Monday, December 20, 2010

Buying Gold on a budget



FerFal:

First, let me thank you for the great blog and the hard work that goes into it.  I have been following it off and on for about a year & 1/2 now but have become more a regular reader since I feel that the rumblings of civil unrest here in America are becoming more frequent & increasing in volume.  Having said that, I am your typical American suburban dad with wife, kids, mortgage, etc but have my eye looking years down the road.  I agree that one should have physical gold in their possession for when the SHTF.  Not being an expert at all on what I should be paying for gold in pawn shops but more comfortable with buying coins, what are your recommendations for acquiring gold coins?  I fear that if I go to a coin dealer or some type that I will be paying too much. 

Again, thanks for your time and your blog.

Adam

Thanks Adam for your email, unless you have someone you trust to deal with, I recommend buying on line, check out Apmex, they are the better known dealers as far as I know.
If you’re on a budget you might want to buy silver instead. It will depend on the budget you’re dealing with but even one or two silver eagles a month adds up quickly.
Stick to gold and silver American Eagles, but if you find other good offers such as Krugerrands, Mexicans, Maples leafs or Pandas at Apmex go for it. Even if you buy gold, you will want to put some of that money into smaller denomination Silver Eagles. Some pre-65 dimes as “change” isn’t a bad idea either. For the bulk of your precious metal savings, go for gold eagles if you can afford it.
Of course before putting money into precious metals you should have the basic gear and supplies often discussed here. No point in stocking up on metals if you don’t have enough food to deal with disasters, including economic ones. A year worth of food for your family translates into a lot of peace of mind. A couple weeks worth of water already stored and means of purifying more. Camping gear, lighting, heating, cooking, first aid kit and at least one handgun for defense.
Take care and good luck!

FerFAL

9 comments:

Jason said...

There's no substitute for personal experience. Silver is still relatively inexpensive, and a good way to get a feel for your local coin shops. Take a little cash, stop by, ask if they've got any 1 oz. bullion rounds or bars. Sometimes they'll get random things in from other customers and will be wanting to turn them around. May be tarnished or dinged, but it's still silver. Don't be too picky about what you buy at this point. Do use the opportunity to also ask about prices of standards like Silver Eagles or Engelhard bars for future reference. Don't be too afraid of getting overcharged at this point. It's tuition. You'll soon learn which ones have the best deals and customer service, and that will save you money in the long run.

Then just keep going back to those shops and increasing your purchases as your budget allows.

Once you're ready for gold, ask about 1/4 or 1/2 gold coins or small bars (1-10 grams). They're easier to buy than whole ounces. Smaller units also carry a higher premium, but every once in a while you can find a deal. If you're a regular customer of a reliable dealer, you'll have a higher chance of being in the right place at the right time.

Have fun. It's not quite as simple as just shoving a deposit in an ATM, but I think it's a more enjoyable way to save.

John Peterson said...

I would also like to mention Kitco. They have pool accounts that allow you to buy an ounce of Silver here and there. When enough accumulates you can convert the Silver in your pool into physical coins and bars (or even trade up to Gold), and then have them shipped. This saves alot of money on shipping fees. They also have Kitco brand Silver coins which carry a much lower premium than Silver Eagles.

JOhn

Ryan said...

I think some comparison and having a reference for about what different items cost helps a lot. You walk into a pawn shop/ PM store and ask "do you have any one ounce silver rounds/ 90% change/ whatever?" and they will say yes or no. However just because a shop is reputable and has been around for awhile doesn't mean their prices for a specific item at a specific time are competitive. I have been occasionally quoted stupidly high prices in the past.

Knowing what something costs on APMEX and Kitco (be sure to factor in shipping) will let you know if the local places price is good.

Anonymous said...

Jason's advice is... golden.


Visit your local shops.


Kitco has screwed up MANY orders. Debate that all you want, facts are facts despite the fan crowds.

Honest/reputable dealers:

CA: California Numismatics (talk to anyone)
Coin Shop (La Jolla, CA) Leon Cronkwright (about the grouchiest man alive, but 100% honest. Screwed up an order and made 100% good on it... without apology, of course).
Southland Coins (in LA, I think)
New World Rarities (Hauppague, NY - ask for Danny)
NWTM out West

A lot of complaining about NorthWest Territorial Mint but they've yet to screw up an order (to my knowledge) or fail to deliver. There was some online guy years ago bashing NWTM saying they were technically BK and he had proof, blah blah. That was years ago and NWTM is still running strong.

NWTM will do small silver orders and mint/sell bars for the Pan American Mint. Easy to work with. Lock in a price and send your money.

Those last five dealers have NEVER screwed up an order that I know of despite the fear-mongering around NWTM. I can't understand they fanboi-ism for APMEX. Too many screwed up orders. That, and their lead times are inexplicably long despite promised delivery times. Broken items, confused customer service, no phone ordering... use them as a pricing tool or to get some obscure gold object. Your money will be held up for weeks when they promise to deliver an item and then don't deliver it at the end of the day after you've sent your money.

Danny at New World Rarities can get you a lot of small gold orders, random stuff. Their shop/inventory is considerable.

Remember to check your local shops. Consider supporting your local guys. There's a lot to be said for cash and carry.

Anonymous said...

I second what Ryan said about NWTM. Here's the link for their online store:

https://store.nwtmint.com/Bullion_Gold_Silver_Platinum_Palladium/

It costs you more if you use a credit card and buy online, but--you can acquire what your budget allows.

I've made numerous orders with NWTM and have ALWAYS received the product with no problem. It comes in an unmarked box and is insured.

The only issue I've had is they wait for the money to clear your credit card (adding a few days to delivery) and I did have to wait about 3 weeks in the past for certain metals.

But, otherwise, the sales help has been great and they follow through with what they advertise.

Jack

Anonymous said...

I found that buying gold on line or from local coin shop is the same they all follow the spot price but they differ in premium they charge. Most coin shop that I've been to are within a couple of bucks difference in premium but close to the price of coins from nomex.com. Look at the price of coins from nomex and compare to your local coin shop that's the best indicator if they're charging you to much in premium.

Also in CA you don't have to pay sales tax when you're buying $1500.00 or more...also cash only transaction and they won't ask for name. If they do get out fast.

Anonymous said...

Depending on where you live, here are a couple of other things to consider:

1. If you live close to the Mexican border and are comfortable crossing you can get really good deals on silver in MX. Mexico is the largest silver producer in the world. You can buy Libertads in Elektra stores for a tiny premium over spot. I know Mexico is dangerous at the moment but it won't always be. If you're not comfortable going, don't.

2. If you go to a coin shop, buy culls. No sense paying a premium for shiny new stuff you're going to give away. I would seriously look at Morgans and Peace dollars in addition to bullion coins like Eagles. My local coin dealer sells them at less than 1% premium to spot. That's about 30 cents.

3. Consider old Mexican silver coinage. The 100 peso coin from the late 1970s early 1980s is very similar to a Morgan dollar. These can often be purchased BELOW spot. Mexican coinage is stamped with the weight and purity, so anyone can see how much silver is in the coin. Another advantage is that there are no known counterfeits of most Mexican coinage. A disadvantage is that they come in odd weights and sizes.

4. Diversify your holdings. It is very difficult to know what people will like and what they won't if and when TSHTF. Worst case, you can always sell the coins that people won't take at a dealership for spot. It would not be good to put all your eggs in the Eagle basket, for example, and then find out that people don't want them because somebody somewhere came up with a really good counterfeit.

5. Deal only in cash. You do not want written records that include what you purchased and where you live. That rules out all online operations, IMO.

6. Don't let ANYONE know you have it. In a worst case scenario, you are going to be shocked at what your so-called friends are willing to do to you if they know you have metal.

My experience with pawn shops is horrible. They seem to have the highest prices and the worst garbage. A relationship with a reputable coin dealer who has integrity, knows how to keep his mouth shut and deals in cash is critical if for no other reason than to have an easy way to liquidate if that day ever comes. Just trying to think ahead.....

Good luck, Amigo. Life is good. Keep playing to win.

Anonymous said...

Here are a couple of other things to consider:

1. If you live close to the Mexican border and are comfortable crossing you can get really good deals on silver in MX. Mexico is the largest silver producer in the world. You can buy Libertads in Elektra stores for a tiny premium over spot. I know Mexico is dangerous at the moment but it won't always be. If you're not comfortable going, don't.

2. If you go to a coin shop, buy culls. No sense paying a premium for shiny new stuff you're going to trade it for food. I would seriously look at Morgans and Peace dollars in addition to bullion coins like Eagles. My local coin dealer sells them at less than 1% premium to spot. That's about 30 cents.

3. Consider old Mexican silver coinage. It can often be purchased BELOW spot. There are no known counterfeits of most Mexican coinage.

4. Diversify your holdings. It is very difficult to know what people will like and what they won't if and when TSHTF. Worst case, you can always sell the coins that people won't take at a dealership for spot. It would not be good to put all your eggs in the Eagle basket, for example, and then find out that people don't want them because somebody somewhere came up with a really good counterfeit.

5. Deal only in cash. You do not want written records that include what you purchased and where you live. That rules out all online operations, IMO.

6. Don't let ANYONE know you have it. In a worst case scenario, you are going to be shocked at what your so-called friends are willing to do to you if they know you have metal.

Good luck, Amigo. Life is good. Keep playing to win.

Doug from Oz said...

Be careful about buying Chinese Pandas. Last time I was at the bullion dealers he showed me some Pandas he had on his desk that were excellent fakes. I don't touch Chinese PM's for that reason.