So I inherited $5000 and I want to buy silver and gold coins... what would you recommend?

I am leaning towards (15) 10oz Engelhard bars and about $2000 in 90% but I am not 100% sure. Your input would be greatly appreciated.

 

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Back when gold was trading at $308 per ounce I made the mistake of buying some (not recognized) bullion coins which traded for less money when I sold them. I got good money for those pieces that were American Eagles or Canada Maple Leafs, K-Rands, etc. However, some of the Canada gold coins that were proof condition & commemorated one thing or another, traded at a discount when it was time to sell.

I am not telling you to invest in gold. I'm just sharing a personal experience.

IMHO you should probably put the 5k in the bank.

 

I remember those days....I think it was back in 2003 when gold was $400/oz and silver was at $4/oz. I bought most of my silver and gold then...(about 45K from my first 401K) and held onto it. I made a killing but am saving this until my retirement and or grandchildren come along.

 

With the Fed looking to raise rates soon, I'm thinking that PM prices will rise along with them.

 

OK, I gather that this is a portion of your portfolio that you want to put into precious metal. Just don't let it become too great a portion of your total holdings. I recommend you consider Maple Leaf coins. They are pure & they trade easily. American Eagles are great too providing you do not pay much premium to buy them.

 

Buy a high end, pcgs certified rare coin, not bullion.

 

Most of the discussions I read indicate that when the Fed raises rates, interest-bearing instruments will become more attractive, and money will flow out of PMs.

It seems to me that rising rates would be inflationary, and that PM prices tend to inflate in step with everything else over the long term. But I recognize that there's an awful lot I don't understand about macroeconomics, so I don't risk a lot on my own suppositions.

 

Do you really think that is the better thing to do?

 

In general, I don't think it is. Rare coins have a much larger buy/sell spread and a much thinner market than bullion. If you have done a lot of studying, you might be able to pick some that are good long-term investments, but if you're looking into bullion, just buy bullion -- Eagles, Maple Leaves, K-Rands, Kookaburras, Pandas, etc. Heed the advice about staying away from no-name bars and rounds.

 

I think the prospect of raising Fed rates have, along with lower oil prices, been a driver this year in lowering pm prices already. The major downfall to pm is there is no current return on the investment, so if rates go up for bonds why does anyone want to hold an asset that has zero return?

Just off the top of my head there are 5 other aspects to pricing, but to get into all of them would take much longer, and in the end would not prove anything anyway. I simply wanted to say its my opinion that expected Fed tightening has already been priced in. If they change versus expectations it could affect pm. I am kind of viewing a longer term malaise in pm. I think we will go into a very, very slow tightening pattern, and this will simply be a firm headwind for pm for a few years. All of this is great for me, as it will shake out other participants and possibly further depress premium prices on things I would like to buy for long term holding.

Again, just my opinion, and EVEN if I were right 10 new things have happened around the world as I type this that will affect this outlook anyway.

 

Btw, to answer the OP directly, I would lean towards a mix of gold and silver, and concentrate on recognizable bullion coins. I would say one or two AGE one ouncers, along with either ASE or Maple leaf's, or possibly junk US silver. These are the easiest to move and verify authenticity when it comes time to sell. This is if you are simply interested in the investment aspect of buying pm.

Want another suggestion? "Collect" them. Start a "collection" of pm coins, but creating a HARD limit on premium over spot. I have done this for my three year old. Every time I go to a coin show I buy him at least one silver one ounce coin. However, I ONLY ever spend $5 over melt for the coin, never a cent more. This way he enjoys the pretty silver coins, he gets the happiness of owning coins he likes, and we build up a base of silver ownership at a very reasonable cost. I consider the "collecting" aspect of it to be a winner in two ways. One, he gets an immediate return from the investment in the form of collecting enjoyment. Second, some of them do tend to appreciate as a collectible more than bullion, but my price paid is low enough I do not have to count on that for the investment return.

So that is my suggestion sir. My only other comment would be if you pursue this course you need to be very firm with yourself on the premium cap. WAY too many people SAY they are only buying the coins for the pm value, but then talk themselves into huge premiums. Paying a huge premium is fine if you are a collector, but if you are pursuing it as a duel track a huge premium complete negates the bullion investing aspect of this plan.

 

Wait until tonight get on apmex, MCM, and Silvertowne. Between the 3 at least one of them will have 1 oz gold pieces for spot or cheaper. For the last 3 months they have been running these Friday deals thru eBay.

 

Yes

 

How long do you think this bubble is going to last though? Dont you think high end coins are becoming a little crazy in price and should be due for an adjustment soon? I mean how much higher can a $10 million coin go? And we have been seeing some record prices in almost all of the last several major sales. Can these things really just continue to go up and up and up and up ad infinitum?

 

I thought the OP had $5k... not 10 million. And in fact, the prices of rare coins have experienced a minor market correction over the past 2 years, so now is a GREAT time to buy nicer rare coins. There are some very good deals out there. Buying a couple low pop, better date rare coins with great eye appeal for $2-3k each, depending on the series, will pay off as an investment. People will always want beautiful rare coins, and if you have them and bought at a good price, they are easy to move for a profit at any time. Bullion is plentiful and can be bought anywhere and everywhere. JMHO.

 

You are thinking a stronger dollar and lowering inflation risk will be good for PM???? I am not seeing it that way.

 

Im sorry I altered the parameters a little bit to better fit my mindset. I just cant see how these prices can continue, what happens when more baby-boomers start to sell off in the coming years? Its not like there is a huge middle class anymore to support scooping all of these up. Thats what I am worried about as a 28 year old in the hobby.

Historically I think you would be better off with rare coins too, I am not on the bullion bandwagon, I am just trying to see how this model for rare coins is going to be viable in the future for people like you and I who would want to make some money on these coins.

 

Do not deposit your $5,000 in the bank! It use to be that banks had to report transaction of $10,000 or more. Not any more. The banks today must report any transaction of $1,000 or more. Familiarize yourself with the law outlined in The Bank Secrecy Act before you find your money confiscated in some civil forfeiture seizure, or, yourself audited by the IRS. http://www.fincen.gov/financial_institutions/msb/materials/en/bank_reference.html

 

How can anyone even take the IRS seriously anymore?

Lois Lerner? Political targeting? High ups in the IRS filing wrong returns, breach of security and personal information? Al Sharpton? Technologically inept?

I dont see this entity being around much longer myself? How can they even pretend to be accomplishing anything worthwhile?

 

It just seems logical to me. If you have something hard to find and stunningly gorgeous, people will fight over it. Whereas if you have something that everyone can easily get anywhere and anytime, then you don't really have anything at all.

Now, it is totally possible that of you buy gold at $1200 an ounce, in 20 years, it will be worth double or triple that amount. But realistically, most people will not hold their investment for 20 years. After 4,5, or 6 years, they'll have a baby, or they'll move, or their grandkids will need help with medical bills, etc. They'll need to move it and they'll shop it around for a week and likely break even.