Just when you thought it was safe to go back in the water, the sharks again begin circling. This time, they’re not limited to Jaws striking fear in people off the fictional New England village of Amity. These sharks are on both coasts and throughout the Heartland. They’ve returned in the form of hucksters working feverishly to convince us that our financial world is about to implode and that gold is the answer.
Understand, I’m not saying they’re wrong. Inflation is rampant; the national debt now exceeds an unfathomable $31 trillion; there remains a good probability of another recession; the stock market can rise or fall 500 points on a whim; and, especially in the food service or hospitality fields, most of the country appears happy not to want or need a job....
Then, there’s a little thing we call an election this November. The barbs, jabs and vitriol among the candidates are nothing short of vicious. Most of them suggest we should dread our economic future. Swell.The crux of the messaging in all this is that the one safe harbor to which everyone should retreat is the ownership of precious metals – specifically gold. A recent notice I received featured the headline, “A Crash Is Sure To Come!” Others have stated, “A major correction is imminent” and we should all have “A Flight To Safety.” Again, all these include a link to buying physical gold or gold deposited in an IRA.
Such alarms are set off when the economy appears dicey. They send many scrambling to invest in or, at least, investigate the metal. Allow me to offer a few caveats for now and in the future.
First, know the value of gold. To do so, just go online and search, “Current Spot Price of Gold.” It will show the price per ounce. (As of this writing the spot price was near $1,700). Whatever that price, understand it is for raw gold. The price for a fabricated bar or coin will always be higher.
Most bullion bars and coins are .999 pure. For minted gold one-ounce coins, expect to pay upwards of $100 to $120 above the spot price. On the flip side, when it’s time to sell you should, in turn, receive $60 to $70 above the spot price.
Second, counterfeit gold coins exist. In particular, numismatic fakes fabricated in China are recognized to be exceptional. Locally, coin dealers are the most traditional suppliers of gold to the general public. Purchase only from a recognized dealer or source. As the adage goes, if you don’t know coins, know your coin dealer. Check to see if they are a member of the American Numismatic Association (ANA) or, preferably, the Professional Numismatists Guild (PNG). Those offer recourse in the event of a dispute.
The best way to assure a coin or bar is legitimate is the weight. All should weigh exactly what is imprinted on them. Not one scintilla more or less. Remember! Precious metals are weighed in TROY ounces – not avoirdupois. Be sure to factor that when weighing.
Third, Always take possession! Some purveyors suggest you allow them to hold or store your gold. Bad idea. Those fleeing Nazi Germany or other Totalitarian regimes survived by taking gold with them, often, sewn into the lining of their clothing. It would be used to bribe border guards or others. Not surprisingly, some who have entrusted gold to storage repositories have never retrieved it. It’s best to secure it in your own safe deposit box.
Fourth, don’t expect overnight profits. This is particularly important considering gold is a “crisis” investment. While crises may be good for gold, it’s rarely good for anything else. For the record, the highest price for gold was $2,032.16 per troy ounce on the August 7, 2020. Technically, the highest was $850 in 1980 which, when adjusted for inflation, is over $2,800 in 2022 dollars.
Finally, if buying for gold bullion value, avoid the “presentation coins” sold by the US Mint. Gold coins they sell are specially struck and come in a presentation box with a Certificate of Authenticity. That may seem appealing but you pay dearly for it. The Mint charges upwards of $800 to $900 over the spot price for such coins. In the end gold is gold is gold. Clearly, it would take a massive crisis for the price of gold to rise that much.
For more collecting advice, visit www.PRexford.com