Before You Buy Gold or Silver, Read This

Last week, we saw the biggest two-day drop in the gold and silver prices since the 1980s.

One moment, gold was trading for $1,600 an ounce… the next, it was trading for $1,350.

While this drop spooked a lot of people, knowledgeable gold and silver owners see this as an opportunity to accumulate more of the metal.

[ad#Google Adsense 336×280-IA]If you’re one of these people, congratulations.

But know that certain conditions can keep you from getting a good deal on gold and silver…

First off, let’s cover the right way to view physical gold and silver bullion.

It’s not a trading vehicle.

It’s not a typical investment.

It’s money.

It’s a form of savings.

Ignorance of gold’s true role in a wealth strategy is what burned people who have been trading “paper” gold vehicles like exchange-traded funds.

With this in mind, a lot of people are stepping in after the correction to buy gold (and silver). So much buying interest has entered the market, the premiums over spot silver that people are paying have gotten out of hand.

This week, I called Rich Checkan, the Senior Vice President of Asset Strategies International (ASI). ASI is a boutique precious metals, foreign currency, and asset protection company. ASI has a long history of treating its customers right… so I always like to hear what Rich has to say.

Rich told me that newly minted Silver Eagle coins are selling at a 24% premium to the silver price right now. Silver Eagles are the most common form of silver bullion. But they are unbelievably expensive. Even though silver is selling for $23 per ounce right now, it will cost you almost $29 per ounce after the commission.

That’s incredibly steep. And it happened quickly. A few months ago, we could buy silver for just 4%-5% over the spot price.

And forget about buying “junk silver,” the non-collectible 90% silver coins minted here in the U.S. before 1964. “Junk silver” coins are popular with investors. These coins hold so much silver, $1,000 of dimes, nickels, quarters, and half-dollars hold 715 ounces of silver.

It used to be easy to buy one of these bags of coins for about 4% over the spot price of silver… but not anymore. Now, there isn’t any supply. Junk silver owners are so attached to their silver, there’s hardly any supply of this stuff on the market. Trying to buy it right now doesn’t make any sense.

My next call was to Van Simmons, president of David Hall Rare Coins. Van is an expert in the coin markets, so I wanted to get his take on what’s going on right now as well.

According to Van, gold bullion is available. Gold Eagles, the most popular one-ounce gold bullion coin, cost about 4.5% over spot (this is a typical premium). And delivery times are fairly short.

However, when you buy bullion, you must be careful. Buy only from reputable dealers. Also, make sure to “lock in” your price. Reputable coin dealers will lock in the spot price when they receive your money. That means even if you have to wait a week or two for delivery, you already know what you paid per ounce. That way, if the spot price climbs, you are protected.

If you’re looking to take advantage of the selloff in gold and silver, gold is your better bet. Popular vehicles, like Silver Eagles and junk silver, are too expensive. But gold bullion can be bought for a reasonable premium. If you want to be a contrarian precious-metal buyer right now, focus on gold.

Good investing,

Matt Badiali

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Source: The Growth Stock Wire