A gold and silver buyer's guide part II
- The most important number
- How to avoid getting ripped off
- What to do with your gold and silver
Yesterday I talked about why, when and what precious metal bullion you should buy.
To recap, I believe that Bernanke's Federal Open Market Committee announcement on November 3rd could present a buying opportunity for gold and silver.
Today, I'm going to briefly tell you how to make sure you're not getting ripped off - and I'll tell you the precious metal vendors I use myself as well as what you should do with your gold and silver once you take delivery.
The first and most important number you NEED to know before you buy a single ounce of gold or silver is what's known as the "spot price."
The spot price refers to the up-to-the minute price for gold or silver on world commodity markets.
You might see spot prices listed for the NYMEX or the London Commodity Exchange, but one is as good as another. There might be small differences, but nothing large enough for concern.
I prefer to use the website kitco.com to find the most recent spot-prices for gold and silver - as well as just about any metal.
Once you know the spot price, now you have the "wholesale" number. You can use this figure to try to find local brick and mortar coin vendors who might sell coins at, or even slightly below the spot price.
That's easier said than done - because most vendors will charge a hefty premium over spot.
The more important function of understanding spot price is that you know when the retail price is way too high. I won't dignify some of the more predatory gold vendors by mentioning their names in this letter, but some of them will charge 100% or more over spot.
So pay attention to spot price vs. retail price and make sure the denominations are correct. In other words, make sure you're not played - like paying one ounce prices on a half ounce coin.
In order to avoid getting ripped off, you should find a reputable vendor that you know, trust AND who will buy coins back from you for a fair price. You can have a vendor who is willing to sell you coins for 5% over spot, but only willing to buy for 25% under spot. That's not a great deal.
I buy bullion from one of two places: kitco.com or blanchardonline.com.
Both of these vendors satisfy my concerns over fair retail and buyback prices. Both have good selections of the bullion products that I'm interested in. Both actually offer a buyback guarantee, which is nice. And perhaps most importantly, I've only had wonderful experiences dealing with the customer service representatives from both firms.
I get no kick-back or discount from these folks for saying so, but I believe they're among the fairest and most responsive bullion vendors in the business, and if you choose to buy from either one of them, I think you'll be satisfied.
(By the way, drop me a line if you've ever purchased bullion products from either one of these vendors: editorial@resourceprospector.com)
So, let's say you've taken delivery from one of these vendors, or from one that you know and trust. Now you have at least several hundred, or perhaps tens of thousands of dollars worth of shiny bullion sitting on the kitchen table.
You're probably feeling excited. You probably want to take a picture, send it to your friends, or to that gold-bug brother-in-law of yours.
You might invite your kids to take a look at it or maybe even hold it.
It's tempting to tell the world about your wise new decision to take physical delivery of bullion.
But don't!
I strongly recommend telling just one other person, probably your spouse. Tell them where you plan on keeping it, how much there is, and how they can get it if something happens to you.
And you need to keep it somewhere safe.
If you have a large, hidden wall or floor safe, that's a decent option. I've also heard of people sealing their bullion in PVC pipes and burying them somewhere on their property.
You might also consider renting a safety deposit box at a bank - although they're not entirely safe. Safety deposit boxes are not outside of the reach of the Federal Government, nor are they immune from unscrupulous or inept bank employees.
So your best bet is to keep your bullion somewhere close to you, in a hidden, secure place that only you and one other trusted person knows about.
If you have any questions about any of the information I've presented here, please send me an email at editorial@resourceprospector.com.
Have a great weekend,
Kevin McElroy
Editor
Resource Prospector
