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- 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: [email protected])
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 [email protected].
Have a great weekend,
Kevin McElroy
Editor
Resource Prospector