The #1 question I get is “where do I buy physical gold?”
And my answer is don't ever buy gold from a TV commercial. Just don’t. I won’t pick on specific dealers, but the stuff you see on TV is a major rip-off.
That’s because you might buy one gold coin that has a spot price of $1,600, and they'll sell it to you for $2,200 and put it in a fancy case with a certificate. That extra $600 is pure profit margin for these guys.
So, don’t go that route. Nobody should invest in gold like this. If you want to buy gold, go to a reputable bullion dealer and order in bulk.
The biggest one in the US is called APMEX, which offers a wide assortment of bullion, numismatics, rare coins, and currency products. It’s like the Walmart of gold and silver.
Another solid choice is the American Gold Exchange—I’ve purchased through here, and it’s always treated me right.
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Now, when buying coins or bars, you need to keep tax implications in mind.
I like American Eagles because there are no tax implications. You can buy as many as you want.
Heads-up, though—American Eagles are not 100% pure gold. They're 93% gold and have some other metals in them to make them harder. But there is an ounce of gold in every American Eagle coin. It's just that some other metals are mixed in.
On the other hand, Canadian Maple Leaf coins are pretty much pure gold, but you can't really handle them because they're so soft. Buy hey, it's not like you're going to be screwing around with this stuff anyway, right?
They come in a plastic tube, and when you get these in the mail—for example, a tube of 10 coins—you shouldn’t take the tape off. Just leave it in the tube. Don't touch it.
It’s best to buy at least 10 coins at a time so you get a volume discount. Because when you buy coins or bars, there's a premium to spot—so basically, you're paying more than the spot price.
How this works is the US Mint produces the coins and then sells them to the dealer at a markup. Then the dealer sells them to you at a markup.
The premium over spot is based on supply and demand for physical coins. Right now, premiums are very high, especially for silver, which is trading for like 10 bucks over spot because the Mint is simply not producing enough and there's a huge amount of demand.
Really, buying precious metals is a bit like buying a closed-end fund because you're not just worried about the underlying price; you're also worried about the premium.
When I bought most of my silver, it was trading at $2 over spot. Now it's $10–$12 over spot, and even though the price of silver is only a little bit higher, I could make a huge profit on what I bought just based on the premium. (And I think the premiums will get even bigger.)
There are other coins available for purchase, such as Krugerrands, which are gold coins from South Africa, but there are tax issues with these as well.
Again, the gold American Eagles are worth a look. They’re considered US currency, and the government doesn't charge tax on US currency.
They're technically $50 coins. They're legal tender. So, you could buy something for $50, but it doesn't make any sense to do so because the price of gold is $1,700+ an ounce.
I recommend you go to some of these websites and check out what they have to offer. They have all different kinds of products. They even have $500 and $1,000 bills from the old days!
Jared Dillian