(This column will be sort of a radio show, with people asking me questions, and me answering them. We are getting so many new customers, that they will be pretty basic, and excellent for readers to to forward to people they may know, who are either skeptical or ignorant. “PC” will stand for Potential Customer. The previous column was part one.)
PC. “Your web site has lots of things in gold and silver. Which ones should I buy?”
Don “I’m a cheapskate, I’ll admit.
The most expensive gold and silver are made by the US Mint in West Point New York, and they are the Gold and Silver Eagles, which I admit, are beautiful. The cheapest way to buy gold, is the Sunshine Mint 1 ounce gold bars, which are about $50 per ounce cheaper than the Gold Eagle, at $17.50 per ounce over spot. They are beautiful also, pure (.9999) gold, wrapped in plastic, and have serial numbers. The cheapest way to buy silver, are the 100 ounce Royal Canadian Mint bars, which are beautiful, flat, shiny, and also have serial numbers. They are 7″ X 3″ X 3/4’ thick, weight but 6 pounds, and are easy to store.”
PC What’s the advantage of bars over coins?”
Don “I know of none. The Gold Eagle and Krugerrand, weigh 1.09 ounces. They have .09 oz of an alloy in them to make them difficult to dent or scratch. This means that technically, they are not ’pure gold,’ although they have one ounce of pure gold in them. The cheapest gold coin is the Canadian Maple leaf, which is .9999 pure gold, but being pure, it is rather soft, and scratches easily. If you get Maple Leafs, don’t handle them. I used to carry a Krugerrand around in my pocket years ago, so difficult to scratch are they. You can’t put serial numbers on coins, like you can on bars. (As an aside, the Krugerrand is named for Paul Krueger who was sort of the George Washington of South Africa. He died believing the earth was flat. No kidding!)”
PC “What about old US silver coins?”
Don “They come in 56 pound ’bags’ and are heavy and difficult to store. They are expensive, and on a per ounce basis, are about the same price per ounce as Silver Eagles, which is outrageous. What would you do with them? They may be 90% silver, but unless you are 65 or older, you can’t even remember that we had silver coins, and a youngster would think you’re crazy to tell them we had silver coins. Even if you can convince someone that a pre-1964 quarter is silver, how much silver does it have in it? You need silver with good hallmarks or brand names, which has its contents on it, such as 1 ounce .999 pure, or ten ounces or 100 ounces, not some mysterious pre-1964 quarter or dime.. Skip ’bags,’ in my opinion.”
PC “Coin dealers try to sell me ’numismatic’ coins, which are old US coins made before 1933. They say they won’t be confiscated. Is this true?”
Don “Totally untrue. Gold has never been confiscated! Roosevelt issued an executive order back in 1933, ordering people to turn in their gold, but it was never enforced. Many people did turn theirs in, but if they were confiscated, how come these guys have them to sell? Numismatic dealers, buy wholesale and sell retail, meaning a 40% or more markup. Condition is a matter of opinion, like a used car, unless they are professionally graded by PCGS, (Professional Coin Grading Service), and even then, prices are a matter of caveat emptor, (let buyer beware). To me, it’s a matter of how many ounces you have, not its age or condition. As you read this, in China, brand new numismatics are being produced, out of real gold, but they are not old, but brand new ’numismatics’. Steer clear of rare coins. These guys are used car salesmen…to me anyway.”
PC “I notice that currently, there is a delay on most silver products. How come?”
Don “Since the Cyprus meltdown, people are frantically buying gold and silver, but more silver than gold. The mints are working 24/7, turning out the stuff, but we are selling it faster than they can produce it. They will eventually catch up, but you can buy now, lock in the price, and take delivery when they catch up. Cyprus, and now New Zealand, and potentially Canada, are trying to do the same thing, which is steal your savings stored in banks. That’s why people are taking their money out of banks and buying silver and gold, which is the ultimate protection.”
PC “Can I store my gold and silver in an IRA?”
Don “Yes, you can, and a lot of our customers have done so, but I am encouraging people to get their gold and silver out of IRA’s, pay the taxes, and take it home with them. I urge you to NOT DO IT. The Cyprus thing has me convinced, even more than I have been in the past, that if the good old US government wants to tax your physical possessions, such as savings accounts, CDs, IRA’s, and the like, they know where lots of gold and silver are stored. In IRA’s. They’d love to take your gold and silver and substitute Treasury Bills,’ or some other worthless paper, denominated in dollars, not ounces of silver or gold!”
PC “You sound awfully negative!”
Don “I am indeed negative about the world’s economic situation. For a hundred years, governments have been spending more than they take in, and printing money to pay for their reckless spending, which they ’buy’ votes. Now, it seems that the chickens have come home to roost, and Cyprus is the beginning, which I think will spread around the world. Just think of it! Taking money out of your savings, without your permission! That’s far different than taxing your income as you earn it. That’s taxing what you have already paid taxes on and have saved. I know of one client of mine, who stored many millions of his customers’ money in Cypress, and it’s gone. Suppose he had stored his client’s money in gold and silver, and the person took it home with him, rather than trusting a bank or government. See what I mean? Gold and silver, in your possession, are free from government’s greedy hands and edicts!”
PC “Why do gold and silver fluctuate so much? It seems to be stuck at around $1600 and $30. Has it reached its peak?”
Don. “I remember when gold was at 700, and it stayed there so long, that people thought it had reached its peak. Nothing tangible can reach its peak, as long as the government keeps printing money, which lowers the buying power of it, and makes prices go higher. The fluctuations are due to the futures market, plus I really do believe that banks around the world, as well as governments, are selling their gold to pay their bills, and trying to stay afloat. Private citizens are buying it. Guess who will have the real wealth if this continues? You and I. When they sell, prices go down, and it make buying opportunities for our customers. There are millions of ounces of paper gold and silver in the futures markets, and when people sell their futures to take profits, that floods the market with paper gold and silver, but it lowers the prices of physical. When they buy millions of ounces of paper gold and silver futures, that causes the prices of physical to go up. A lot of people think that prices are
manipulated by governments, to keep prices down, thereby raising dollar values, but I don’t agree. If that’s true, they’ve been unsuccessful, haven’t they? 12 years ago, gold was $150!”