I am new to the precious metals investing world and have been doing alot of research about what to buy and where to buy it. I have talked alot with APMEX and I really like thier customer service. I am just wondering if I should shop around on ebay(and trust them) or If I should just buy my first group of metals from APMEX. Another question on my mind is how much silver and how much gold, I am very hesitant of putting $1700.00 dollars out on one ounce of Gold, I am not so hesitant with silver.Oh and one more question, rounds and bars or government backed coins like the gold american eagle. Some argue that the legitamacy of a round or bar will be questioned while coins like the gold american eagle will not, others argue thsat this will not be an issue and to buy anything that is closest to the spot price as possible. Can you guys help me start my collection?
The only things I can tell you with certainty are that you will get a diverse set of responses and what I do personally. I believe there are more than adequate fundamentals for gold and silver, but that silver has even more support than gold over the longterm for numerous reasons I will spare for now. Unless the gold/silver ratio reverts to a more historical average I will be very heavily weighted in silver. I am personally holding 75% of my liquid wealth in silver, which is higher than most. Of that silver, I like to have a diverse makeup. You are right that government backed coins are easier to sell and will retain their premiums in most cases, but in the event of systemic breakdown those could potentially go down to intrinsic value so it's really down to whatever helps you sleep at night. Ultimately if it says .999 pure and 1 oz and you can weigh it out to 31 grams you shouldn't have any trouble selling it, but you probably won't get as much for it either. Even less so with junk silver, but I like to have a little of that for smaller denominations, and the nostalgic collector in me. The other good thing about silver is you can buy some here, some there, without breaking your bank or overpaying. With gold I would not buy anything less than 1/4 oz due to higher premiums at smaller size. As far as who to buy from. APMEX is a reputable dealer. You may prefer Provident Metals or Gainsville Coins for better pricing. Northwest Territorial Mint has competetive deals on bulk purchases of generic bullion IF you call them, but their web site is overpriced. I like to shop around at coin shows and my local dealers for smaller purchases of the more desirable coins, but would go with APMEX or NWTM for a purchase that I wouldn't want to have to worry about. As far as ebay, it's a crap shoot. You might find stellar deals, or you might find a sheister. A lot of people like to use ebay, but I would tread carefully.
If your only interested in bullion investing I would try to get it for as close to spot as you can. You generally aren't going to recoup the extra price when you sell and if you use ebay or something fees will eat up that extra money anyways. I bought a bunch of gold a few years ago and the price of gold has since doubled so I made a good profit on it. I also bought some more collectible gold coins that were much more expensive than spot and they still sell for the same price I paid for them then. They are really neat coins but obviously not as lucrative as the bullion purchases. I never intended to do anything besides buy and sell silver/gold but quickly got into collecting all sorts of coins beyond their melt value. For this reason some of the best lots you can buy are 90% silver coins because you can do both and not spend a lot over spot. I have used apmex and have been satisfied with their service. Depending on what your buying though, you can find the same or better condition coins for much less. If you use a trusted seller and make sure that the package is insured and you should be fine. If you want to have that extra peace of mind than use apmex and pay a little more.
Welcome to the forum! If there is no reason to rush, consider this. Gold is at a high currently, silver is not. The rise in gold seems to be fear money for the US debt limit and the Euro default possibilities. Maybe they continue to get worse, but if they become acceptable ( not necessarily solved) to the market, gold will have a fall back. You probably will have a chance later in the summer to buy gold at a lower rate, but no one knows for sure. If you can predict politicians, you will be rich. Jim
I agree that silver probably has more potential than gold. What else can you buy that is selling cheaper than it was 31 years ago? Nobody knows for sure whether silver will outperform gold or not, but if you are uncomfortable with the price of gold, the easy course of action is to buy silver. Regarding what to buy, I would stick with American Silver Eagles. They always sell at a premium to generic silver and 90% coins and when the market turns down, you will want to own what is easiest to sell for full value rather than what was cheapest to buy. The post above that indicates that they don't is incorrect. I would avoid Ebay [there are many pitfalls] and never buy a coin on impluse. Never buy something where you can't recognize the issuer. Just because a silver round is marked .999 silver doesn't mean it is. So just try to keep things simple. I think American Silver Eagles the best despite the premium. Around me, dealers currently pay $1.50 OVER spot for them while almost every other form is at a discount to spot. Keep it simple and have fun with it.
I would go with ase also. Like cloud said,the $5 or so premium you pay when you buy them partially comes back when you sell. 90( junk silver has a much larger buy/sell spread. Sure, junk can be bought at or near spot, but you won't get near spot should you sell. A recent example, when junk was selling for 26x face, dealers in my area were only buying for 20x face. I've bought online, but after shipping fees, buying locally was about the same price.
If silver were to go gradually to $100, what would an Eagle cost? Would the premium still be $5 or is it a percentage?
Thank you all for the advice, I was just talking to one of my good friends who collects coins and he stated that the value of siver and gold will drop immensly when this so called bubble with the economy bursts. He also believes that with the demand of precious metals being high enough to support new mines to open, we will se an increase in supply therfore decreasing the value of the metals. Are these valid statements? He stated that it would be better to invest in stocks because they are low, invest low sell high. I still think, however, that gold and silver have a good run left. I personally think that gold will take the hit more as desertgem stated above, i'm not sure about silver. I think that for how much silver is being used up in production than the rules of supply and demand come in, it has to at least maintain it's value. What do you guys think?
The simple answer would be whatever the inherent cost to produce and distribute it is, and if they haven't changed the premium shouldn't. The real answer is it is unknown. Those things change based upon what the market is going to do regarding future prices of silver. If it goes to $100 and people are knocking down dealer doors to buy, you can be sure it would be a higher premium. If the market is $100, but no on eis buying and dealers are worried about prices correcting, maybe you could buy under spot. Another aspect of it is what the dealer paid for the silver. In the 80's a lot of them paid higher than market, and for years were trying to get over market for their junk silver, simply because they didn't want to take the "loss". The truth was they took the loss the day the market falls, but many will not see that immediately. All these things are encompassed in dealer premiums in the real world, so its hard to answer you today.
All in my opinion, but here goes... There is no bubble. New mines take 5 to 7 years to open from exploration to production. Stocks are generally better investments than metals, but currently the averages are a little on the high side, not low. Gold and silver might go down or might go up, but not for any reason your friend gave you. I think the probability of gain still exceeds the probability of loss. Unless your friend is Warren Buffett, it is better to do your own analysis. Except, that Warren has had a rough decade lately and even his advice is suspect.
This is why its called speculating in commodities. You can find people on this board with both opinions, maybe more PM bulls than average just because this forum is for people who believe in PM investing. To me, (and I am known as a contrarian somewhat on this board), I think LONG TERM PM will hold its purchasing value, meaing go up in an inflationary economy like ours, but there are no guarantees short term. I think both are probably bumped up a bit versus long term prices because of the current news stories, and am not sure I would buy at todays prices. I have that luxury though since I bought a lot 20 years ago. I think having them in any portfolio is beneficial. What should YOU do? I have no idea, it will depend on your worth, what its in, your plans for retirement, need for cash, etc. One thing you should be aware of is PM investing does have buy/sell spreads, so I would look at buying for a long term timeframe if you wish to invest to minimize this cost. Btw welcome to the board! Chris Edit: I didn't see the part about your friend saying PM will drop "immensely". I do not agree with that statement, and feel that gold especially is not too far out of line with its long term purchasing value. It could fall, but not what I think would be "immensely".
It seems to generally be a percentage except that the percentage tends to drop as the price rises. So you might have a 10% premium at one price, and an 8% premium at double that price. There is no fixed answer.
Both really good points, and it all does come down to speculation and what you believe in, I second everything cloudsweeper99 said. My biggest concern is that sometime in the near future I am going to be using my dollar bills to start my woodstove because that will be worth more than trying to buy something with it. If you invest in metals at least you have something that will always be worth something. Another question that I just thought of is how do you guys store your coins? I have a safe and I am just looking at how I am going to store the coins inside of it.
I would say make sure its bolted from the inside into the floor, near walls to prevent people from leveraging it off, and put some moisture absorbers in there. Even ASE you might as well keep in good condition. If you do not have a really heavy safe, preferably in a basement closet bolted into concrete, maybe look at a SD box instead. Thieves love safes, and are very good at either breaking into them or simply carrying them off if they are not the correct type.
A year ago I was seeing $3 premiums at my local dealers, now I'm seeing $4.50 and more often $5. This would seem to indicate more of a weighted average, but it may have more to do with demand than price.
