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Thursday, February 18, 2010

Buying Gold‏

Hi Ferfal,

I just ran across your blog and appreciate your practical advice. I live a simple life. I have plenty of stored food, gravity spring water, wood heat and a practically unlimited supply of wood for cutting. I have no debt, a small comfortable home, a nice amount of land and a comfortable nest egg. I never invested in the stock market, but instead have my savings in treasury bonds and IRAs. While I didn’t lose any money in the stock market crash, my money is drawing very little interest right now and I don’t think it is even keeping up with inflation. I took out a few thousand dollars for emergencies and stashed it away when the economic crisis first started, but it is in cash and I would like to start buying gold or silver but I don’t really know how to go about it. I’m afraid I would get ripped off. Do you have any advice on how to get started with buying precious metals.

Thanks

Geri

Hi Geri, sounds like you have things nicely sorted out.
Buying precious metals is no different from any of the other things you learned to do around your home.
You have to learn what to look for historic prices and current ones of precious metals and smartly purchase when you find good deals.

Right now gold is a bit expensive due to the crisis and likely to go down sometime, so I would definitely buy some but not a lot, and maybe look towards silver more.
Still, gold may go up and down in price, what it will never do is lose its weight… :-) As expensive at is may be, if things turn ugly its likely to go up much more AND you managed to protect some of your savings.



For protecting your savings stick to well recognized forms of gold and silver such as American Eagles, Krugerands and Canadian Maple leafs. Do your homework so as to know the gold contents and weights, and don’t be afraid to shop around locally in some cases looking for the best prices. Online, /www.apmex.com/ seems to be good and trustworthy but still count your coins and check them well.

I’ve recommended a small amount of junk precious metals so as to have as change or to use during the first stages of a crisis, before you end up breaking down your stash of coins or when buying locally for smaller amounts. For silver, in America you’re set with some pre 65 dimes. In the rest of the world and maybe one day in USA, junk gold is more readily acceptable so having a few simple rings and gold chains makes sense. Again, know you precious metals and the gold content in 14k and 18k. Some places will sell old wedding bands or broken chains for their gold content alone. Check ebay for these and stick to reputable dealers.
American 22K $5 Gold Eagle 14K Pendant (Random Year Coin will be shipped)American 22K $5 Gold Eagle 14K Pendant (Random Year Coin will be shipped)

How much gold to buy? Its hard to set a percentage to recommend without knowing many other personal circumstances. Usually around 10% to 20% of your savings its advices but of course it depends.
Think of it this way: If the dollar keeps losing value, your gold will stay the same, probably go up some, if inflation keeps getting worse, your gold stash will again, retain value or increase in price as demand rises. If there’s a total economic collapse, the only savings you will have left will be your gold. Just think about it for a few minutes, how you’d get buy with that amount of money alone.

13 comments:

Idahoser said...

You can buy a $1,000 face value bag of junk silver (that is, pre-65 dimes quarters or halves which aren't selected for rarity or beauty-- they're just 90% silver) for the spot price of the silver content at tulving.com and get free shipping. Several other online retailers do similar things. If you can catch it under $11,000 snap it up! You won't be throwing away much at today's spot price, and you won't believe the warm fuzzy feeling when you have a stash. MUCH BETTER THAN GOLD at the current ratio (70:1)

Anonymous said...

20 of the one Troy ounce gold
coins will buy a new US car....
just like they did 30 years ago.
gold retains purchasing power.
remember: Troy is 12 per pound,
not 16 as in English measurements.

Anonymous said...

I like the (non-collectible years) silver Eagles. While there is a price premium over junk silver, they are readily identifiable by Americans, and state on the coin the silver content and purity. Plus they are an awesome coin anyway. When and if they become an alternate to our fiat currency I believe they will be accepted long before junk silver or junk gold. Any comments FerFAL? Americans are the least familiar with other currencies compared to citizens of the world.

Likewise, I like the 24K Gold Buffalo's over the US Gold Eagles, but they are harder to come by and have a substantial premium over Eagles.

Just my humble opinion.

FerFAL said...

Anonymous said...

"I like the (non-collectible years) silver Eagles. While there is a price premium over junk silver, they are readily identifiable by Americans, and state on the coin the silver content and purity. Plus they are an awesome coin anyway. When and if they become an alternate to our fiat currency I believe they will be accepted long before junk silver or junk gold. Any comments FerFAL? "

Hi Anon (guys please use some kind of name. Mr Smith or something will be better than Anon :-p )
People naturally feel more confortable with what is already known, what they handle on regular basis.
Dont think about "alternative currencies", no guys ammo wont be used as currency either! :-) Think about changing your PM for whatever ammount of pieces of paper with colors and numbers is market standard that day.
If you think of it that way, its already happening with gold jewelry. There's gold parties where people sell jewelry gold, "I buy gold" places where they buy it as well. So as of today, the Pm that is getting bought and sold in large quantities among the non-gold conosieurs is "junk" gold. Saw it in Spain too.
Now, as for Americans, you guys already have a cultural knowledge regaridng pre 65 dimes, so Idahoser has a good point. Not sure about 1000 of face value, but pre 65 dimes is the way to go for junk silver, specially given the price of gold.

FerFAL

Charlie said...

$1000 face silver is simply 715 ounces. That's a big chunk of change (for most people). I've used Tulving to buy gold and silver (www.tulving.com) and they are reputable and nice and have the lowest prices I've seen. (not sure about silver at "spot" though..c'mon they gotta make a profit!). But the point is, get started now..buy SOME gold and silver.. Don't wait until the price drops to some magical level (chances are it won't). Buy some, get started, a small amount will go a LONG way towards protecting the value of what you've earned.

Anonymous said...

DOLLAR COST AVERAGE.

Get started with a portion (5-10% of your proposed investment/conversion into precious metals) then every month or every two months add to your position. No need to do it all at once. Don't be cute, don't try to outsmart the market.

Shop around, talk to as many folks at the local coin shops as possible. Get a feel. If you get a bad vibe, say "Thanks" and take a walk. Don't return.

Having multiple contacts will allow you to both buy AND sell when the timing is right for both.

$11K for a full bag of pre-65 ag? Wow, times have changed. I remember debating in the $4-5K range. However, why buy a full bag? Many dealers do half, quarter and tenth bags. Stick with that for starters. A full bag (usually split into two halves) is bulky and HEAVY... I can't remember, but I think about 50-70 lbs. Don't drop that on your foot!

Think of storage/hiding spots.

Don't count on people recognizing your coins... they won't. They won't recognize a kruggie, a maple, an eagle (au or ag) or anything else.

DO NOT DISCUSS YOUR HOLDINGS WITH ANYONE. Even innocently you can endanger yourself and your family by doing so.

Story: Guy I know had a coin collection. Guy meets his friend for lunch and they talk about it. Friend goes home, gets held up at gunpoint for the coin collection (in the US!). Friend says, "There is a collection but you got the wrong guy! Guy has the collection, not me". Friend gets away with is life. Guy sells collection.
Moral: Keep your mouth shut.

So many reputable dealers out there. Do your homework. Prices vary.

APMEX (they mess up... a lot... but will make good on orders). They are great for pricing. B-
California Numismatics, A
Coin Shop, La Jolla, CA (one man show, in business forever, SUPER GROUCH, 100% honest, good prices) B+
New World Rarities Hauppauge, New York (ask for Danny, super-nice, great guy). A+

Southland Coins in Louisiana. Only a few transactions with this vendor, all good. YMMV Do your HW with this one.

NorthWest Territorial Mint - Can be pricey on some items, great buy on others (esp. silver). There can be a long wait but they always deliver. Pick up the phone, they answer, even on Saturdays. Lots of rumor-mongering and haters about them on the 'net. Sounds like jealousy. A lot of these Bible-banger critics were predicting NWTM would be out of business years ago. Never happened. A

Kitco - :( - Great for seeing spot price. C+



View these holdings as insurance. You don't want to have to cash them in, but rather you'd like to pass them on to a future generation and have something so you can sleep soundly at night.

Good luck, and keep it on the down low.

Anonymous said...

p.s. To the comments that "gold is in a bubble"... wrong.

People are selling their gold at jewelry parties and at the mall. When the masses are buying like mad and talking about something consistently (think: Tech Bubble, housing) then it's a bubble. When folks are selling you have a good chance at getting in before the masses get a clue as to what's going on.

What's going on? Right now wealth, true timeless wealth, is moving to China and India... from weak hands (in the west) to strong hands in the East. Sad days for Western Civilization.

Which hands do you have?

The Black Family said...

FerFal,please check out www.justmeasurescs.com

Anonymous said...

Ferfal,

I know you were on vacation recently.

One thing I did to keep an eye on my house when I am at work, etc. was installing small webcams in my house, pointed at doors, driveway etc. I wirelessly connected them to a remote storage device so the pictures can't be stolen by robbers, and I upload the pictures to a free online web service (JustinTv) for additional backup. They take several pictures per second and can be motion activated or just constantly film the house. I can view the cameras from a web browser online during work. If I see something suspicious I can call the cops immediately.

Doing this takes some money and a bit of technical knowledge but for me I consider it well worth doing if you can. I like the peace of mind.

Thanks.

Idahoser said...

Considering the OP's description of his situation, a full bag of junk is appropriate and the least expensive way to buy. There are an amazing number of reasons but some highlights: Right now the gold/silver ration is ~70:1. Foolish to buy gold when silver is so cheap relatively speaking. When the ratio goes closer to 50:1 go trade in half the silver for gold and you still have half a thousand left. There is no 'something' that has to happen before junk silver 'becomes' useful- you can spend it right now, it's better than cash in a bank or under a mattress, it doesn't lose value to inflation or barely keep up through interest. Don't consider it an investment, it's purchasing power nobody can take from you (other than physically, of course- the advice about not talking about it is good!). I'll tell you that no stock or mutual fund will get my trust in the foreseeable future, this is my savings plan. People I buy from were using as THEIR savings plan decades ago, they're living on what they get from me! This doesn't have to wait for some SHTF to happen! This is real now. And I beg to differ greatly with the poster who thinks Americans are more familiar with ASEs than junk silver. That's simply fiction. If the S did HTF, I'll be doing business at 1920's prices just like I can do today with junk. When 80% of the people around you confirm that my silver is good, you're going to take it at that value. When one guy knows a guy that's heard of Eagles, you should avoid them. And get over the need to pay premium! That's throwing away money.

Anonymous said...

I suggest either www.monex.com or I have personally bought many times from Liberty Coin http://www.libertycoinservice.com/ - I highly recommend them. You can also get their newsletter, there is a free one of last issue on their site - discusses the whole PM/rare coins market and once you make a buy they send it with special offers - it gets you slowly educated. Gold is good, so is silver. Keep it in a hidden safe at home.

Anonymous said...

Ferfal,

something I have been wondering about regarding your experience in Argentina.

What happenned to professional people after/during the crisis?

Were they dragged into the lower classes with the middle class, albeit at the upper end, or were they barely hanging on to the upper class?

When I say professional person I mean a basic lawyer, engineer or doctor; NOT a specialist making $500K per year and has hundreds of thousands in assets.

Thanks, and keep the valuable info coming.

Anonymous said...

I second the AP/MEX recommendation, at least for pre-65 "junk" silver