Steve's note: Today's essay provides details on one of the hottest topics in our industry right now. It's from Jeff Clark with Casey Research (not Jeff Clark with Stansberry Research). When it comes to natural resource investments, Casey is among the world's best providers of investment insight and recommendations. Here's...
Where to Find the Best Deals in Physical Gold
By Jeff Clark of Casey Research
Saturday, May 2, 2009
When gold breeched $1,000 an ounce this February, the mass media was full of reports of unprecedented coin demand and long wait times for bullion buyers. You couldn't open the paper without seeing a piece about the gold rush.
Although the press has now set gold aside for hotter stories, I can tell you demand for gold coins continues at unprecedented levels worldwide, and production is still struggling to keep up. Take a look at these reports from the past 30 days:
* Sales of the Austrian Philharmonic gold coin soared 544% in the first two months of 2009 (vs. the same period the year before), with production at the country's mint running quadruple its usual volume.
* The demand for Krugerrands is at its highest level since 1986. The South African refinery recently doubled production of blank gold coins to 20,000 ounces per week.
* China, now the fastest-growing market for gold, saw 2008 sales (measured in dollars) rise by 50% over the year before – and total sales in January 2009 were one billion yuan (US$146 million), 30% more than all of last year.
* The U.S. Mint sold 193,500 one-ounce gold Eagles in the first seven weeks of 2009 – equaling the number shipped in all of 2007 and about matching the first half of 2008.
* Russia's Sberbank says it has "never seen such strong demand for investment coins."
With this incredible interest in gold, it's worth a fresh look at where to go for the best deals in bullion... and what the wait times and premiums are. Here are the dealers that have consistently treated their clients (and our readership) well over the years:
Kitco (Kitco.com; 1-877-775-4826). All bullion products are available at Kitco and can be shipped within 24-48 hours of a paid order. Premiums are slightly higher than our other dealers recommended below, but what's particularly attractive at Kitco is that you can get silver for less than 1% over spot... Its pool account is currently charging only 14 cents over spot (premium fluctuates daily), which is a great way to build your silver holdings while waiting for physical premiums to come down.
The Coin Agent (thecoinagent.com; 1-888-494-8889; thecoinagent@gmail.com). Wayne Lemonier currently offers immediate delivery on paid orders for all gold coins except the Eagle, which takes two weeks.
Premiums for gold coins are 6% over spot for Maple Leafs, 6.5% for Philharmonics and Krugerrands, and 7% for Eagles (one of the lowest in the industry).
Silver bars are at the lowest premium we know of: A 10-ounce silver bar costs $1.75 per ounce over spot, and 100-ounce bars are only $1.50 per ounce over spot. American silver Eagles are spot + $4.50, and silver Canadian Maples are spot + $4. Shipping and handling for silver is $20 per 100 ounces.
Border Gold (bordergold.com; 888-312-2288 ext. 7). Both gold and silver Maple Leafs are readily available and can ship the day an order is paid. Border told us premiums are slightly higher this year than last because the Royal Canadian Mint raised its prices.
Premiums on gold Maple Leafs are only 5.5%, one of the lowest in the industry. Shipping and insurance is $25 for one or two coins. A one-ounce gold bar is spot + $25; 5-ounce and 10-ounce bars are available in limited quantities at spot + $22 per ounce.
The one-ounce silver Maple Leaf is $4 over spot for up to 99 coins and then $3.25 per coin. Both 10- and 100-ounce silver bars cost $2.50 above spot, with the 100-ounce silver taking a week to deliver.
ASI (assetstrategies.com; 1-800-831-0007). Gold Maple Leafs, Philharmonics, and Krugerrands can be shipped immediately upon a paid order, with American Eagles currently taking about three weeks.
One-ounce gold coins are 7.5% to 8% over spot; Eagles are 8.5% to 9%. One- and 10-ounce gold bars can be had at 6%. One-ounce silver Eagles are $4.30 over spot. A 100-ounce silver bar is $2.20 per ounce, and a one-ounce bar is spot + $2.50. Costs for junk silver vary but average about $2.20 per ounce over spot.
Some of our readers ask... why don't we recommend any of the larger dealers?
Availability and premium are the primary considerations in selecting a bullion dealer. Some of the larger houses may match the prices of our recommended dealers; however, there's an intangible issue: the hard sell.
Many of the big dealers push high-margin numismatic coins. So while you may get good prices and delivery on your bullion coin, beware the salesman who begins talking up rare coins. You won't experience this with our smaller dealers, and it's this no-hassle service that gets our business. If you start to hear, "Hey, my friend, I have a great deal right now on a rare Swiss coin...," you might want to reconsider where you shop.
Regards,
Jeff Clark
Editor's note: In addition to gold bullion, we also recommend getting familiar with a unique investment from Toronto that can return 10 times as much after gold prices rise. Last time conditions were this good, this investment soared 1,739%... 2,779%... and 3,479%… and those are the small gains. Click here to learn more about "Toronto's Secret Gold Investment." |
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15.1%
Decline in the May 2009 live hog futures contract since swine flu hit mainstream news headlines. |
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I have a good friend who advises institutional clients on investing. As he reminds me, the really big money hasn't started buying yet. There are no big pension funds or endowments with significant gold holdings. That could change. If so, the gold price will go wild.
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You Can't Be a Millionaire. Unless...
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What my friend did to get rich was to set out to get rich. For years, he made that his main goal. You might not like the idea of dedicating your life to amassing wealth. (And you don't need a fortune to live well.) But a dedicated pursuit of wealth worked for my friend... and it worked Felix Dennis.
My Plan to Make a Fortune over the Next Five Years
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Combine the cheap valuations, the dominant competitive advantages, rich option premiums, and you have yourself a very safe stable of income stocks.
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