The best advice you will ever get is to accumulate physical gold and silver which you hold and keep in your possession and under your control. Shares in some mutual fund or a stock issue or in an exchange traded fund (ETF), may leave you believing you own gold or silver, but what you have then is a piece of paper, or the equivalent digital document in cyberspace, that has the word ‘gold’ or ‘silver’ on it. You don’t own gold or silver at all. All you own is a paper promise to pay you some gold or some silver. Same goes if you stick your money in a futures or options contract that promises delivery of gold or silver in the future. And if that satisfies you, then you just don’t get the basic premise of owning gold. Gold is not a promise to pay or a promise to deliver. Gold is the pay. And it’s not paid and delivered until you have it in your hot little hands. If all you have is a piece of paper with the word ‘gold’ on it, then good luck to you the day you need it, because I can promise you that you will never see it.
The same goes for buying physical metal which is then stored by the seller for you. Personally, I avoid and ignore any offers to “store” my physical bullion for me. And that’s even by companies I consider legitimate. Those offers can be legit, but if I don’t have it in my hands, it isn’t guaranteed that I can count on it. Once again, gold or silver stored by someone else involves a promise to you from those folks, however well meaning it might be. That promise, to my mind, defeats the real purpose of owning precious metals.
The best place to go for gold or silver is a local dealer in gold, silver and coins. The best transaction is over the counter, face to face. That’s because you can see and hold exactly what you are converting your cash into, and you will learn which dealers among many you prefer to work with or whom you feel are most fair to you.
One step above the coin shop is the coin convention. You can find many dealers in one place all at the same time at a coin show. A typical show has from 20 to 50 dealers. Some major, national shows have hundreds of dealers. Every area of the country has a coin convention within driving distance at least a couple of times a year, and the shows typically run from Saturday morning through Sunday afternoon. In my region, there are about six every year in cities large and small, all within an hour or so driving time. The advantage to you is that dealers at a coin show compete with each other for your business, and often they are willing to outbid each other in order to get your business, both buying and selling.
Plus, a few hours at a coin convention is an education you cannot buy in a year of college classrooms. I would say that, as a group, coin dealers are among the most informed folks in the world. What they love most is talking about coins, about history and about government. Your problem will be breaking off the conversation about gold and silver, not starting one. So, don’t be shy.
Most bullion dealers today started as rare coin dealers who had very little bullion available for sale. Then over the past several years they found that the rising interest in bullion created a new market that overshadowed the rare coin market. So, today they handle both bullion and rarities.
Coin conventions are just like gun shows, with one notable difference. At the gun show, all of the guns are on top of the table – and unloaded. If you think you can walk into a hotel ballroom where several million dollars in gold and silver is spread out all over the place without expecting several layers of excellent security based on personal responsibility, think again. And see one of my earlier posts for a refresher in safety:
There are a number of very reputable on-line companies that are completely trustworthy. I’ll leave it up to you to find the ones you want to trust. A few criteria I would use to choose are (1) a company with a walk-in storefront as well as an on-line business, (2) a company that right up front advertises its buy-back policies, (3) a company that competes on pricing with competitors, (4) a company that has been in business for many years, (5) a company that offers reasonable shipping charges and terms, including on-line package tracking and very definitely, shipping that is insured and which requires your signature upon delivery. And, you can always ask a friend who is way ahead of you for his advice.
[Don't be alarmed if you don't have such a friend. It is estimated only about 2% of Americans actually own any good amount of gold and silver. More on that in a fascinating future Dear Goldbugs post.]
You should window shop numerous companies on-line to become familiar with prices, different products and shipping terms. Window shopping on-line is one of the best educations you’ll find, and will answer many, many questions for you. Here’s a hint: as you develop your interest in gold and silver, you should be regularly reading some of the very fine precious metal opinion and news sites, many of which carry a list of reputable companies they trust. That’s a good place to start. But you still need to be a wise shopper.
You can also buy directly from the US Mint, where you are assured first class quality, top drawer (and cheap) shipping with tracking, and an automatic return policy for most items if you are not satisfied. But you are buying collector coins at the US Mint - not to be confused with rare coins. Collector coins carry a very hefty premium – much higher than you’ll find elsewhere for just common bullion. It is pretty near impossible to buy straight bullion from the Mint. Their bullion sales are channeled through ten major dealers known as Primary Dealers, who handle the heavy bullion sales.
It’s interesting to me that the US Mint uses UPS and Fed-X for delivery, and not the US Post Office, which officially went bankrupt today, August 2nd, 2012. I personally prefer UPS and Fed-X, since I have many horror stories about delivery problems and lost/stolen shipments through the US Postal Service, and no horror stories at all with UPS or Fed-X. Only in rare cases will I buy from a company that uses only USPS and does not offer UPS as an option.
The flip side of where to go is where not to go.
I have a hard and fast rule: I never buy anything from any company that advertises on television or on radio in any form. That includes the mega-bullion-companies that are sponsors of my favorite politically conservative broadcasters.
A couple of major bullion distributors seem to have a lock on the endorsements of conservative talk radio hosts. Those are NOT the companies I want to be dealing with. I have no comment on the honesty or ethics of those companies – that’s not the point. I will comment on their prices for gold and silver: they are way out of line and way over the top. It isn’t cheap to advertise with the major talk-radio programs, and you end up paying the costs of that advertising with those celebrity endorsements. I am personally disappointed in my favorite broadcasters for their associations with some over-priced bullion merchants. If I hear those companies on the air, they are off my list.
Where else to avoid? Stay completely away from the cable shopping channels when they have the gold and silver spread out on the display. If you want to buy their other stuff, that’s fine with me, but when it comes to gold and silver, turn the channel and get away!
Avoid any bunch that comes to town, sticks an ad in the newspaper announcing a weekend of buying and selling gold and silver in a local motel room. Stay away! If you attend such a gathering out of curiosity, consider it an educational field trip. Double dittos for any cash-for-gold-type kiosk in the middle of the mall. If you have granny’s silverware or what has become known as ‘scrap’ gold to sell, take it to a reputable coin dealer. You are almost guaranteed to get a better price. I think you’re crazy to sell it, but at least get a good price for it.
I’m always mystified by the term ‘scrap’ gold, which the quickie buyers use everywhere to lure customers into selling their precious, family heirlooms. There is no such thing as ‘scrap’ gold and silver, just as there is no such thing as scrap cash, scrap IRAs, scrap bank accounts or scrap da Vinci paintings.
Ditto again for eBay. eBay spent several years ignoring and frustrating consumer efforts to rid eBay of known, obvious counterfeits. Only recently did eBay relent and issue rules that known, obvious counterfeits would not be sold on the popular auction site. But guess what? eBay has no effective way of enforcing that new policy (which should have been their policy all along), and eBay has no way of stopping a crooked seller from lying about his product. eBay doesn’t inspect the merchandise before it goes up for sale. Yes, eBay has a protection service which refunds victims of fraudulent purchases, but if you buy a coin or bar of bullion you suspect may not be real, then you are in for the long haul to get your money back. Plenty of paperwork, lots of weeks waiting around, shipping costs back and forth, and maybe the final decision will go against you. And good luck getting eBay on the phone. Most eBay merchants are honest. But I prefer to NOT take the chance of dealing with a stranger who may have set up shop a week ago and who will be gone in another week. I use eBay now and then, but not for coins or bullion.
On the other hand, there are a few on-line coin auction sites that deal only with precious metals and rare coins, that are reputable, that do have return policies, and that only ship with insurance and tracking and signature-required confirmations of delivery. These are the auctions that dealers go to. You can find them through several respected coin magazines, such as Coin World or Numismatic News. But remember, also, those magazines don’t guarantee anything. Once you get to know a local coin dealer, you will have an invaluable source for all kinds of information.
It’s easy these days to end up on some boiler room call list, hawking everything from free weekends in Bermuda and time shares in Florida to bargain airline tickets. For Heaven’s Sake, do not talk to telemarketers who’ve just cold called you with ” an amazing deal.” Hang up on them right now! On the other hand, I do get calls from time to time asking if I want to sell coins or bullion. Those calls come from national dealers I’ve previously done business with, who are trying to replenish their stocks. They have my records right there in front of them, and they know what I bought from them. They are offering to buy the stuff back. Nothing wrong with those calls.
Do not – repeat – do not be fooled by any advertising that says something like “A hoard of silver dollars has just been uncovered! Coins that have not been seen in one hundred years! Limited number! Coins just discovered in Europe! So rare most people have never seen one of these! Available for a limited time only! Only five per household!!”
Legit dealers don’t use that kind of advertising. Those ads are scams. You’ll find them advertised mostly on local radio, late night infomercials, and in some general interest magazines. These sellers must be avoided, and they fall right in line with my hard and fast rule to never – never – deal with anyone advertising on radio or TV. The folks who sell ads for broadcast and print media, by the way, don’t care if the ads are honest, as long as they get paid up front. My evidence for that is the blatant misinformation I recognize in those ads all the time. Consumers pay the ultimate price.
Safety and confidence in buying gold and silver boils down to face to face, over the counter dealings with a guy or gal you can look in the eye, while holding a coin or bar or bag of coins in your hand you can touch and admire. And that would include dealing with a friend you trust who is already stacking gold and silver. Educating yourself about bullion is no more difficult than spending some hours on-line doing your mandatory window shopping and other reading. Note: Rare coins is a whole different story. Stay away from ‘rare’ coins until you’ve spent a couple of years minimum studying numismatics.
Here are a few websites run by reputable, longtime coin and bullion dealers with very excellent consumer information on buying gold and silver. Click around their menus to explore. Look for their consumer articles. You’ll find several excellent articles at each site with top flight advice. These folks have a personal interest in educating the public about gold and silver. What these three don’t have is an instant clik-’n-pay page to take your money. If you want to deal with these longtime coin guys, you’ll have to call them. I offer them here strictly as an educational tool.
It’s your money, your future, your economic security and your personal responsibility we’re talking about here. So, looks like you have some homework to do. Questions and comments welcomed!