How to start "investing" or "stacking" in precious metals

How would you recommend new investors or stackers begin? This would be a good topic to pin after others reply to it, so new users don't start threads like this over and over again.

My recommendation is new precious metals buyers is to always do the following:

1) Do not buy silver and gold unless you can afford to. First things first, pay off your debts. Second thing: invest in normal, better performing investments. Your company's 401k, a personal roth/traditional ira, a mutual fund, managed investment accounts, etc. THEN supplement all of this with precious metal stacking/investing/collecting.

2) Understand how you plan to liquidate your PMs. Do you want to try to make money within a short period of time? You probably won't, because buying PMs requires a bigger fee (in the form of premiums over spot) than normal investments, so it is extremely unlikely you will be able to make money reselling in short period of time. Do you understand that reselling your PMs for a profit will be considered a capital gain, and you will be taxed accordingly? How will you resell? Local coin shops are the best source, because most will buy any amount, small or large. However, online dealers will probably pay the best, but understand that they require large minimums when they buy from you, and that you are responsible for shipping it to them.

3) What will you buy? My preference is that you should be equally concerned with buying at the lowest premium possible and buying something that is the easiest to liquidate. The factors that make something easy to liquidate, in my experience, are that is it well known and that it is very easy to authenticate.
A) GOLD
for the aforementioned reasons, the Gold Maple leaf is my preferred investment. The reason is that it the least likely to be counterfeited due to extreme security features and because it is as well known as the American gold Eagle in the United States and perhaps more well known outside of the US. Buying in a full ounce also carries the lowest premium over spot of only around 4%. AVOID BUYING FRACTIONAL GOLD. The premiums are often in the double digits. However, if you can ever find, say, 1/10 gold at or near spot with a premium equal to or lower than the full ounce premium, by all means, by it and have fun. But, again, make sure it is a government issued piece of bullion that is recognizable.

B) SILVER
Silver is tricky one, because its value is so much lower than gold, its cost to mint an equal amount will often requires 90 one ounce coins just to equal a 1 oz gold coin. So, the premium you will pay for a 90 oz of silver coins (in 90 coins) will be much greater than buying an equal value in 1 oz of gold in a single coin.
Thus, while security on the Silver Maple is the best in the world, and it is as easy or easier to sell than an American silver Eagle, it will cost you considerably more to buy Silver Maples or Silver Eagles. So, I recommend buying junk American Silver as close to spot as possible. Junk silver is US coins that circulated as currency through 1964 that contain 90% silver. These are recognizable to everyone in the United States, and they individually contain so little silver, that they are unlikely to ever be counterfeited. They can also be purchased close to spot.


What do other users recommend to newbies who might be interested in starting to stack?

 

Log in or Sign up to hide this ad.

Looks good to me. My suggested addition: do not buy slabbed bullion coins or proofs.

 

UNLESS you can get it for the same price as a raw coin.

 

I mostly agree. My main disagreement is how you view Maples so much more favorably. No, it is not nearly as desired or priced the same as eagles in the US. Most of the time, the premium differences between them you will get back when you sell, nmand you will have an easier time selling the eagles IMHO. This is at least true in the US.

Myself, I invest in pre-34 US gold coins. I have two dealers who call me when they come in and they can sell me close to melt. I paid $1500 Thursday for a pretty 1907 St Gaudens $20. Much more interesting way to me to own gold.

 

That is a much more interesting way to own gold, indeed! However, please just realize that there is a reason why they are so eager to hold pre33 gold for a buyer. It is very difficult for an individual to sell a raw pre33 gold piece to a dealer for anywhere close to spot, and forget about getting any numismatic value from it. I think for the average newbie stacker and buyer who is not a numismatist, they should not buy circulated gold. It is too easy to counterfeit, dealers always buy back well under spot, and you're just opening a giant can of worms for yourself.

Now, for someone like yourself, I think you should continue buying what you like because you because it sounds like you are collecting as much as you are investing, and based on your other posts, sounds like you possess a little numismatic interest and knowledge, so buying raw pre33 makes sense for you.

 

I do not believe dealers buy back early gold at any less a percentage than modern gold. The advantage is if gold tanks, early gold coins will not drop as much due to numismatic interest. You are right about forgeries, though I have seen just as many forgeries of modern gold as earlier gold lately.

Thanks for saying I have "a little numismatic interest". You should check out my other posts here on CT. 45 years of coin collecting, and maybe 20,000 "better" coins. Most people here would say I have " a little bullion interest" instead, lol. It's all good though.

 

buy an ounce of gold per year

 

Yes, or whatever. But be consistent with when and what you buy is always a good investment strategy. Whether it's putting x dollars into the market every month or putting y dollars into gold every year.

The thing that can make doing that with gold a little tricky, though, is it becomes a little subjective and less rational when you require of yourself to time your purchase. You can never really predict what the market will do, so you're not sure when your yearly purchase of an ounce of gold, or whatever, is happening at the right time.

 

It doesn't matter all that much as long as you have it. Think of all the spending people do with nothing to show for it.

 

True. Forced savings, assuming people pay off debt before they do it, is very helpful for them long term. Most go through life spending everything, then when retirement comes looks to the government to save them.

 

I don't mind people being allowed to survive and paying into social security and medicare etc, but it's nice to have extra.

 

That is actually sound advice and easy to accomplish. Brew your own coffee every morning instead of Starbucks and in a years time, you just paid for an ounce of gold.

 

Sadly we have trained an entire generation that they should have all they want now. Just use credit.

 

hahaha! Wait. Hold on.

Brewing your coffee at home should run you around 25 cents. (And I agree, it is best to not waste your money buying coffee out. Keep that as a special treat). But a 12 oz coffee at Starbucks is right around $2 plus tax.

If we figure not getting Starbucks coffee every morning saves you $2 per day, that's only $730 per year. I wish gold was only $730 per ounce.

 

I have a Starbucks near my work. I have never seen one person walk out spending only $2, most checks if only for one drink run between $4 and $5.

 

Right. Because they are people ordering things that are hardly coffee. Things that they couldn't make at home. For those things, there is no money saving possibility by making them at home, because people can't make those things at home.

1) criticism number one: people spending $2 on drip coffee at Starbucks when they could make it home for at least $1.75 cheaper
2) criticism number two: people who don't actually drink "coffee" when they order coffee but get a Starbucks monstrosity that is more milk and sugar than it is coffee.

 

I get a call or text about once a month from a realtor wanting to know if I will sell one of my properties near a University. I ask ~ What's the offer,...and the agent goes, well we will have to appraise it, etc. etc..........pause from script.......I say " when you have a price for me call again" Bye.. If one doesn't have to put themselves at a disadvantage, life is good. No one ever calls and says ....we want your metals.

 

I thought it was just near me. Realtors contact me about my rental home at least monthly.... I guess University for you, Lakeview for me, maybe they are just trolling to catch an idiot.

 

For investing, avoid looking for key-date or graded coins which will hold higher values than their metal content. Pre-1965 is great for "stacking". I particularly love the 1964 Kennedy's, that's about how I started. It is true that pre-1965 is unlikely to be faked, especially the dimes and quarters, there'd be no money in it for the people doing that.

Coins like Morgan Dollars are not really silver-investing coins, they all hold premiums nowadays even on the most common year and common grades.

 

Be careful. There is money in faking quarters and dimes. I have seen listings on Alibaba for them. When you think about it, even a dime, when selling for $1.30, is worth it if your cost of production is like $.06 a piece.

Nothing is too cheap to be faked. Everyone simply needs to learn what real coins look and sound like in today's world.