz. of pure gold. I like the Gold eagles over the purer ones as they aren't quite as soft and won't "bend" as easily. But I have Eagles and Maples just incase I have to go to Canada. 

goes211's picture
goes211
Status: Diamond Member (Offline)
Joined: Aug 18 2008
Posts: 1114
Re: Shopping for GOLD

Look at the weight of American Gold Eagles and Krugerrands.  They are actually 1.0909 troy oz so you are still getting the value you expect.  You are just buying a coin made of a gold alloy that is more durable.

pinecarr's picture
pinecarr
Status: Diamond Member (Offline)
Joined: Apr 13 2008
Posts: 2244
Re: Shopping for GOLD

markf57 and goes211, thanks!  I didn't realize that!

-pinecarr

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