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How to Buy Gold ‒ Three Easy Steps

Article courtesy of Mint State Gold – By Barry Stuppler.

Having been a professional wholesale gold dealer and investor for over 50 years, I have found it’s easy for a well-informed gold buyer to quickly learn how to buy gold and get a good deal when adding gold to your portfolio. Buying gold investments for your precious metals portfolio is as easy as 1-2-3.

Step #1 – Where to Buy Gold

The best gold dealer is a major-market wholesaler with a minimum of ten years experience in the rare and investment coins business, with a proven track record of building profitable precious metal portfolios and an excellent industry reputation in numismatics and/or investment strategies.

Seven criteria for selecting your dealer:

  1. A member of the Professional Numismatists Guild (PNG).
    The PNG is a members-only association of reputable numismatic dealers that must be voted in by the membership to join. They must be well-known and respected by the numismatic industry to even be considered for membership.
  2. A minimum of ten years as a major market maker posting buy/sell prices for gold coins.
  3. An informative website ‒ ideally with an investment guide section on buying and selling precious metals including items like portfolio-building tips, how to buy gold, how to find a reputable gold or bullion dealer, investment strategies, etc.
  4. No commissioned salespeople.
    Important fact: If you’re dealing with an account executive, their commission is added to your sales price!!!
  5. The gold dealer must be willing to disclose the profit margin and buy/sell pricing.
  6. The ability to ship your gold order within 48 hours from receipt of good funds. It is important that you receive your gold coins and bullion products immediately and don’t allow the dealer to store them for you. This provides you, the coin buyer / gold investor, with better flexibility when you wish to sell your gold coins, bullion, or other precious metal investments.
  7. Knowledgeable and available ‒ the dealer can offer you current precious metal market spot prices on demand; complete and full disclosure; has the ability to quickly and easily answer your questions about investing in gold, buying gold bullion, etc. by phone or email; and offers free gold investment and portfolio building consultations and investing strategies.

Choosing the right gold dealer requires investing your time BEFORE investing your money. Spend the time and give due diligence to checking out the gold dealer. Knowing the dealer is credible, knowledgeable, fair and honest are of the utmost importance before you invest a single penny of your money into gold bullion, precious metals or investment coins.

Step #2 – Buy the Right Gold Coins

Based on your timeframe, are bullion gold coins or investment gold coins the right fit?

Short-term investments (Less than 3 years) : Bullion Gold Coins

Gold Buffalo

The best and most popular gold bullion coins are:

  • Canadian 1 oz. Gold Maple Leaf coins
  • United States 1 oz. Gold Eagle coins
  • United States 1 oz. Gold Buffalo coins

These three gold coins are the most actively traded gold bullion coins in the world and therefore have the best buy/sell spreads (lowest profit margin for gold dealers) of any gold bullion investment.

Long-term investments (3 years and longer): Investment Gold Coins

Franc Rooster

The most recommended gold coins for long-term investing, all with an excellent history of appreciation are:

$20 Gold Saint Gaudens – Graded MS63 to MS66 by NGC or PCGS

• MS63-MS66 Saint Gaudens coins have the largest and most active market.
• NGC or PCGS are the two most respected grading services in the numismatic community.
• PCGS and NGC both guarantee that coins they grade are true for that grade or your money back.

French 20 Franc Gold Roosters – Pre-1933

  • Since coins dated prior to 1933 are classified as a “collectible” by the IRS, they have additional tax advantages!

Step #3 – Know the Right Price to Pay

If your dealer doesn’t disclose his/her profit margin and buy/sell spreads, find another gold dealer immediately!

Bullion Coins
Wholesale market makers should have a 2% buy/sell spread on a minimum sale of 10 oz. gold bullion coins.

Example: if the current Spot Price of Gold is at $1,000 an ounce, the dealer would buy gold bullion products for $1,035 an ounce (the extra $35 is for the cost of production of the coins) and sell those bullion investments for $20 more (totaling $1,055 per ounce).

Investment Gold Coins

Wholesale market makers selling premium-quality gold coins such as the $20 Saint Gaudens Double Eagle and the French Rooster require a 10% profit due to the fact that rare investment coins are no longer made, have a high investor demand, and must be prescreened to ensure that they are mint condition, premium quality coins.

Here are two examples based on a Gold Spot price of $1,250 ounce:

Example #1
A fair buying price for an Uncirculated French 20 Franc Rooster (which has a gold content of just under 2/10th of an ounce of gold) is $268.38 with a selling price of $245.04. Based on the gold content of a coin and the current gold spot price, the dealer should charge you a minor 5% to 15% premium.

Saint Gaudens

Example #2
The price of a graded $20 Gold Saint Gaudens Double Eagle coin can range from $1,700 to $3,100 based on the certified grade. These coins have a gold content of one full ounce of gold and are in strong demand from precious metal investors and coin collectors alike. Plus, they are classified as a “collectable” by the IRS and because of that classification, they have TAX BENEFITS!

Please contact a PNG-Accredited Precious Metals Dealer for more information on how to buy gold or build a precious metals investment portfolio.

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