buying gold

January 23, 2007 7:25 PM

What's the cheapest way to buy and later sell physical gold?

I bought and later sold American Eagles but I was charged a pretty hefty charge to sell as I remember.
I've held gold stocks (mining and indexes) but this time I want the real thing, just in case...
Someone said it's good to have just enough for the border guards. I'm not really that paranoid but it's always good to be prepared.

posted by bkiddo to work & money (6 comments total)

What you're looking for is straight-bullion, where the value of the coin is based purely in its weight, not because of any special-issue, limited edition, fancy-pressed, limited circulation nonsense. It sounds like you already know this, but for anyone reading this in the future, there you go.

There are plenty of places that deal in bullion; for some strange reason American Buffalo's and Eagles tend to go for more than the exact same troy weights for other countries. South African Krugerrand's sell for about $650 these days while Eagles go for $30 more. I couldn't tell you why.

Personally, I'd go with Credit Suisse Gold Bars. They're all .9999% 24K gold, but they come from the Swiss, they're only $10 more than the Krugerrands, and they're bars instead of coins, so you don't have to worry about some idiot confusing bullion with numismatic value.

A previous post pointed to this site for current deals.
posted by Civil_Disobedient at 8:19 PM on January 23, 2007

I suspect that finding a good local coin shop would be the cheapest way, if possible. Maybe you can find better prices on the web (for example a 2% spread on the American Eagle here) but then you'd have to pay for shipping both ways, which may or may not be enough to make the difference.
posted by sfenders at 8:37 PM on January 23, 2007

If you're planning on precious metals as a medium of exchange in apocalyptic circumstances, you'd be as well off with worn silver dollars, or other silver coins, in the three lowest condition grades (About Good, Good, and Very Good), because there is very little associated numismatic premium value. They are portable, recognizable, have intrinsic value in small enough amounts that parting with some is always feasible, even if the trader you are doing a deal with can't "make change," and they are hard to counterfeit, so easily accepted by strangers.

In short, in terms of true emergency money, worn silver coinage is hard to beat.
posted by paulsc at 11:34 PM on January 23, 2007

I know two families who bought their way across closed borders with gold (one after the Vietnam War, the other after the partition between India and Pakistan). Both used gold jewelry to purchase papers, transportation, and so on. (See also recent articles about the price of gold being driven in part by the purchasing of gold jewelry in India and elsewhere.)

So that's one option: buy your gold in the form of jewelry, which has the advantage of coming in small pieces, is recognizable and easily exchanged, and while you wait for the apocalypse you can enjoy wearing it. The problem with silver coins is that it would take a lot more weight to have the same value --- gold is portable. Diamonds might be better in a weight to value sense, but not everyone can tell the difference between real and fake, so you would probably have to exchange them at a deep discount.
posted by Forktine at 3:53 AM on January 24, 2007

As Forktine suggests, jewelry that you're willing to part with (i.e. real but not heirloom-quality stuff) makes a great hedge for things like this. Beware of diamonds (and for all I know other gemstones too), it's my understanding that actually converting a diamond into cash is difficult so while they may be useful for barter you are locking yourself in quite a bit more than with precious metals. Of course jewelry requires a bit more trust in the seller and a bit more markup for the workmanship.

Depending on your budget I'd go jewelry first, then maybe some by-the-pound non numismatic silver until you've got enough to get past the border, and then some Krugerrands/bars for once you're past it.
posted by Skorgu at 7:48 AM on January 24, 2007

Go with straight-bullion. Find a place that charges as close to the spot price of gold as possible.

You should ask whatever dealer's you contact how much above spot they are asking. Certain coins, such as Maple Leaves --because they are 24k-- and Chinese Pandas often carry a premium over the "Spot plus X" price for 1 oz of gold. Fractional gold, which is less than 1 oz also often carries a premium above the gold value. Krueggerands and Eagles usually don't.

Dealers might sell gold to each other in bulk for $5-$30 above spot, depending on their relationship with each other etc. so you should expect to pay above that --and that would be a reasonable "wholesale" price. If the price quoted appears to have no relationship to spot, they're selling their coins strictly retail --avoid them.

Another deterrent to buying gold is many dealers will have to charge sales tax.

If there is a coin show in your area that is often a great place to buy gold --you can get several quotes as well as usually avoiding sales tax depending, I suppose, on local laws.

You should know that dealers are required to report any single purchase of gold over $10,000 to the government.
posted by MasonDixon at 10:25 AM on January 24, 2007