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| How To Buy Physical Gold And Silver | |
Before you buy gold or silver bullion, read this.
By Dana Samuelson
| Editor’s Note: I’ve known Dana Samuelson since my first day in the precious metals industry, and I trust not only his encyclopedic knowledge on the bullion and rare coin markets, but also his honesty and dedication to customer satisfaction. The combination is why he’s the coin dealer I personally use and recommend to family and friends.
I asked Dana to provide our Golden Opportunities readers with a short but succinct lesson in how to buy gold and silver bullion, including some important “dos and don’ts” that even experienced investors should watch out for. The invaluable result is below…and I suggest you read it closely and save it for future reference.
— Brien Lundin | | |
The process of buying gold and silver bullion is like buying any other product in many respects. There are some unique aspects of the process, however, that require you - the consumer – to do extra due diligence before making your buying decision. In this special report we will discuss the process, the products, and offer some do’s and don’ts that should help you to make educated and financially prudent decisions. Here are some helpful guidelines to get you on the right track.
While there are literally hundreds or even thousands of products available to for you to consider, it's best if you stick with the most widely traded and competitively priced items available in the marketplace. Why? Liquidity. When you want to sell, you will be glad you stuck with the tried and true. There are only a handful of products we recommend for this reason.
Work with dealers who have long track records of positive dealings with the public. Members of the Professional Numismatists Guild are industry leaders who abide by a code of ethics and agree to binding arbitration in the event of a dispute. PNG members care about their reputations and potential future business dealings.
Competitively shop. With the internet this is easier to do than ever before. Find a dealer who offers competitive pricing but remember, the lowest price is not always the best deal for you. We elaborate on these issues and more in our Do’s and Don’ts section below.
All bullion items are priced based on the current gold and silver “spot” price plus a premium for manufacturing, distribution, and profit. Check premiums dealer to dealer and item to item to do effective price comparisons. Some dealers charge higher premiums than others, and some items have higher premiums than others. While you will see some variances, they should not be too wide or high. If so, find another dealer or product.
| | Gold Bullion | When people think of gold bullion, they often imagine a huge stack of gold bars in a dusty vault. Since the mid-1980s, however, gold bullion coins issued by government mints have all but replaced private bars as the primary way for individual investors to own physical gold bullion. The US Mint, Royal Canadian Mint, Austrian Mint, and South African Mint are the main suppliers of modern gold bullion coins to the US.
Government-produced modern bullion coins offer several distinct advantages over other forms of bullion. They are minted to the highest standards. They are guaranteed for purity and content by the issuing government. They are easily transported and stored, often in mint-issued plastic tubes. And they are virtually impossible to counterfeit. Plus, their designs are typically quite beautiful.
| | The Top Four Sovereign-Minted One-Ounce Gold Bullion Coins | | #1 U.S. One-Ounce Gold Eagles | Introduced by the US Mint in 1986, American Gold Eagles are by far the first choice for modern gold bullion buyers in the United States today. Along with American Gold Buffaloes, they are the only modern gold bullion coins
backed by the US government for weight and gold content. They are legal US tender, not replica coins. US Gold Eagles are available in four sizes: one-ounce ($50 face value), half-ounce ($25 face value), quarter-ounce ($10 face value), and tenth-ounce ($5 face value). They are also available as sets. Each one-ounce American Eagle gold coin contains precisely one troy ounce of pure 24-karat gold.
One-ounce Gold Eagles are by far the most popular and cost-effective of the four sizes. Because the US Mint charges dealers a fabrication cost for each coin, when you buy one-ounce Gold Eagles, you only pay it once. Buying 10 tenth-ounce coins means paying a fabrication cost ten times. On a per-ounce basis, you can readily see why one-ounce coins are more cost-effective.
| | #2 Canadian One-Ounce Gold Maple Leafs | Our second-most popular gold bullion coin is the one-ounce Gold Maple Leaf, manufactured since 1979 by the Royal Canadian Mint. Struck in 99.99% fine gold, the Canadian Maple Leaf is among the purest gold coins in the world. Many gold investors prefer the purity of the Maple Leaf to American Eagles, which contain a full ounce of pure gold but also have small amounts of copper and silver added to increase durability. Pure gold is very soft and scratches or dents very easily if mishandled.
| | #3 Austrian One-Ounce Gold Philharmonics | Our third-most popular is the Austrian one-ounce Gold Philharmonic, manufactured since 1989 by the Austrian Mint. Struck in 99.99% fine gold, the Austrian Philharmonic is a favorite for European investors and US investors alike. Originally issued with a 2,000 Schilling face value, this was converted to 100 euros in 2002.
| | #4 South African One-Ounce Gold Krugerrands | One-ounce South Africa Gold Krugerrands are a low-priced, high-quality bullion coin that is avidly traded throughout the world. First issued in 1967, Krugerrands were the bullion gold coin of choice until the advent of the American Gold Eagle in 1986 and remain one of the most successful of all modern gold bullion coins.
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| If these top four gold coins were ice cream flavors, they would be vanilla, chocolate, strawberry and chocolate chip mint, the most popular flavors. But just like ice cream, there are many more than just these four. Today sovereign minted gold coins are also available from Australia, China, Singapore, Great Britain, and the list keeps growing. The choices above are the best of the best for U.S. investors.
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| | Gold Bullion Bars | While government-minted bullion coins are the most popular, safest, and most convenient way to buy gold, some investors still prefer gold bars. Investors have available to them high-quality bars from Credit Suisse, Pamp Suisse, Royal Canadian Mint, and Valcambi. Sizes are one-ounce, 10-ounce, one-kilogram (32.15 ounces), and 100-ounce.
We have seen a small but growing problem with counterfeit “gold bars” fashioned to look like the genuine ones listed above. Typically produced in China, these fraudulent bars are usually made of tungsten covered in a layer of gold. Tungsten has a similar density to gold, so when the bars are weighed and measured, they are close to what real bars should be.
While counterfeit bars won't deceive most professional dealers because their color and size are often slightly off, they can fool the unsuspecting public. Like most reputable dealers today, we have sophisticated testing devices to verify the integrity of the bars we buy from sellers whom we don’t know. These devices are cost-prohibitive for non-professionals to own. You should only buy gold bars from a seller you truly trust.
The designs on bars are much less intricate than on sovereign-minted bullion coins, so counterfeit bars are more difficult for the average investor to spot. Smaller-sized bars are especially problematic. This why we recommend that new buyers shy away from gold bars altogether. We have more to say on this in our Dos and Don’ts section below.
| | Silver Bullion | | Silver bullion is popular in modern investment portfolios because, like gold, it typically has low correlation with stocks and bonds, enabling investors to diversify their risk profile. Investors also buy silver bullion as a hedge against inflation and as a “currency of last resort” during times of political or economic instability.
The most popular silver products today are sovereign-minted modern bullion coins. The same mints that produce our top four gold bullion coins also produce one-ounce silver coins. These one-ounce coins are put into tubes of either 20 or 25 coins, depending upon the mint, and shipped from the various mints to dealers in boxes containing 500 coins that are called “monster” boxes. They are equivalent in size to the box a pair of hiking or cowboy boots might come in and weigh about 40 pounds.
Pre-1965 U.S “Junk” 90% silver coins are also an excellent way to buy low-cost, high-quality silver. For larger purchases, 100-ounce silver bars from the Royal Canadian Mint (RCM), Asahi (formerly Johnson Matthey), Valcambi and Pamp Suisse are also excellent options.
| | The Top Four Sovereign Minted One-Ounce Silver Bullion Coins | Silver Eagles are the most popular silver bullion product in the U.S. Containing a full ounce of .999 fine silver and backed by the U.S. government for weight and metal content, Silver Eagles are among the safest and most convenient ways to invest in silver bullion. Issued since 1986 as legal tender by the U.S. Mints in Philadelphia and San Francisco, Silver Eagles are only available in the one-ounce size with a face value of $1.00.
Beautifully struck in 99.99% pure silver, Silver Maple Leafs are guaranteed by the Royal Canadian Mint for purity, weight and content. Starting with the 2017 issue, Silver Maple Leaf coins have cutting-edge security features including precise radial lines on the obverse and reverse, and a micro engraved maple leaf on the reverse for authenticity.
The Austrian mint makes one-ounce silver Austrian Philharmonic (since 2008), and the South African mint produces one-ounce silver Krugerrands (minted since 2017) as well. These tend to have slightly lower premiums than the more popular US Eagles and Canadian Maple Leaf.
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| | Pre-1965 U.S. “Junk” 90% Silver Coins and Silver Bullion Bars | As noted, pre-1965 U.S “Junk” 90% silver coins are also a great way to buy low-cost, high-quality silver.
These pre-1965 US silver coins are dimes, quarters or half dollars minted in 1964 and earlier, when U.S. coinage was still made of real silver (90% silver, 10% copper). 90% junk silver is one of the most cost-effective ways per ounce to buy bulk silver, because no fees for refining or minting have been added to the cost.
Modern silver bullion coins and bars always pass along a small manufacturing premium to the investor. Not so with 90% U.S. junk silver. These coins were made years ago by the U.S. Mint, free of charge, for use as currency. Today that means you can get more silver for your money.
Apart from superior cost-efficiency, another advantage of U.S. 90% junk silver is the trading flexibility it provides. You can buy in the denomination of your choice, so you have incremental size alternatives that do not exist with 100-oz. silver bars or even one-oz sovereign minted coins. In fact, you can trade in increments as small as one dime if you choose.
90% junk silver bags consist of dimes, quarters or half dollars, but not mixed bags. A $1,000 face-value bag is close to the size of a football and weighs 55 lbs. A $500 face-value bag contains half as many coins, half as much silver, and is half as large and heavy. $250 or $100 face value bags are also available.
We buy and sell “junk” 90% silver coins by the $1.00 of face value because each $1.00 of face value, no matter whether 2 x 50-cent pieces, 4 x 25-cent pieces or 10 x 10-cent pieces, contains 0.715 ounces of pure silver. By extension, a $1,000 face value bag contains 715 ounces of pure silver.
100-ounce silver bars are also a cost-efficient way to buy bulk silver. Their large size results in very little fabrication cost per ounce, which means you get more silver for your investment dollar. We trade in Asahi (formerly Johnson-Matthey), Royal Canadian Mint (RCM), Valcambi and Suisse Pamp 100-oz bars, which contain a full 100 troy ounces of .999 fine silver, making them among the purest silver bullion products available.
| | DOs and DON'Ts of Physical Precious Metals | | #1 – First and foremost, find a reputable dealer you can trust | The most important aspect of buying and selling physical precious metals is to deal with a longstanding and reputable dealer. The retail precious metals industry is largely unregulated. Anyone can become a dealer.
With the precious metals surge in the late 1970s, and again following the 2008 financial crisis, opportunists popped up in the marketplace, only to disappear when the market contracted. Most reputable dealers today have been in industry for decades and have survived previous bear markets. We encourage you to deal with members of the Professional Numismatists Guild (PNG.)
These days you can easily learn about your prospective dealer’s track record and history through internet searches, including their credentials and customer reviews. Are they referred or recommended by someone you trust? Do their customers give them high marks through review services like Trust Pilot or through other social media review sites? If you see multiple complaints, be very careful. Reputable dealers will make you, their client, a competitive buy/sell market and will buy back coins and bars they have sold you, or those you have bought elsewhere.
Once you find a dealer you trust, it is generally a good idea to stay with them. The more business you do with the same dealer, the more they will be inclined to offer you special deals that always come along. For the most part, all precious metals dealers are small business owners. Each client is precious to us. You will become a valuable client to your dealer, and you will often be rewarded for your loyalty with preferred treatment.
| | #2 – Avoid private sales and online platforms | Most of the problems we see with counterfeit and problematic coins and bars originate in private transactions via non-professional or online selling platforms where anyone can list items for sale. In most instances, these are items that are priced lower than market rates. Deals that are “too good to be true” usually are. Unless you buy through a reputable dealer, you may inadvertently become the victim of fraud.
| | #3 – Take delivery of your purchases | We do not recommend that you store your purchases with your dealer. Too many things can go wrong, and you surrender the security of having your precious metals in your possession. Sometimes dealers who have financial problems become slow to deliver your product when you most need it.
When you receive your delivery, make sure you to check it thorough to make certain you received what you ordered. If you have any issues or questions, call your dealer immediately. It is our policy at AGE to videotape every package we open and close to have an indisputable, video record of what we received and what we shipped.
| | #4 – Only use an independent, respected facility for storage | We do not normally recommend you store your metals unless your IRA requires it by law, or the volume of your portfolio renders it unsafe to store yourself. If you prefer to store your precious metals outside of your possession, use only an independent and respected facility that specializes in precious metals storage. Again, leaving them with your dealer is not a recommended practice.
There are several precious metals storage facilities that provide an excellent service. If you wish to explore this option, please call, or email for our recommended storage facilities. We only recommend trusted industry professional facilities that specialize in this niche business. Storage fees can vary from facility to facility and are based on the value or volume of what you are storing.
| | #5 – Beware of loss leaders | Some precious metals telemarketers or television sales pitches offer low priced items at “dealer cost” or “direct from the mint” to entice you into doing business with them. Often these deals are not what they seem, and result in bait-and-switch. And once you provide your contact information, you may be deluged by telemarketing calls from fly-by-night companies to whom your information has been sold.
Reputable dealers will respect your privacy. If you don’t know a dealer, we recommend making initial contact via email. This is a simple way to test the waters, see how they treat you, and protect your privacy as you vet them.
We hope this getting started guide has been helpful.
Whether you are buying, selling, or have questions about the markets or products please don’t hesitate to contact us and we’ll help you in any way we can.
Thank you for your time!
Sincerely,
Dana Samuelson
President
American Gold Exchange, Inc.
1-800-613-9323
Info@amergold.com
www.amergold.com | | | | | Advertisements included in this issue do not constitute endorsements from us of any stock or investment recommendation made by our advertisers.
As you know, every investment entails risk. Golden Opportunities hasn’t researched and cannot assess the suitability of any investments mentioned or advertised by our advertisers. We recommend you conduct your own due diligence and consult with your financial adviser before entering into any type of financial investment.
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