Purchasing gold recommendations

[skeeter]

I HAVE A FRIEND WHO DOES NOT OWN ANY GOLD. HE WANTS TO SPEND ABOUT $1,500 AND BELIEVES THAT COINS ARE BETTER THAN BULLION.

ANY FORUM MEMBERS HAVE ANY THOUGHTS ON THIS SUBJECT?

THANKS, GEORGE aka SKEETER.

[BillJones]

If this person has $1,500 to "invest" in gold, I think that he should buy 1, one ounce bullion gold coin, like the American Gold Eagle and save the left over money to put buy another gold coin when he has saved more. I agree with his perception that a gold bullion coin would be better than a bar. When the time comes, the coin is easier to re-sell.

 

He should stay away from coins that have a numismatic premium because he does not have the expertise to tell a properly graded coin from an improperly graded one, or a choice coin from a run of the mill piece. It is also harder to get the numismatic value out of the coin when it is time to sell. With a bullion coin, the value is more cut and dried.

 

He should also avoid buying the fractional bullion coin coins. The smaller the coin is the bigger premium you will pay for the piece. For example on this week's "The Coin Dealer Newsletter" (a.k.a. "Gray Sheet") the bid for a 1/10th ounce American Gold eagle is $136.40. That means you would be paying 1,364.00 for ten 1/10th ounce gold coins. A single one ounce American Gold Eagle is bid at $1,314.50. Bottom line you get more gold for your money with the larger coin.

 

[skeeter]

Thank you for the input- Very much appreciated.

Regards, George

[RWB]

"Purchasing gold recommendations"

 

I'd spend the money on buying gold and not pay anyone for "gold recommendations."

[Nutmeg Coin]

IF THE OBJECTIVE IS TO MAKE $$ BY BUYING UNDERPRICED OR UNDERVALUED GOLD COINS, HE MAY HAVE TO SIT ON HIS MONEY A WHILE AND WAIT FOR THE RIGHT COIN TO COME ALONG. THEN HE CAN CUT HIS TEETH ON SOME CHOICE MORSELS INSTEAD OF THE LEFTOVERS. YOU CAN'T CARVE A STEAK WITH A SPOON! 1/10 OZ EAGLES ARE AN EXCELLENT BUY IF YOU CAN BUY THEM RIGHT AND THERE ARE BUYERS WHO WILL PAY A PREMIUM. JUST HAVE HIM DO HIS DD. A COLLECTOR WAS ABLE TO BUY GOLD EAGLES AT THE NJ SHOW THE OTHER DAY AT SPOT, AND THERE WERE SIMILAR OPPORTUNITIES.

[jtryka]

If he's in SW Michigan, tell him to go up to the Grand Rapids club show this Saturday and take a look around, there are a number of dealers there that specialize in bullion and common date Saints/Libs that last I checked were selling for around $1500. At least he can look around and see his options, pay cash and no shipping!

[BillJones]

I hope that we can stop using all CAPS in our posts. It gives me a headache.

[Matt_dac]

If it were me I would pick up an NGC slabbed Saint Gaudens $20 gold coin with that budget.

 

 

[DaveG]

As BillJones said, a 1 oz. American Gold Eagle is probably your friend's best bet.

[skeeter]

Thanks Jtryka. We are both near Grand Rapids. Bill I apologize for getting the CAPS started. I agree looks better without. Appreciate all the option suggestions.

[GoldFinger1969]

For example on this week's "The Coin Dealer Newsletter" (a.k.a. "Gray Sheet") the bid for a 1/10th ounce American Gold eagle is $136.40. That means you would be paying 1,364.00 for ten 1/10th ounce gold coins. A single one ounce American Gold Eagle is bid at $1,314.50. Bottom line you get more gold for your money with the larger coin.

 

If that is the BID, then that's the price you could sell it for, right ? I think the ASK price -- the price he would pay -- is much higher.

 

My local dealer charges about 6% on gold bullion coins in 1 oz. but for 1/4 oz. it's as high as 15-20%. For 1/10th, I think I recall seeing 25-30%. I once bought a 1/20th ounce Panda and I paid just under a 30% premium to spot in early-2009.

[BillJones]

For example on this week's "The Coin Dealer Newsletter" (a.k.a. "Gray Sheet") the bid for a 1/10th ounce American Gold eagle is $136.40. That means you would be paying 1,364.00 for ten 1/10th ounce gold coins. A single one ounce American Gold Eagle is bid at $1,314.50. Bottom line you get more gold for your money with the larger coin.

 

If that is the BID, then that's the price you could sell it for, right ? I think the ASK price -- the price he would pay -- is much higher.

 

My local dealer charges about 6% on gold bullion coins in 1 oz. but for 1/4 oz. it's as high as 15-20%. For 1/10th, I think I recall seeing 25-30%. I once bought a 1/20th ounce Panda and I paid just under a 30% premium to spot in early-2009.

 

The premium they charge when they sell it, and the premium they PAY when they buy it can be two very different things. If you want to buy gold, buy the larger coin. The only advantage I can see with the small coins is that you can break up you holding into to smaller individual sales.

[O mint bug]

With that amount I would check the NGC and PCGS price list and pick a common date. Newer gold coins are very much a bullion play. On a percentage basis I have made the most betting a common ST or LIB ie 1904 Philly in MS 62. My first gold coin bought 12 years ago for $300.00 in MS 63. Your friend may have to spend a bit more but he will have a coin not to too far over the bullion value. He will have two ways in which the coin can appreciate as a collectible and/or gold will continue to increase in price. Given the rate the Treasury is printing so much money I think he will do well over the long haul. The dollar has lost 9-10% of its value since Obama was elected. Just remember gasoline was $1.85 when he was got in and the increase in the money supply is the biggest reason for the increase. Point is the common gold coins will prove to be winners as they are good hedges against inflation and more people seem to be interested in them rare or common.

[GoldFinger1969]

With that amount I would check the NGC and PCGS price list and pick a common date. Newer gold coins are very much a bullion play. On a percentage basis I have made the most betting a common ST or LIB ie 1904 Philly in MS 62. My first gold coin bought 12 years ago for $300.00 in MS 63. Your friend may have to spend a bit more but he will have a coin not to too far over the bullion value. He will have two ways in which the coin can appreciate as a collectible and/or gold will continue to increase in price. Given the rate the Treasury is printing so much money I think he will do well over the long haul. The dollar has lost 9-10% of its value since Obama was elected. Just remember gasoline was $1.85 when he was got in and the increase in the money supply is the biggest reason for the increase. Point is the common gold coins will prove to be winners as they are good hedges against inflation and more people seem to be interested in them rare or common.

 

You buy gold because it's disaster insurance, not because some data points reflect the 1970's when taken out of context.

 

(1) The $$$ always loses part of it's value. It's the price we pay for having a reserve currency.

 

(2) The Treasury doesn't print money, the Fed does. But even the Fed's printing press has been offset by a drop in velocity. MV=PQ...and all that. Inflation isn't around the corner and may not be for years to come.

 

(3) The gas price you cite was when the economy was in melt-down mode in early-2009.

 

I agree with your general thrust, O-Mint, but don't oversell it to friends. (thumbs u

[JIM F.]

See PM, I have something that may be of interest and within your budget. Otherwise I will put it up on the marketplace thread in a couple of days.

 

[O mint bug]

Wrong!. Inflation ebbs and abates. At times we have deflation but if you think inflation is no where to be on the horizon go take Eco 101. I lived in London for a brief period of time and pre euro. forex rates for the $/Franc on the spot were .10/Franc and the Sterling was almost at par with the U.S $. It relates to economic growth, economic health, monetary policy, interest rates and other forces, which are coming as soon as the economy gains are sort of momentum. The fed is out of bullets to fight it. Cannot lower rates any More. Hope you are right but I would in now way bet the farm. Another inflation consideration is healthcare and is proving to be a real killer.

 

Simply stated inflation is best described as when the money supply grows faster than the economy. Q E programs did not work as they did not stimulate the economy even though very large amounts of money ($ trillions ) were dumped into the economy. If you are of the opinion that inflation is not on the horizon buy U.S. Treasuries. Equities ( stocks ) that provide a high yield such as A,T& T don't work well now as the market knows rates will be pushed up by the huge debt load and economic improvement. These high yielders are what people want when rates are expected to stay low. They do well when rates are low. Capital markets are very efficient and the higher yielding stocks like T and V are getting a beating and being replaced with the cyclical stocks that will perform better in as an improving economy. To fight an overheating economy the fed raises to discount and targeted fed funds rate, if it can.

 

When the rest of the world gets more nervous about the huge and growing debt load we have they will bid rates up, especially when the U.S. gets hit with a downgrade. The only reason we are able to float $ 17 trillion in debt is every other country's currency sucks and we are the best game in town at present. If you think the Chinese are buying our debt in bulk to be nice your are mistaken, It is capital preservation, NOTHING MORE as they know their currency is manipulated and don't trust it. When we get to the point our debt must carry a higher coupon rate to sell bonds rates will rise, I think and hope your outlook for inflation is correct but don't count on it.

 

This started out as a thread about why type of gold coin a fellow should buy. Why you always try to twist it around and attempt to input you own agenda leads me to believe you are here for something other coin collecting. For his sake I responded to the post with past experience as first gold purchase worked with a limited capital outlay. I feel it will again as inflation will return. Frankly I have yet to see a post from you regarding coin collecting that added any value to a thread. Don't recall seeing anything from you.

 

Hopefully you now know the basic inflation of inflation. I am putting about 15-20% of my financial assets into AU grade type ones O mints for this very reason (collecting to) and to diversify my asset base. look at the price trends , even during the 2008-2012 period. Don't know what you collect or care but if keep your head in sand about the effect the dollar falling has had on inflation and will have (almost all other commodity related product as well ) you will see the ingredients are there for less than smooth sailing. Fiscal mismanagement catches up with everyone, even the U.S. Enough about economics as it is a bit boring.

 

Now show us what you know about coin collecting by responding to others post in an effort to help the and not try to prove your expertise on everything.

 

A little bit of knowledge like a college degree can help you provided you realize it is only a ticket to get you in the real world of business, where you can really learn about the business end of things. NOTHING MORE.Thinking a bit of exposure makes you an expert shuts off the learning process and stalls a person just as they are getting into the game. I gladly recognize I am just getting into the real world of collecting DEs but I read, make as many contacts as I can and will only quite learning when the pulse goes. I got a business degree from a very "reputable" business college but did not frame it for 22 years as I knew VERY little about my chosen vocation until was I the real world for several years. I am in that stage of collecting a different level; of coin and recognize the importance of asking people and I do like sharing my mistakes to help others. That is why I mentioned a focus on what you are collecting in a previous post is very important and you can achieve you goal with it at a much lower cost. I got in the game early and funded my putting together a complete set of Buffs by age 17, working and throwing papers. I learned for this experience and hope this never stops

[O mint bug]

I would not buy any coin for disaster insurance. If you think it is all about to feel I this hobby is not for you. Real estate? I gather you watch CNN

[GoldFinger1969]

Wrong!. Inflation ebbs and abates. At times we have deflation but if you think inflation is no where to be on the horizon go take Eco 101.

I already did 30+ years ago and have worked as an economist since then.

 

I lived in London for a brief period of time and pre euro. forex rates for the $/Franc on the spot were .10/Franc and the Sterling was almost at par with the U.S $. It relates to economic growth, economic health, monetary policy, interest rates and other forces, which are coming as soon as the economy gains are sort of momentum. The fed is out of bullets to fight it. Cannot lower rates any More. Hope you are right but I would in now way bet the farm. Another inflation consideration is healthcare and is proving to be a real killer.

Globally, DEFLATION is still the biggest threat. Check out Ambrose Evans-Pritchard columns in the UK Telegraph.

 

Simply stated inflation is best described as when the money supply grows faster than the economy. Q E programs did not work as they did not stimulate the economy even though very large amounts of money ($ trillions ) were dumped into the economy. If you are of the opinion that inflation is not on the horizon buy U.S. Treasuries.

If the money supply grows faster than nominal GDP but velocity of money falls, there is NO inflation.

 

Equities ( stocks ) that provide a high yield such as A,T& T don't work well now as the market knows rates will be pushed up by the huge debt load and economic improvement. These high yielders are what people want when rates are expected to stay low. They do well when rates are low. Capital markets are very efficient and the higher yielding stocks like T and V are getting a beating and being replaced with the cyclical stocks that will perform better in as an improving economy. To fight an overheating economy the fed raises to discount and targeted fed funds rate, if it can.

Of course it can...it controls these rates directly.

 

Dividend-paying stocks did poorly last year because the rise in rates after Ben Bernanke's May Taper Talk shocked the markets. The 10-year rose from 1.65% to 3% in 5 months.

 

When the rest of the world gets more nervous about the huge and growing debt load we have they will bid rates up, especially when the U.S. gets hit with a downgrade. The only reason we are able to float $ 17 trillion in debt is every other country's currency sucks and we are the best game in town at present. If you think the Chinese are buying our debt in bulk to be nice your are mistaken, It is capital preservation, NOTHING MORE as they know their currency is manipulated and don't trust it. When we get to the point our debt must carry a higher coupon rate to sell bonds rates will rise, I think and hope your outlook for inflation is correct but don't count on it.

And the tens of trillions in investments that wants safety and security will go.....where ?

 

The Chinese remnibi ?

 

The Russian Ruble ?

 

The Euro ?

 

There's only 1 currency that can handle the workload, and only 1 group of fixed-income markets (US Treasuries + US Agency MBS) that can handle the fund flows.

 

This started out as a thread about why type of gold coin a fellow should buy. Why you always try to twist it around and attempt to input you own agenda leads me to believe you are here for something other coin collecting. For his sake I responded to the post with past experience as first gold purchase worked with a limited capital outlay. I feel it will again as inflation will return. Frankly I have yet to see a post from you regarding coin collecting that added any value to a thread. Don't recall seeing anything from you.

Are you talking about me ? 99% of my posts on this site have been about coins and you and I went back-and-forth on a few different U.S. Coin topics so I don't know where this is coming from.

 

Hopefully you now know the basic inflation of inflation. I am putting about 15-20% of my financial assets into AU grade type ones O mints for this very reason (collecting to) and to diversify my asset base. look at the price trends , even during the 2008-2012 period. Don't know what you collect or care but if keep your head in sand about the effect the dollar falling has had on inflation and will have (almost all other commodity related product as well ) you will see the ingredients are there for less than smooth sailing. Fiscal mismanagement catches up with everyone, even the U.S. Enough about economics as it is a bit boring.

A falling dollar may or may not lead to inflation. Again, you need to understand the role of a Reserve Currency in a global economy. I think O-Mint coins are great to collect and would like to get some down the line but not as a hedge against inflation. If inflation does happen, they'd probably do even better but it could be years or DECADES before that happens.

 

History shows that when populations AGE nominal GDP growth SLOWS and inflation is SUBDUED. The demographic wall is being hit or soon will be in Europe, Japan, and China.

 

Now show us what you know about coin collecting by responding to others post in an effort to help the and not try to prove your expertise on everything.

Again, I think you have me confused with someone else. Check out my posts on US COINS to see dozens of my posts on coins and coin topics.

 

A little bit of knowledge like a college degree can help you provided you realize it is only a ticket to get you in the real world of business, where you can really learn about the business end of things. NOTHING MORE.Thinking a bit of exposure makes you an expert shuts off the learning process and stalls a person just as they are getting into the game. I gladly recognize I am just getting into the real world of collecting DEs but I read, make as many contacts as I can and will only quite learning when the pulse goes. I got a business degree from a very "reputable" business college but did not frame it for 22 years as I knew VERY little about my chosen vocation until was I the real world for several years. I am in that stage of collecting a different level; of coin and recognize the importance of asking people and I do like sharing my mistakes to help others. That is why I mentioned a focus on what you are collecting in a previous post is very important and you can achieve you goal with it at a much lower cost. I got in the game early and funded my putting together a complete set of Buffs by age 17, working and throwing papers. I learned for this experience and hope this never stops

I have managed billions of dollars for some of the wealthiest individuals in the country. I can assure you I live in the real world. If I didn't they would have lost serious money and I would have been fired pronto !!

[BillJones]

For those who might be confused this equation is an economic truism.

 

M*V = P*Q

 

where

 

M = the money supply (amount of money in circulation)

V = velocity of money (the number of times a dollar is spent in a year)

P = the price of goods

Q = quantity of goods sold in a year

 

This equation can be used to explain and predict economic outcomes in a very broad sense.

 

With "QE2" the Federal Reserve has been increasing the money supply (M) at an alarming rate. Normally that would result in price increases (P), and maybe an increase the amount of goods produced (Q), the recovery has been sluggish. The reason, in part is that the (V) the velocity of money is way down from where it was years ago. The involves the "hoarding of cash" by businesses that some claim is root cause of our problems.

 

Why? The main answer is the investment climate and policies that have been created by the anti-business attitudes of the current administration have stifled growth. I also would add that inflation is now under reported by government statistics because of the way it is now measured. What we have is what Keynes called the "Liquidity Trip." It means that low interest rates are irrelevant because investors (businesses) are reluctant to take chances given the current economic climate.

 

[GoldFinger1969]

For those who might be confused this equation is an economic truism.

 

M*V = P*Q

 

where

 

M = the money supply (amount of money in circulation)

V = velocity of money (the number of times a dollar is spent in a year)

P = the price of goods

Q = quantity of goods sold in a year

 

This equation can be used to explain and predict economic outcomes in a very broad sense.

 

With "QE2" the Federal Reserve has been increasing the money supply (M) at an alarming rate. Normally that would result in price increases (P), and maybe an increase the amount of goods produced (Q), the recovery has been sluggish. The reason, in part is that the (V) the velocity of money is way down from where it was years ago. The involves the "hoarding of cash" by businesses that some claim is root cause of our problems.

 

Why? The main answer is the investment climate and policies that have been created by the anti-business attitudes of current administration have stifled growth. I also would add that inflation is now under reported by government statistics because of the way it is now measured. What we have is what Keynes called the "Liquidity Trip." It means that low interest rates are irrelevant because investors (businesses) are reluctant to take chances given the current economic climate.

A Friedmanite monetarist !! (thumbs u

 

And at least the U.S. has control of her printing press, in Europe they have surrendered it to the ECB which led to the problems in 2010-12.

[O mint bug]

Goldfinger

 

A final note the U.S. Treasury prints and mints ALL U.S. coin and currency.. The fed sets monetary policy and asks as our central bank. Its primarily mission is controlling inflation through changes in the money supply often referred to as open market operations.

[GoldFinger1969]

Goldfinger A final note the U.S. Treasury prints and mints ALL U.S. coin and currency.. The fed sets monetary policy and asks as our central bank. Its primarily mission is controlling inflation through changes in the money supply often referred to as open market operations.

Correct, the money supply is determined by The Fed while the actual coinage/hard currency ("high-powered money") is actually done by The Treasury (it's a fraction of total credit).

 

But who were you referring to in your post with OT posts, real estate, etc. ? It wasn't me......

[JIM F.]

Gentlemen,

I think you are doing the OP a bit of a dis-service by getting off topic. But that happens.

[skeeter]

That's OK being off topic. I enjoy reading all the posts. If they get a little technical just skim through.

By the way thanks for the inputs. I'll see my friend this weekend and will past along the info.

The reason for the original question due to my limited knowledge since I do silver bullion and coins so it has also helped me.

George

[GoldFinger1969]

Gentlemen, I think you are doing the OP a bit of a dis-service by getting off topic. But that happens.

 

Credit and monetary policy is CENTRAL to gold pricing.

 

And I was curious about who O-Mint was referring to since he mentioned it a few times and it couldn't have been me.....