My (revised) argument for the best way to invest in bullion

The best bullion to buy is government-issued, high security single ounce gold coins and "junk" circulated silver. How did I come to this conclusion?

These are the things that matter most to me, in order:
1. Security. Particularly with the higher the value, the more interested I am in owning bullion that has the lowest risk of counterfeiting as possible. I don't want to lose my investment, and I want the easiest resale possible, which will come when my buyer also knows what he's buying is safe.
2. Low premium. This should be self explanatory, but basically I want to invest with the lowest risk possible and I want to maximize the return when I go to sell. The more premium I have paid, the higher the risk and the more I would have to wait for the price of the metal to rise before I could make a profit reselling it.
3. Storage. We all know owning metals is a burden due to storage. Metals are heavy, take up space, and are untraceable in the event of theft. The higher value I can store in the smallest weight and area possible, the better.
Some of these points were made in my previous thread: https://www.cointalk.com/threads/the-case-to-be-made-for-gold-vs-silver.299858/


Based on the three things that matter to me, I argued it was
It is smartest to own gold over silver. I still believe that is so. To summarize:

1. Security: tie between gold and silver Government-issued bullion coins, such as Maple Leafs, have hard to counterfeit radial lines and privy marks. Comparing gold to silver Maples, this is a tie, because both have the same features.
2. Low premium: Hands down, gold is the winner. Today gold is $1291. A 1oz Gold Maple on JMbullion is $1341. That's a premium of 3.8% and a loss of $50 paid over spot.
Silver is $17.12. Silver Maples on JMbullion, buying a quantity of over 25, is $19.61 each. To buy approximately the same amount of silver ($1341.00 worth) that is 68 silver Maples for $1333. In doing so, I would have paid a premium of 12.7% and lost $2.49 per coin and lost $169.32. In all scenarios, buying in nonfractional form results in the lowest premium.
Clearly buying gold vs silver is the smarter, low premium buy
3. Storage: Gold wins hands down: 1 ounce vs 68 ounces.


However, we all still like silver, right? I still want to own some silver. I don't just want a safe deposit box full of gold Maples and Eagles that I rarely visit. That's a little boring.

So, owning American and Canadian circulated "junk" silver is still a good, although not nearly as good, buy
1. Security is high on government issued currency. The details are fine and the age is apparent. Trying to replicate these details and make the coins appeared aged is a challenging task. Most counterfeiters wouldn't bother due to the low reward of counterfeiting of Mercury Dimes, for instance. Plus, reselling junk silver is very easy.
2. Most American junk silver can be purchased right at spot or hardly much over. Canadian junk can even be purchased for sometimes a little under. I regularly buy my Mercury Dimes at spot or a few percentage points over.
3. Still a loser in this category. Junk silver takes up lots of space. However, it is already circulated, so it may be fondled. Thus, it's worth buying.


So for those reasons, my advice is to buy full one ounce gold coins issued by a government mint. To supplement your gold bullion investing and to have a little fun, buying junk silver is the best way to go.

 

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I agree gold is the way to go.

 

Gold is the way for me to go, also, but only as a small part of a diversified set of investments.

 

I agree with much of your calculations. Although they are counting on the ratios staying nearly the same for the holding duration. I like gold definitely, but make sure you stack silver also. You never know when a huge spike in spot price is coming. Stay diverse in your stacking. Besides, there's a lot of good looking, near spot coins out there. It isn't pure investment to me, it's also a collection.

 

I have some ASEs — about 10 rolls worth — but no gold. The OP's point on the premium paid for these coins became very evident to me, so, after buying nearly all of my Silver Eagles in a short space of time, I stopped completely, almost two years ago. Based on random checks, I've noted that there is no recovery for these; in fact, I would be almost sure to lose a lot if I were to sell now.

I would, though, like to begin buying gold. What would be the downside of buying half-ounce coins, though?

 

A little more premium.

 

You pay a higher premium but then again you don't have to pay the whole $1,320 or so. I was a silver stacker but got my first few gold ounces this year. I would like to keep the same mindset and by some gold fractionals here and there.

 

Me, too. The only thing that's holding me back is that when I'm gone, my wife is not too keen on money issues, leaving her open to some scalawag who might give her less than the gold & silver is worth. Since I am of the age when Uncle Sam is forcing me to take distributions from my accounts every December, I am prone to buying coins off the radar screen so as to preserve a good part of my (unneeded) retirement money.

 

You can make me your beneficiary.

 

From what I've seen in the marketplace over the last 10 years, it's kind of a "bastard" size. For some odd reason it's the size that is the least bought and sold. If you're not willing to buy the full oz, the 1/4 seems to be the best happy medium as the premium difference between the 1/4 and 1/2 is not big enough to cause any real pain. Just keep in mind that any premium over spot is basically the juice...

 

You could be proactive. Find a good place, or places to sell. Make a list of your coins, with current values, (FMV) and update it once in a while. (Annually min.) This has made me feel better about that necessary, often overlooked, burden.

EDIT: search for threads that show different ways to catalog your coins. There are anywhere from programs, to spread sheets, to just pen and paper.

 

A few random thoughts on counterfeits and over-bullion premiums: Back in the late 1950's, when it became apparent that the US Treasury could not hold down the price of gold forever, I began buying $20 gold pieces at $38 each. [People would say "It's illegal to own gold"; I'd say, "Not if you are willing to pay a premium to get it in coin form."] To show how smart I was, I quit buying when they got to $70 each, because I was sure gold would never go over $100/oz. Thanks to my laziness and procrastination, I still had them when gold got over $600/oz in response to the Hunt brothers silver debacle in 1980. [So depending on the circumstances, it can make sense to pay even premium over 100%.] I was selling them about a half dozen at a time to a big Southfield, MI dealer. One day I went in and he said "You know, a couple of that last batch you sold me were counterfeit." I said "Gee, I didn't know; I'll take them back of course." He said "Too late, they already went to the smelter. They were Lebanese counterfeits; full weight and fineness, just fake." I guess if you were in Lebanon in the 1950's, and you already had the die cut, it made sense to take $35 of bullion and make it into a coin you could sell for $38.

 

Thanks @PeacePeople, I was watching that Mike guy on HSN last night, and after sleeping on it, I decided that I would begin my gold purchases with the three commemorative gold coins from 2016 for the Dime, Standing Liberty Quarter and Walking Liberty half. After checking eBay, it was clear that these coins can be bought for much less than the HSN/CSN prices right there on the auction site. I have not found any listing of preferred gold sellers here, yet, so I would like to know what search I need to place to find such a list. These are rather irrational purchases, I realize, but...

I decided, too, to embrace the conventional wisdom and stick with the 1 ounce coins. Again, I'm a babe in the woods when it comes to buying gold, so your experiences will be helpful and appreciated.

 

At EBAY, search DAILY DEALS GOLD BULLION. You should stick to the bigger bullion dealers, at least until you are more confident. You'll know them by the feedback numbers, and ratings. Feel free to ask more questions if needed. Also, same search using silver, instead of gold, if you are looking for silver that is.

 

Thanks ^

 

I don't like paying for the extrinsic value of minted coins. I prefer 1oz bars of gold and 10oz bars of silver. I buy when the major dealers advertise a discount over spot. This usually happens when prices fall. I think it is because they want to liquidate their inventory and have cash rather than have to write down the paper loss due to reduced inventory value.

 

Great exchange of ideas! I agree with the 1 ounce gold coin acquisition program, with some junk silver added for good measure.

Keep on stacking!

 

I'm gonna break that rule at first, and get those 3 commemoratives, then I'll be looking in December to buy one or two every six months or so.

 

You can get them now at much less than the mint charged.

 

I try to buy govt minted coins... 3, 4, 6 and 11% premiums max for 1, 1/2, 1/4 and 1/10th sizes. Others may disagree, but that seems to be the top end of the range I'm willing to pay for premium. I've paid more when I didn't know better, but not much more and I'm unwilling to chase any collectibles and pay more. Why would I when you can buy those 2016 commems you're looking at for way less than issue. It doesn't always work that way, but if it doesn't, I don't buy.