Buying Physical Gold

[JohnnyH]

Sign up for ebay bucks... I routinely get offers for 8% ebay bucks, $100 max ($1,250 @ 8%). Purchased with 2% credit card, or 6% off gift cards, it is routinely well under spot and can be flipped instantly for $50+ profit/coin locally... I like apmex as seller on ebay.

[Spartan_Warrior]

I just signed up for Ebay bucks, but they don't seem to apply to bullion--that is, I don't see any bullion listings that earn them. What am I missing?

[Scott 2]

For a one pound DIY tea kettle you are looking at something like $3 for copper, $275 for silver, or $20k for gold.
...
You'd have to deal with attesting to the purity though..

You just mean the risks of having cash on hand versus the risks of it in the banks, brokerages, etc? I'm not sure what you mean by increased transaction costs, though.

In my mind, storing $300 of wealth doesn't do much for you. Even a green box of silver eagles, which is relatively compact, but still weighs about 30lbs, only stores about $9k. If you are going to store physical, I don't see much argument for anything but gold. Maybe the idea of using silver for small transactions in a disaster scenario, but again, not the most useful objects to have. I would definitely think recognizable forms, like a silver eagle, would be more useful than a teapot. Even then, who's to say you don't have fakes?

Purity assays are a solved problem, but an ongoing challenge of transactions with physical, especially private party. So that leaves you with the question of - do you buy from a big dealer and accept that your transactions will be on the record, or do you take the risk of small time transactions? If so, how do you ensure purity, security and privacy? What about once the transaction is over? How much time and travel do you spend on it? That is all transaction cost.

In the US there is a federal reporting limit for "large" transactions. Here's an example:

https://www.jmbullion.com/reportable-bu ... fographic/

So one of the main benefits I'd see, secret wealth, is pretty hard to actually keep secret. Again, I'm not saying you can't, but it adds to transaction costs.

Additionally, how much untraceable wealth does it take to make you a target? It depends on the area, but $10k sure would interest a lot of people. The most valuable thing in my home is either a 4 year old laptop, or a 13 year old car. That's on purpose. I live in a safe area and am security conscious, but I also go out of my way to avoid being a target.

If you just want to invest in precious metal, you can own the miners, you can even buy physical that is held by a 3rd party. I think either would be a better option than getting and holding physical, for the reasons above. Again, I think it would be fun to own physical, I just can't justify it. I have a whopping two ounces of silver, mementos from a job where I among other things, did work for a company that services the bullion industry.

[vexed87]

@scott 2, the trouble with owning Au miner stock is that they don't always work well as a substitute for Au. The stock can drop when other factors in the economy will cause Au price to rise. Miner stock might seem like a good bet when the economy is stressed and the conditions are right, however, imo Au shines when used as a hedge against extremes in the economy, by extremes, we're talking about events like the great recession, brexit etc.

For instance, a serious economic downturn might result in tight money recession or some monetary crisis, crippling necessary investment to continue mining operations. While you would expect miner stock to do well when Au is also doing well, they rely on turning a profit to pay dividends, so any of the multitude of factors that affect the costs of operations hits the bottom line, thus your stock can fall, even if Au price is rising. If the Au isn't economical to mine, the extraction and refinery works stop. Factors can be cost of labour, machinery, transports and distribution, credit, availability and cost of energy, or quality of Au deposits being exploited, (just like oil, all the easy Au has been exploited, what remains is the marginal yield stuff that's only profitable when prices run high). Continued extraction relies on high prices, and low energy prices. It's important to remember the value of Au miner stock is not linked to the value of Au extracted, but the amount of profit turned over. When you really need the Au , the miner stock might be crashing for the same reason physical is doing well, right when you need it.

All investments have some cost of ownership, I don't see physical being any different, although the spread cost on physical can be unpalatable to the uninitiated, it's nothing compared to the 15% drop in the £ we experienced after Brexit. IMO, the trade offs are worth the security of physical, after all, it's often used as a hedge against the worst case scenarios. Cutting costs of investing makes sense, but not when you undermine the integrity and purpose of your allocation.

[Spartan_Warrior]

Re: Ebay Bucks

After closer investigation, it would seem that anything listed in the category "Coins and Paper Money > Bullion" is ineligible to earn ebay bucks. Apparently you can find some scattered listings posted in "Coins and Paper Money > Other US Coins" or "World Coins" that are eligible, but every one I've seen is about $100 more than equivalent listings in "Bullion". For example, APMEX lists a 2017 gold eagle in "Bullion" for about $1275, while a 2009 gold eagle in "Other US Coins" is listed at about $1375. This would seem to offset any potential benefit to looking for listings outside the bullion category that are ebay bucks eligible. Not seeing how this ebay bucks scam actually works. I thought it sounded too good to be true...

[Scott 2]

@vexed87, I agree, the miners are a different type of exposure to precious metals. Someone could do something like the kitco pool accounts to get direct exposure without holding:

https://online.kitco.com/gold-silver-pool/index.html

What to own depends on the purpose of the person's investment.

Using pool style accounts, I believe it's also possibly to get exposure to precious metals in a retirement account, like an IRA. From what I recall, doing that while physically holding is difficult.

[jennypenny]

Miners seem low compared to physical gold right now.

If you're only talking about buying moderate amounts of gold, seriously consider jewelry as an alternative to gold bars. Jewelry sales don't have to be reported like bullion sales, so there isn't an immediate paper trail. It's easier and less expensive to get a jewelry rider for your homeowner's insurance policy. Many companies refuse to insure gold/silver because they consider it cash. It's also easier to transport jewelry and travel with a significant amount if you worry about getting stuck out of the country unexpectedly (when you might need quick cash). Someone carrying $10K worth of cash or gold bullion would get stopped immediately by TSA but someone wearing $10K in simple gold jewelry wouldn't arouse any suspicion.

[vexed87]

...but someone wearing $10K in simple gold jewelry wouldn't arouse any suspicion.

how sure are you of that?*

http://i.dailymail.co.uk/i/pix/2016/07/ ... 040714.jpg

In all seriousness, it's a great idea, but even my simple wedding ring had a 80-100% markup on the gold spot price. That's one hell of a transaction cost. Then there's the appraisal on the sellers end. I guess if you were prepared to follow this through then one more skill to add the renaissance man's toolkit is DIY jewelcraft

*disclaimer, this is a lot more than 10K

[stayhigh]

Someone carrying $10K worth of cash or gold bullion would get stopped immediately by TSA but someone wearing $10K in simple gold jewelry wouldn't arouse any suspicion.

$10K worth of gold bullion is just a few coins, just put them into your wallet or pocket along with other coins. In the worst case scenario, gold also can be easily melted and/or painted to make it look like other regular objects, so it will be even less suspicious. The best place to hide is in plain sight.