The Secrets to Buying Gold the Right Way

Diversification is the key to reducing the risk of over-exposure to a single asset class in all types of investing. Gold bullion can be beneficial for short-term goals, but the governments and central banks around the world that own gold can have a major effect on your gold’s value. Gold can be used to manipulate the value of world currencies and, therefore, can be used for political purposes, causing the value of gold bullion to rise and fall sharply overnight, wreaking havoc on your portfolio. When moving assets into precious metals, we recommend diversifying your investment into both bullion and certified Investment Grade Coins. This will help protect you from the downside risk of bullion while giving you the security and long-term growth potential of the rare coin market, which is uncorrelated to both bullion and equities.

Having possession of gold, the physical metal, offers the most protection that precious metals can offer. When you purchase gold stocks, exchange traded funds (ETFs) or bank storage programs, you do not own gold and you are at the mercy of a company’s management to protect your investment. As Ronald Reagan said when authorizing the US Mint to start producing gold and silver coins, “True freedom can only be obtained with financial independence, and financial independence can only be obtained through gold ownership.” Take control of your money by taking physical possession of your precious metals and do not depend on a third party for protection from economic turmoil or political chaos.

For clients that want to invest in physical metal, but not take on the burden of safekeeping, we recommend the secure, insured storage provided by the Texas Bullion Depository, which is the only state-administered precious metals storage facility in the nation that is open to the general public.

Just like any investment, you should not put all your eggs in one basket. Financial experts recommend that you should have between 10%-30% of your assets in gold and other precious metals. There are times like now when having even more of your assets preserved in metals can prevent major losses that can occur from overexposure to stocks. When investing in precious metals, knowing how much to invest comes down to one question: Can I put this money aside and not touch it for at least 10-15 years? If the answer is yes, then you should trust gold to maintain your purchasing power and build wealth. If you will need that money to live on in the short term, then you should seriously reconsider entering the gold market. It’s also important to note that the U.S. government now allows you to hold gold and precious metals in your individual retirement account (IRA). Your U.S. Gold Bureau representative can tell you how.

Having a relationship with a dealer who has dedicated his life to understanding the precious metals market is a tremendous value. Most people don’t have the time to invest in the years it takes to understand how to make money in this market. When you are sick and you need a doctor that specializes in your particular condition, you have no problem paying the premium he asks for his knowledge and expertise. The same is true in the financial world. Find a dealer you can trust, ask questions and work together to create a plan to achieve your objectives. The precious metals market can protect and grow your money if you are patient and let time create the value that overcomes the premiums you are asked to pay, which are nothing compared to the peace of mind and legacy wealth that only Investment Grade rare coins can offer.

Many people have made the mistake of assuming that if a coin is 100 years old, it must be rare. Age alone, however, has nothing to do with rarity. Rarity is determined by supply. Truly rare coins typically have the highest values, and have produced by far the greatest overall price appreciation for investors. A coin’s rarity is a function both of the limited quantity of the original mintage and the surviving population of examples in any given grade rating. In almost all cases, collectors and investors should rely only on the certified population totals published by NGC (Numismatic Guarantee Corporation) and PCGS (Professional Coin Grading Service), the two most trusted authentication services in the industry. Coins with high surviving populations, for example, generally do not perform as well as investments. Gold coins with lower populations, on the other hand, often perform very well as investments, and trade at substantially higher prices than more common coins.

The fact remains that it is difficult to find a coin produced by the US Government -- whether it’s a penny, a nickel, a quarter, etc. -- that has not doubled, tripled, or quadrupled in value over a certain period of time. So what’s the difference between the coins, and which coins should you own? The difference between coins is how much time is required for the coin to double in value. Knowing the time required for your coins to double, or triple in value, comes down to understanding mintage figures. The 2018 $100 ounce Platinum American Eagle, for example, has a total mintage of 20,000 and posted an initial price of $2,545 for a coin in perfect Proof 70 condition. At the time of this writing, the price is $3,859 -- that’s a price gain of 50% in a very short period of time.

Before you sell your coins for a profit, you need to investigate the history and background of the coins you own. Knowing all the details about your coins will provide you great assistance in profiting from your coins. The history, condition and supply of your coins play a major factor in the potential selling price. To make money selling a specific coin, do not believe the lowest offer is the “REAL” value of the coin. Clients that have purchased a coin from one dealer and sold it to another dealer for less than they pay often feel the dealer that sold them the coin overcharged them. This simply is not true. Dealers do not purchase coins that they cannot make money on, so when a dealer agrees to buy your coin, it is only because he can sell it for more than he is paying. It is important to realize that it IS possible to make an excellent return on the coins that you have and The U.S. Gold Bureau can help you do it. In fact, we promise to buy back anything that we sell.

Mark-ups allow gold dealers to make the money they need to survive. Some dealers make the effort to educate their clients and advise them about the market and the products available. This requires a sizeable financial commitment from the dealer and their higher mark-up is justified because of the time and effort that is spent on educating and consulting clients. Bare-bones dealers offer no assistance to clients and expects their customers to know everything on their own about the products. These dealers may have a lower mark-up because they provides a lower level of a service to clients. As with most things, you get what you pay for. The best approach is to slow down, get educated, and then move with confidence. Clients that shortcut the education process tend to make choices based on price alone and usually end up dissatisfied with their purchase.