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What Gold Coins & Bullion to Buy at a Dealer?

When you go to your gold dealer weather online or across town it is good research that can vastly improve your return on your gold investment.  Some gold dealers will try to sell you their highest margin items without a consideration of what is in your best interest.  Read on to find out how to get the most gold for your buck on your next visit to your gold dealer.

What Kinds of Gold Not To Buy!

Make Sure its Yours and Not a Promise

You want to be smart about what you are buying for gold  bullion by buying the right types.  A hugely important issue here is to only buy something that is yours and you hold it yourself - no certificates or holding by some institution,  the gold must be in your possession.  Even gold stored in a bank safety deposit box has several risks.  First there may be a bank holiday, as in Cypress and a few years back in Iceland and before that in Argentina and many more to come in the near future.  There is also the risk of government seizure of your gold from the safety deposit box because they deem it is in the "national interest". 

Beware of Numismatic Coins

Dealers of numismatic coins rank right up there with con artists. Stay away from numismatic coins! Numismatic coins are collections of currency and some are often plated as gold or silver coins with basically no real metal content.  A good friend of mine recently was raving about the silver coins he bought for $28 a piece. They were a special edition and looked like one ounce silver dollars - but they were not, they only contained about 3% silver.  Those flashy ads on TV - ignore them.

Don't Buy Proof Coins

Proof coins are coins that are designated as a better, near perfect or even perfect specimen of that particular coin.  Typically designated as the grade of the quality of the design and the luster of the coin they ore often designated as "BU" (Brilliant uncirculated) or Mint State (MS) such as MS 65, MS 66, MS 67, MS 68, MS 69 or a perfect coin MS 70.  These coins (especially (MS 69 and MS 70) are sold a high premiums to their metal content due to the quality of the minting on the coin. So lets use an example to show how this would play out. 

Lets say at today's gold price you buy a 1 oz American eagle at $1562 ($75 premium) vs. a Mint State MS 70 coin at $1642 ($150 premium).  Now two years from now gold has risen to $6700 and you want to sell your coins what will you get?  On the Gold Eagle you would likely get about $6732 ( you would lose $43 on the premium)- a slight premium to the spot price, and the MS 70 specimen? about $6764 a bit more but you would loose $86 on the premium. Now that's not huge but on 20 ounces of gold the difference is enough to buy another ounce that when gold hits $6700 is an extra $6700 in your pocket!

The Best Kind of Gold to Buy for Investment

The best kind of gold to buy for investment is that which has the lowest cost  per ounce over the spot price and ease of recognition. The types of bullion that you should be looking for should be gold coins bars and rounds. Any reputable gold dealer will be well stocked with a good selection of these items.

Buy Gold Bullion Bars and Rounds at Low Premiums

Some gold bullion dealers show the premium per ounce on their site, some also show their buy price - the price they will pay you for your gold - looking at the different gold bars and rounds you will notice that their are different premiums to buy them. Now look at the buy price - you will find that the buy price for the bar with the $70 premium and the $35 premium are the same.  No benefit for the premium products or "bling gold bullion".

Sealed Gold Bullion Bars with Assay Cards

Most government and private mints now offer sealed gold bars sealed in tamper evident packages and the bars may be numbered and assayed. Although not necessary, the $10 premium per ounce that you will pay for this does offer a couple of extra features that could make selling your gold easier in the future especially if you decide to sell it to someone other than a gold dealer.

Buying Gold Coins - Eagles, Maples, Krugerrand's

By gold coins I am talking about the kind of coins that are made by government mints.  There is the most popular country minted regular gold bullion coins- US Gold Eagles, Canadian Gold Maples, South African Krugerrands, Australian Gold Kangaroos, British Gold Sovereigns and Austrian Philharmonics. These are all widely recognised around the world and all have the amount of gold stamped on the coin.  If these coins are selling at a low premium they are a good deal.  What to stay away from is "special or limited edition coins" that sell at a high premium.  It is a good idea to have a few of these coins from the country that you are residence in as they carry a very high trust factor.

One warning on these coins is that in times of high demand like in April 2013 as the price falls the premiums may go up on certain products. Premiums may in fact double or in some cases triple or more.  In times like these look at other products that have a lower premium.

What Sizes of Gold Bullion Coins and Bars to Buy?

Gold can be purchased in sizes varying from one gram to 400 oz good delivery bars - what sizes should I buy?  The larger you buy the lower the premium but you don't want to put all of your money just into one bar because its cheaper.  Often a 1/10 oz gold coin will have the same premium per coin as a one ounce coin - so on one ounce you can pay hundreds of dollars in premiums instead of gold.  Under one ounce buy as large as possible to get more gold for less premiums.  So one ounce gold coins, bars or rounds are a good choice. 

What about larger bars such as 5oz 10oz, 1 Kilogram or 100oz? The main benefits of larger denominations is that they are easier to count and you save a few dollars per ounce - $5 to $20 per ounce depending on the size.  so on a hundred ounces of gold you could save about 2%.   What if you wanted to buy real estate with gold directly and only had 100 oz bars? My opinion would be that larger sizes are good if you are putting vast amounts of money into gold and buying more than 50 oz. The most important factor in determining size is the amount of gold that you are buying.

Look for Gold Bullion Specials

Yes it is possible to have specials, occasionally a gold dealer makes a large purchase, or is carrying too much inventory on its books.  They want to move it and offer low premiums per ounce to move stock. When the gold price is at an attractive entry point for you look for these specials!

Government Confiscation

Government confiscation of gold has happened in the past - it is possible that it may happen again in the future but the possibility is impossible to predict. That being said taking the 1933 case in the United States as a case study - collectors type coins and gold jewelry was exempt.

 If you deemed it necessary for such a case  what you should look for is to diversify your gold holdings into collectable gold coins and gold bullion jewelry that has the lowest premium to the spot price of gold.

 One gold dealer online sells a gold bullion bracelet, it is available at at a reasonably low mark-up to the spot price - the best way to tell is to look at what it costs and what they will buy it for.

  Another good choice would be to diversify into other metals such as Silver, Platinum and Palladium.  Silver in particular has a very bright future as stated by Eric Sprott of Sprott Asset Management, Jim Rogers and many others.

You can check your local gold dealers and compare prices to online gold dealers for common bullion products.  Buying in larger quantities will get you a better price, as well as waiting about two weeks for possession.  Gold dealers give a better price if they can order it at live spot prices instead of out of their inventory that the dealer must insure.

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