Most investors concede we haven’t seen the likes of our current investment roller coaster since the recession of 2008. Last week, the Dow Industrials plummeted more than 3,500 points. While investors bit their fingernails wondering how this might affect their IRAs another investment sector quietly saw a substantial boost.
In times of uncertainty and crisis, precious metals – specifically gold – usually experience an impressive jump. In the past month, the shiny metal climbed $100 per ounce to over $1,600. From just one year ago it’s up $300 per ounce....
A guaranteed offshoot of these notable price increases will surely be opportunistic “gold hawkers” coming out of the woodwork to lure the uninitiated. You may recall the hype the last time gold prices began to creep up. Then, some pundits declared gold would “soon be selling for $5,000 per ounce!” When it didn’t, they quietly slithered away.
Similar rumblings are just now starting. With gold edging higher, ads are sure to be popping up exhorting people to buy now. For whatever reason, $5,000 reoccurs as a magic number. Naturally, the sellers want you to believe those lofty dollar amounts will appear in mere months.
The ups and downs of last week’s gold prices even created some alarmist verbiage from normally rational sources. When gold dropped $25 last week to $1,625 one site that reports on gold stated, “If you haven’t bought gold yet this is an ideal opportunity to scoop (it) up at a bargain-basement price.” The irony? Just days later gold dropped again to $1,585.
The bottom line remains that absolutely no one can predict or determine the future price of gold. In the past there have been “gold advisors” who charge upwards of $500 per hour. That money would be much better spent going directly into the precious metal than to soothsayers.
As regular readers know, I have always been an advocate of owning some gold and silver. The ideal form in which to do so is recognized coinage. The most sought after and traded is the American Eagle. The major caveat is how and where it is purchased.
The US Mint sells gold and silver Eagle coins in uncirculated and proof conditions in beautiful display boxes. Price-wise, this is not the best way to buy it. Each coin sold by the Mint comes in a pretty box with a Certificate of Authenticity. They look nice but you pay a hefty premium.
When gold is valued at $1,600 an ounce, an uncirculated one-ounce coin on the US Mint website costs $1,940. That same coin is available from most local coin dealers for around $1,640. That $300 difference is a lot to pay for a fancy box and certificate.
Other than the American Eagle gold coin, the Canadian Maple Leaf, Chinese Panda and South
African Krugerrand are investment staples recognized by any precious metals dealer. BUT, WAIT!
As if China hasn’t contributed enough being the originator of the Coronavirus, they are also the world leader in creating counterfeit gold coins. This is not intended as “China-Bashing” but, the facts are indisputable. The flood of fake gold bullion coins from China including precisely crafted counterfeit American Eagles is chronic.
Most remarkable are reports from people who have seen China’s counterfeit operations in action. In most any other country such manufacturing would be totally clandestine. Not there. One traveler told NBC News, “They take the actual image of the coin, use a graphics program to touch it up and then they send it to an engraving machine. They’re doing it just like the Chinese mint does.”
The fake coins made of base metal are then sold to unsuspecting buyers via flea markets or websites such as Alibaba. The Chinese government has so far turned a blind eye to the problem.
The solution is to get a money-back guarantee from a dealer you know and trust. As the adage goes, “If you don’t know your coins, know your dealer.” That alone is worth its weight in gold.