How to Buy Gold and By Brian Hunt -------------------------------------------------------- Congratulations on signing up for this report. You've made a wise decision to buy some gold to protect your family's finances. If you already own gold and are just looking to buy some more with no dealer markups, double congratulations. For the past few thousand years, gold has seen a lot of competitors try to become the "ultimate form of real money." Folks have used everything from cigarettes to butter, stones, livestock, salt, and seashells to store their wealth and trade for goods. But when crisis hits... when wars break out... when bank runs grip a nation... when it's really time to just "grab the money and run," humans keep coming back to gold as the ultimate form of money. Gold beats the competition so easily for six reasons ... 1) Gold is easily transported. Land is a good store of wealth, but you can't take it with you if you have to get out of Dodge. 2) Gold is divisible. If I owe both Peter and Paul and I have just one piece of gold, I can split it in half. 3) Gold does not rust or crumble. As just mentioned, folks have used cattle as money, but cows don't survive long in a locked vault. 4) Gold is consistent all over the world. I'll accept the pure gold you mined in China just as easily as I'll accept the pure gold you mined in South Africa. 5) Gold has intrinsic value. Gold has wonderful conductivity, it's super malleable, and it doesn't break down... so it has lots of industrial uses. Seashells lose big on this one. 6) Gold cannot be created by the government. People who saw their wealth disappear in the great inflation of the 1970s know that holding lots of paper money can be disastrous. Most of the "requirements of money" were laid down by Aristotle over 2,000 years ago. The great investor Doug Casey is the world's best at reminding us why gold is still the ultimate form of real money. And now that America is inflating its money supply in an attempt to pay for all kinds of wars, mortgage bailouts, social programs, infrastructure buildouts, and green-energy boondoggles, it's vital to own a chunk of real wealth. To protect your wealth from the government, I recommend you buy physical gold. The problem is, physical gold is in short supply and prices are at ripoff levels. I called two dealers recently and both said they were out of stock. They told me they could get gold bullion for me, but I'd have to pay a large premium over the gold price to buy it... as much as 13%. Would you give me $1.13 for a dollar bill? Probably not. And you shouldn't give it to a gold dealer either. That's why I've written this report, so I can show you several ways to eliminate big dealer markups and get more gold for your paper dollars. Let's begin... Two Ways to Buy Cheap Gold Bullion Option No. 1: Bullion Direct Headquartered in Austin, Texas, Bullion Direct is an online service that offers trading, clearing, purchasing, and storage of precious metals. From the company's online catalog, you can order gold, silver, or platinum and get immediate delivery or accumulate your orders in an online account. For example, as of October, you could buy a 32-ounce gold bullion bar kilo for $34,206 (a 1.4% markup) from the catalog or a 10-ounce bullion gold bar for $10,754 (a 2% markup). The more gold you buy at one time, the smaller the markup. With Bullion Direct there is no minimum purchase. However, if you plan on ordering from the company's catalog as a new customer, there is a cap of $25,000 on each purchase. Bullion Direct will either send your gold via UPS, FedEx, or USPS Registered Mail. Or you can have it stored in one of the company's several vaults located throughout the country. To get started, go to www.bulliondirect.com and click on the "New Account" tab located on the top right-hand corner. Option No. 2: Bullion Vault Another way to buy gold cheaply and quickly is to buy from BullionVault (www.bullionvault.com). At BullionVault, you can buy gold and have it held in "good delivery" form. Good delivery bars are cast by a small group of precious metal refiners accredited by the professional bullion-dealing communities in London, New York, and Zurich. They are accurately assayed and guaranteed to be 99.5% pure gold or better. Professional market buyers, who pay the best prices, won't normally accept bars from private owners. When you buy physical gold and keep it in your home, potential buyers might wonder if you've tampered with the gold. However, if you store your gold in a secure vault, the buyer is able to trust the purity and weight of your gold. This way, you get paid quickly. BullionVault charges a maximum commission rate of 0.8%, which falls progressively to 0.02% depending on how much you invest. The more you trade, the less you pay. And the system remembers how much you have traded in each year – starting from the day you first register. For both sales and purchases, the rates diminish on the following scale:
This low fee structure makes owning gold with BullionVault much cheaper than buying gold elsewhere and shipping it to your home. And unlike other gold dealers, the company doesn't require a minimum purchase. So if you choose to buy your gold a single gram at a time, you can. With BullionVault, your gold is also allocated, meaning that specific, numbered bars are assigned to you and stored in a vault in London, New York, or Zurich. Your account even has its own "burglar alarm" that sends text messages to your cell phone when it's accessed. BullionVault charges a 0.12% annual storage fee (0.01% per month) or $4, whichever is larger. So you can store as much as $40,000 of gold for just $48 a year in storage fees – and this includes the cost of insurance. Here's what you need to do:
Go to www.BullionVault.com and press REGISTER to get started. If you're more interested in owning gold coins than gold bars, no problem. I've found a cheap way to buy those, too. Where to Find Cheap Gold Coins Coins are a great way for individuals to buy gold. They come in small denominations, they're portable, and you can exchange them for cash anywhere in the world at gold's international spot price. But here's the thing: Gold coins are hard to find in this economy. They're in high demand. And even if you do find them, they're more expensive than usual. In fact, there were severe shortages reported recently: In August of last year, the U.S. Mint suspended sales of the American Eagle due to lack of supply. And in September, sales of the Buffalo coin were suspended due to a shortage. In normal markets, you can buy silver coins below the spot price and gold coins at a 1% or 2% premium to the spot price. Today, the cheapest gold coins are selling for a 5% premium to the gold price. That said, if you want to buy small quantities of gold coins right now, I suggest you visit www.gainesvillecoins.com. Gainesville Coins is an online store that has one of the world's largest collections of modern and pre-1933 coins and other bullion items, and the prices are low. For example, as of October, you can buy Mexican 50 Gold Peso Coin for $1,285. This coin contains 1.2 ounces of pure gold. With gold currently trading at $1,050, this means the coin is worth about $1,260. In other words, you'd be paying only $25 over spot price, which is a 2.4% premium. That's roughly half of what you'd pay if you were to buy any other gold coin. Similar sites require you sign up and create a new account in order to purchase precious metals. However, with Gainesville you can order as a guest without opening an account. The company does charge a small shipping and handling fee based on the weight of your purchase. For example, if you were to buy a 2009 Canadian Maple Leaf gold coin and a display box, you'd pay around $7 for shipping and handling. The company also asks for a 5% non-refundable deposit via credit card when submitting the order. This deposit will lock in your price. After that, you wire the remaining balance from your bank. After you make your purchase, you must call Gainesville Coins at 352-653-3009 during business hours (Monday-Friday, 9a.m.–6p.m.), to confirm the sale and receive wiring instructions. Other gold coin dealers you may want to consider buying from include:
And finally... now that we've covered how to buy physical gold with little markup, I'd like to tell you... How to Buy Gold with NO MARKUP The New York Mercantile Exchange (NYMEX) is the world's largest physical commodity futures exchange. The futures exchange is a market like any other, where sellers and buyers agree on a price. The only difference, really, is that they don't settle up right away. They "lock in" the price for a future date. One of its two principal divisions of the NYMEX is the Commodity Exchange (COMEX), where you can buy gold. When you buy a gold futures contract on the COMEX, you agree to buy gold at a particular price on a particular date. Unfortunately, you can't buy just a few ounces of gold on the COMEX. Each gold contract covers 100 ounces of gold, in a 100-ounce "good delivery" bar. So if you don't have the capital to cover 100 ounces of gold, try a couple of our other sources of cheap gold. If you do, here's how it works... Very little gold actually changes hands on the COMEX. Most buyers and sellers of gold futures contracts are speculating on changes in the price of gold. But every participant who buys a gold futures contract can request actual delivery of the gold. To buy physical gold on the COMEX, you need to open an account with a futures broker. You can do this through a U.S. Futures Commission Merchant like www.pfgbest.com or www.lind-waldock.com. These brokers may ask you to prove a minimum net worth and a minimum income. If you can put down enough cash for 100 ounces of gold, you should clear these requirements no problem. Gold futures contracts trade for the current month, the next month, and the month after that... along with every February, April, August, and October over the next two years... and every June and December over the next five years. In other words, you have lots of choices for when to get your gold. But if you want to get your gold as soon as possible, buy a futures contract for the current month. That contract will close on the third-to-last business day of the month. So for November 2009, that'd be Thursday, November 26. And for December 2009, that'd be Tuesday, December 29. As of late October, both the April and May contracts were trading for about $940 per ounce. If that sounds like a good price to you, buy your contract and deposit the full amount into your account. In less than a month, you'll be the proud owner of 100 ounces of gold. Now, you don't have to deposit the whole amount right away. You'll probably have to put down something like 10%. But if gold declines in price, you'll be required to deposit more or risk getting kicked out of the contract at a loss. On the settlement date, your account will be charged for an amount equal to the settlement price (whatever the contract price was when you bought it) multiplied by the exact weight of the particular bar that's been assigned to you. (Bars can vary from 95 ounces to 105 ounces.) You won't pay any markup on the gold, but you will pay a commission ranging between $30 and $80. (These rates are paid per contract, so that's not even one tenth of one percent.) When you buy gold off the COMEX, it is stored in one of the four designated COMEX depositories, all of which are in or near New York City. The average storage fee is $15 a month per bar. Ask your broker to mail you the warehouse receipt, which includes all the details on your specific bar. Don't lose this receipt. You can get your bar delivered to your home, but you have to pay a $150 delivery fee to get the bar released. Then you'll have to add shipping charges on top of that. If you leave your bar in the COMEX vaults, you know it's safe. And it's easier to sell this way. (As I mentioned earlier, a prospective buyer will not question the authenticity of your gold if it has been locked away in a monitored facility since you bought it.) As far as my savings are concerned, I'd rather keep them in gold. And I don't mean gold futures or gold certificates or gold mining shares. I'm talking about physical gold bullion. I'd advise you to own at least a couple of ounces of gold, too... if nothing else, for insurance purposes. And with these tips, you should be able to get your hands on physical gold without paying ripoff prices. Good investing, Brian P.S. There's another great opportunity in the gold markets right now, which no one I know of is writing about. |
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