How To Buy Gold & Silver 101

With all the craziness happening in the world markets and governments, some of us are making shopping lists that are starting to look like this:

  • Bread
  • Milk
  • Lettuce
  • Gold bullion
  • Guns
  • Survival manual

Since gold bullion is the only item you can’t get at the local Super Wal-Mart, I decided to throw out a few practical tips I’ve culled for the “Average Joe” who wants to begin his own collection of the eternal economic hedge and superb safety net but hasn’t a clue how to start.

First, determine how much you want to buy and how you’re going to store it. Silver is much bulkier than gold and not easily transported, so keep that in mind if you’re planning to make a late-night run to Uruguay or Mexico. Also, gold is viewed more as “money” whereas silver still has the taint of being an industrial metal. On the other hand, silver could be more undervalued than gold with a larger profit-potential. There are practicalities to weigh depending on your personal values and goals. Fleeing the country with 1500 pounds of metal is definitely prohibitive.

As for storage options, some use safety deposit boxes, others use home safes, and others use a shovel at 3 a.m. Don’t buy without a plan to keep your gold or silver safe. If you’re going to use a safety deposit box, consider using one with a very sound bank, ideally in another country. Ideally that country would be Switzerland. Keep in mind that there’s always the risk of losing your deposit box, either to crooked governments or crooked banks who can loosely declare your box “abandoned” and then auction off the contents.

Speaking of Switzerland and gold, there is a gold-storage company that I have not personally used, but I’ve heard a great deal about from some reputable sources. It’s called BullionVault and with their services, you can buy and store your own gold (held in your own name) in vaults located in New York, London, or Zurich (your choice). You pay a .12% per year storage fee and insurance is included. You can set it up online very easily at their website and you get a free gram of gold when you do that. (If you want to send that gram of gold to me as a thank-you for recommending the service, I wouldn’t complain at all.)

But if you want to run your fingers through your own cold metal hunched over your pile every night after dinner, and not simply dream about what it might look like all alone in some distant vault, you need to buy from a dealer.

Here are three larger internet dealers that I can recommend:

Kitco is a big fish with higher prices and shipping and insurance are extra. There are no minimums on purchases, so that’s good. Their main site is great for watching markets as well as some decent commentary. My favorite articles are always by Chris Laird and Kitco’s own Jon Nadler.

Tulving is a family run operation. They’re efficient, honest and have the best prices on their metals. Don’t be afraid of the cheesy website with extra large and multi-colored fonts. Also, don’t be afraid or offended of the owner, Hannes, and his to-the-point and gruff personality. The best part is that shipping and insurance are free. The catch (other than putting up with Hannes) is the purchase minimum of 20 ounces of gold or 500 ounces of silver per order.

The Moneychanger is a good ol’ boy who lives and breathes precious metals and writing about precious metals from his farm in Tennessee. You can sign up for his free email updates where he occasionally announces sales or special deals on metals … and usually includes some updates about his pigs or crops, too. He’s got a great true story on his website you should read some time. It’s filled with tales of gold and silver, money, banks, the Constitution, jail-time, and ends with a dramatic court battle with the IRS… which you can assume he won since he’s not selling bullion from prison.

A note about buying from online dealers: Since the prices of metals fluctuate daily, usually when you place your order, it’s for the price that is quoted to you via phone or email that day even if it drops 50% the next day, or better yet, runs up 50%. This is the way dealers work. You will have a certain timeframe to pay, usually via wire transfer, or the order is cancelled.

Of course, there’s always eBay, too. If you can only buy in small amounts, you might peruse eBay. It will take some work and late nights to get the best deals, but it’s better than buying from late-night infomercials where 1-ounce silver rounds are being sold for $125 to unsuspecting baby-boomers desperate from watching their plummeting 401k accounts.

Please, whatever you do, don’t buy precious metals from infomercials. I don’t care how shiny and pretty it looks in that nice that leather-bound protective box with the gold lettering!

One thing that you can find on eBay is sterling silver items that might not get bid up past spot price. You need to know your stuff, though, to get good deals.

Lastly, get to know your local coin dealers with the walk-in shops. If you buy from them regularly, you could get some good deals. One day they might get a large supply of coins because someone’s great-aunt died and her ignorant relatives want to unload all these weird coins hidden under her mattress. If a dealer knows you and likes you, he might call you up and offer a small percentage over what he paid if he can easily pass the coins off to you for a quick buck. Another advantage to buying from a local dealer is that you can buy small and pay in cash.

When To Buy

Since gold and silver markets are so volatile, you might be wondering how you can time the markets. Should you wait until a big drop? Should you buy now because maybe I’ll never see these prices again? I would advise you to buy on dips and average in. That way you’re not catching the high or the low of the market, but the nice warm, happy and hopefully lower-middle.

I would wish you good luck, but with some research and hard work, you won’t need it. Feel free to add suggestions or ask a question. I’ll help if I can.

 

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RosalieFlowers31 November 18, 2012 at 1:42 pm

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