Investing in gold/silver coins - any tips/suggestions, etc?

I have the standard set of 401k, stock, mutual fund accounts, but I've always like coins. I was thinking about getting into some silver and gold coin investing. I'm not necessarily looking for some gang-buster returns, just as long as they hold their value and may even increase in value slowly over the years. I think it'd be neat to hand down some cool stuff to the kids one day.

Thanks!
Aaron

Well, considering that gold is almost at $700/oz, I'd be careful of putting too much money into it, as an investment.

Gold and silver are so 1980's... PLATINUM!

Investing in gold/silver coins - any tips/suggestions, etc?

DON'T........!!!

Basic gold coins like the American Eagle have a huge markup. If you want to own gold to be diversified, it's better to pick up an ETF.

As for rare gold coins like the St. Gauden's, watch your rear!!!!!!!! Value is ALL about grading. There are several grading services out there, but there's no assurance that the grade which you pay for will be honored when you go to sell the coin.

Most bullion coins can be had for close to spot

Not in my experience, JF7. How much over spot do you pay for a 1 oz American Eagle???? I would guess no less than 6%.

You can buy 1 0z gold Krugerrands on eBay for ~2% over gold "spot" (value) Buy-It-NOw price. I see one lot of 10 of these coins for $7040 buy-it-now on eBay while gold is $690.

Other gold bullion coins have slightly higher markups over gold content.
1 oz gold Krugerrands have the lowest markups for 1 oz gold bullion coins.

But your biggest risk is actually the change in gold price itself rather than the few % markups on any of these bullion coins.

Avoid 'collector' coins which have 30% markups or more (and a lot of 'cheating' by dealers, especially on newbie buyers).
Avoid smaller bullion coins which have 10-15% markups.
Stick with strict bullion coins 1 oz.

Edit by Mod- Lets keep the political commentary to ourselves. Thanks.

I am a retired bullion dealer. Started 45 years ago.

LustfortheMoment said: Most bullion coins can be had for close to spot

Not in my experience, JF7. How much over spot do you pay for a 1 oz American Eagle???? I would guess no less than 6%.

eBay will get you close to spot.

asarat said:

But if you want to handover some souvenirs or gifts to your kids (as you said), you may keep a few coins or bars. An in that case, I feel diamonds are a much better option than gold.

Diamonds are worthless. The value is kept high by limiting how many are mined.

Diamonds can now be made in factories.
Man-made diamonds

Thanks for all of the comments guys. Yeah, this does seem pretty complicated, especially for a newbie. Seems there's a lot of stuff out there being sold that would be easy to get ripped off on, if you don't know what you are doing.

And yeah, the huge markup on the gold eagles is pretty hefty. Even from the US Mint directly, they're almost $800 for a proof - dang.

I did sign up for a US Mint subscription - the 1oz Silver Eagle, the yearly silver proof sets, and the presidential coins. While I don't expect those to be high dollar items later on, it might be nice to have a few years in sequence to hand down.

I'm also considering the commemmeratives from the US Mint. And I'll do some more research into the Krugerrands. Seems like the best bet is to keep 98% of the portfolio in my 401k and other stock accounts, and just play around with a few hundred $$ here and there on the coins. I don't think I'll ever be able to compete with the big time collectors here.

Don't buy the overpriced junk sold directly from US Mint. That is the worst rip-off in the industry. Never buy US Commemorative coins...they make too many of these! Almost all direct US Mint stuff becomes much cheaper from a dealer ~2 years later on.

Technologist said: Gold and silver are so 1980's... PLATINUM!
Platinum/palladium are so 1990s. Copper and nickel are so last year.
Today's top speculations are uranium and molybdenum !

Seriously, precious metals are a speculation not an investment.
Lots of folks get enjoyment out of the collecting aspects of actually owning coins,
but for most it is easier just to buy ETFs like GLD IAU SLV

I have been a coin collector since 1965, a part-time coin dealers in the past,
and now have gold mining and coin collecting sites. I guess I should be promoting
gold, but I still come to the conclusion it is not an appropriate for most investors.

sort of OT, but i've always wondered what kind of coin / bullion would make the ideal currency in the event of complete catastrophe that devalued paper currency (i.e. - nuclear war, bird flu, if someone shakes up all the beer cans in the world causing a massive explosion).

i'm thinking US minted silver coins would be ideal. seems like most gold coins would be worth too much (except maybe really small ones). any thoughts on this. you never know . . .

clyde_frog said: i'm thinking US minted silver coins would be ideal
Yes, 90% junk silver bags should do the job nicely.
Sites to get an idea of pricing for gold and silver bullion stuff:
NWT AJPM MJPM Tulving CNI

P.S. sloppy1 comments are excellent, he knows what he is talking about.

scott1961 said: Nickel "So last year" I wish. Was about $7 a Lb a year ago and now around $23.

I follow all metals daily so I apologize for being a little sloppy.

Nickel went from $13,380 to $34,600 in 2006, up 158.6%
(I follow metals on LME in $US/metric tonne)
Nickel was the biggest gainer of all base metals in 2006. (aka so last year)

Currently at $50,200 it is up ONLY about 50% so far in 2007.
goldsheet weekly news

The folks who are having real fun are those that owned this
who went looking for diamonds and found nickel instead.

NukeMedDude said: Well, considering that gold is almost at $700/oz, I'd be careful of putting too much money into it, as an investment.

I would do the opposite of this dude. Put all your money in commodities. USD broke 82 and the 20 year floor of 80 is next. If 80 broke, all commodities will do more than superb. Nickel will be at $50; silver over $30, and gold in 4 digits.


But be careful though, I am sure the government will manipulate the market by defending the 80 line. After all, free market is not allowed.

Gold at $700 is just cheap.

as an investment. physical coins/bars are not a good idea. They are not liquid so you you would probably lose a few points when you sell.

And you would prob pay a premium when you buy. This would greatly reduce your return.

I would suggest buying deferred futures contracts or try..http://www.bullionvault.com/

I was thinking about buying a few of these.

http://www.jovapstore.com/product.cgi?group=34&product=47

At the risk of repeating some of what's been said, I'm going to throw my two cents in as this is a subject I'm very familiar with.

Gold coins are easy to sell, bars not as much. Do not buy "collector" coins if they are 20% or more over spot - not because they are overpriced, but because you're not experienced in the coin hobby. It's too easy to get taken.

I have nothing against the futures market, but it's more complicated. And if you buy gold in any form, do not let someone store it for you. Many people have done so without problems, but if I'm going to buy something, I want to have it. Not be dependent on someone else to watch my stuff.

I think a good option is uncirculated American Gold Eagles in the 1 oz. size. Don't buy smaller sizes as you pay too much over spot. You can buy and sell them easily. Yes, there is a spread, and gold will have to go up a few dollars in order to sell for a profit, but I don't see that as a big negative as you don't indicate you want to jump in and out - you said you'd give them to your kids someday. The AGE's have a cool design and most years (if you want to do a set) can be bought for about the same price.

Don't buy the proof AGEs - too expensive for no good reason.

If you can get them already graded by PCGS or NGC for no additional cost, so much the better. But I wouldn't worry about buying graded ones - 95% of them would grade MS69 anyway.

A good place to check out is apmex.com. Checking their site just now, I see they are selling 1 oz. AGEs for 3.6% ($25) over spot. They are buying at 1.2% ($8) over spot. I don't think that's a huge spread.

7lowe said: So eBay is the best way to sell it once you have some? I've got a few ounces I bought back when it was a lot cheaper. I'd like to sell it, but I worry about selling it on eBay because it's so expensive and I worry about how to receive the money. I'd hate to sell it and then have PayPal pull the money back out of my account or find out that a Cashier's Check is counterfeit or something. Any suggestions?

Thanks,
Seven

What exactly do you have? Old US gold coins? Modern American Gold Eagles? Gold bars?

sloppy1 said: Don't buy the overpriced junk sold directly from US Mint. That is the worst rip-off in the industry. Never buy US Commemorative coins...they make too many of these! Almost all direct US Mint stuff becomes much cheaper from a dealer ~2 years later on.

I disagree Sloppy.

Actually in the last two years almost all the higher end US mint products have not only sold out some have doubled and tripled in value. examples: American Eagle 20th anniversay sets (3 coin gold)(3 coin silver), The new uncirculated American Eagle silver dollars, the American Eagle uncirculated platinum coins.
THe american heritage sets have sold out and appreciated as well as the commemorative silver dollars such as Ben Franklin, Marine Corp etc.. these have all appreciated in less than one year.

lhughes said: I have a roll of 10 American Eagles that I would like to sell.

Is there anything I should do other than call a few local coin shops and see who will give me the best price, and then walk in and sell them? (I've called three so far and found a $15 spread between the prices they quoted - it's worth it to me to make some phone calls for a $100-200 net gain)

I assume it's not worthwhile to have the coins graded - they look perfect to my untrained eye, so presumably they would be MS-69.

I assume I might get a bit more on eBay, but I'm thinking it's not worth the risk/hassle. Is there any way to thoroughly protect oneself selling on eBay?

Does the mint year matter? The coins I have are 1991, stamped in roman numerals. There's an eBay auction that closed on the 14th for a 1991 roman-numeral American Eagle in which the seller hypes the "Roman numeral date!!!". The coin got 11 bids and sold for $976, which is significantly higher than the prices I've been quoted over the phone (best price was $890) today - obviously the price changes over time, but it wasn't much higher 2 days ago.

All this in mind, I come back to my original question - is there anything I should do other than calling coin shops and selling it to the one that gives me the best price?

thanks for any advice...

You won't go too wrong if you call several dealers and sell to whoever offers the best price. Some deal on very small spreads, where they will sell a coin for spot price + $7 and buy it back for spot - $7, for example (on Krugerrands). On Eagles, the premium is more like spot +$30 sell and maybe spot +$10 buy. That is very fair, considering they have expenses and need to make a profit. If you ask for their buy/sell prices or "spread," they will know that you are a knowledgeable customer and might be less likely to try to lowball you. GENERALLY, larger, more high-volume dealers/coin shops will have smaller spreads (and more fair prices) than the smaller stores.

You can also visit a coin show and talk to dozens of dealers all in one place - and take the best offer from there!

Or, if there aren't any good dealers or coin shows around, you can sell to APMEX with fair prices, but then you need to ship, insure, wait for a check, etc. Face to face is easier - you should walk in with coins and walk out with cash, no paperwork involved.

You can try eBay - often coins sell on there for more than they are worth to buyers who just "want to win." As for the grade and date, bullion is bullion, but some suckers on eBay will pay more for something that is not really worth more. You can try this route, the downside is waiting, shipping, bad buyers, needing to start with high feedback to sell something like that, possibly having it sell for less, etc. But you might be able to sell it for significantly more than any dealer will give you.

Bottom line: if a dealer pays you spot price or spot + $10 (especially with gold on the rise like this), take it and be happy. Unless you want to hold onto them while gold keeps going higher as our dollar collapses..........