I just bought my first bullion item. A plain 1 oz gold bar. I'm thinking investment potential. The reason for buying a plain gold bar is easy to understand. There is a lot less overhead for it's production than the so called "bullion coins". Hence lower initial investment. Why a 1 oz of gold rather than silver? Initial Thinking - I considered buying one 10 oz silver bar each month. Then I found out that the state of Maryland doesn't tax precious metal purchases if the cost is over $1000. That saves 6% right there if I spend the $1000+. Next Thought - How much silver would put me over the $1000 level? Five 10 oz bars would be close; six would definitely put me over. So instead of one bar a month I would buy six bars twice a year. Final Thought - Storing 60 oz of silver each 6 months would at least be annoying if not difficult (a safe deposit box could get quite heavy). But the cost of 60 oz of silver is about equal to one oz of gold. BINGO!!! I'll buy a 1 oz bar of gold every 6 months. So I bought my first 1 oz bar today. Gold spot was $1242 and change. Dealer's markup was 3.2%. So the total cost was $1281 and change. Now if I can only get gold to go back up to the $1500-1600 range And I've now got 6 months to see if the gold spot is going to at least increase enough before it's time to buy another bar.
At first I thought this was a Detecto post In all seriousness that sounds like a great plan. Dollar cost averaging is a great method and if you consistently buy like you plan to you needn't worry about the price of gold. My only criticism is that I would shy away from the private mint gold bar. Right now on apmex( and I'm sure on many other online dealers) you can obtain a kruggerand or philharmonic for only 8 dollars more than what you paid. That's for single quantities to. I'm sure there's other options of similar caliber I just didn't check. Given that small spread I think you should opt for government made 1 oz ers for your next purchase But in any case congratulations on obtaining your first bar and may there be many more to come
The Philharmonic would be okay, but not the Krugerrand. The Philharmonic is .999 gold. The Krugerrand is only .917. If you're buying bullion you don't want something that's going to take refinement to be useful. Although .917 is 22 karat which is useful for jewelry. Anyway I want to save all that I can on the price so even the $8 higher to me is a waste.
That lower initial investment also translates into no added premium what so ever when you do eventually sell it. Most places will actually only pay a little under spot for generic private mint gold.
You've got a great start and definitely the proper mentality to get into bullion. I would warn you though, bullion is great for long-term investment but many fall into the trap of attempting short-term flipping which usually doesn't end well. Well, keep it up!
I'll be keeping records of cost and current value. I probably won't sell until my profit is in the 3-figure range. And that will take a while at the rate the stock market is going.
