Should a cheapskate buy low premium or low spread?

Performance comes and goes, but expenses are forever.

So imagine someone buying physical but trying to shave every possible basis point off their deals.

One approach would be to go for the lowest premiums, so as to get the most gold per dollar. That would take you to odd and relatively unpopular sizes like the 100 Corona, and away from the relatively pricey Gold American Eagles.

But wait, there are two sides to an investment, buying and selling. A round trip deal on 100 Coronas (buy and then sell immediately) at Apmex today would cost you 3.6% of your total. A round trip on AGEs would be only 2%.

So would our hypothetical shrewd investor buy AGEs? The problem is that the premium might disappear over time, creating a loss even if the price of gold were steady.

At which point our hypothetical investor might shrug and say "Don't sweat the small stuff", but then again might say "A penny saved is a penny earned".

Thoughts? Assuming the hypothetical cheapskate has ruled out electronic solutions like GLD or Bullionvault.

 

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I think that whenever you decide to purchase something other than AGEs and ASEs, you run into additional expenses and potential difficulty reselling them someday.

 

I AGREE 100%
By the way Cloudsweeper you never did coment on my new icon? I hope you find it more to your likeing! LOL!

 

I just don't think you should go out of your way to be politically offensive. Other than that, you can do what makes you happy.

 

My thoughts are that the better investment would be a .999+ purity coin as opposed to the .900 Corona. In my experience the 24 karat coins seem to be a much more sought after coin compared to lesser karat coins. For example, with the gold maple leafs you can usually get them lower per ounce than ASE and some places will pay just as much for them on resale.

 

Thanks, cdncoin -- I was wondering about Maples, since I'd heard that people outside the US didn't always like 22 karat gold.

2.6% spread at Apmex.

 

With investments, time is even more important that buying and selling. You need to dollar cost average and not flip.

For example, I buy 10 AGEs every year. The 10 that I bought in 1994 for $3,5000 are worth $12,000 today. I could care less about the premium over spot. Of course the 10 I bought this year cost me, $9,680 but I could still turn a profit if I sold them today.

You need to buy in incriments over time and premiums will not be a factor to you in 20 years.

 

I agree with andrew289 about the value of long term investment over quick flips since my investment stratagy is long-term, but I still think premiums should be considered. If I can get a gold maple leaf with $3 less premium compared to an AGE, when I see I have $3 more in my pocket. I will admit $3 when gold is $1000 an ounce is only 0.3%, but it is still extra money no mater how little it is.

 

Some of these coins though may appreciate over bullion value in twenty years, so you might consider paying slightly more for those.