5 things to know before buying Gold and Silver

There are a lot of variables that go into answering this but once you get familiar and browse the extraordinary variety of Gold and Silver products, you will start to get a good feel of what is a good or bad over spot premium. Though the variables I mentioned are vast let’s go over a few important ones, some folks never really consider.

1. PRICING – SPOT PRICE VS. PREMIUMS

 After deciding Precious Metals as an investment will suit your needs the next question is what is the absolute best way to buy Gold and Silver? The answer to this may seem complex but all you need to do is understand these 8 things and you’ll have enough information to make a safe and secure transaction.

When it comes to buying Precious Metals the first thing you will notice is there are a huge number of places, either online or physical location, where you can buy Gold and Silver. There is also a wide range of prices and different types of bullion to purchase, why is this? 

The spot price of Gold and Silver is largely used to determine the value of raw ore. Raw ore is purchased by a refinery from mining companies and is then refined into its pure form. This process is extremely lengthy, difficult, and expensive. The pure .999% +/- form of the Precious Metals is then sold to businesses or mints that then turn the commodity into the final product. The mints (both private and government) have business overhead such as employee wages and expensive tools such as coin presses.

2. SCAMS AND COUNTERFEIT GOLD AND SILVER

Many folks will never end up buying Precious Metals because they are worried, they will be scammed or sold counterfeit bullion. This is certainly a threat and happens ALL the time in our industry, however, there are VERY easy steps you can take to avoid being scammed. First and foremost, buy a test kit. Test kits range from chemical, magnetic to x-ray machines and are so readily available and inexpensive there is no reason you can’t test a questionable item. Don’t want to buy a test kit? You don’t have to. Walk into any jewelry store and they will have a handheld x-ray device that can test purity in a matter of seconds.

Secondly, it is extremely easy to avoid ever being sold a counterfeit piece in the first place. ONLY buy from a reputable dealer and know how to do a little bit of a background check on a bullion retailer before purchasing. Don’t feel like doing that? Here is a shortlist of bullion retailers who will NEVER rip you off. (Any company that does not make this list is not necessarily a scam this is just a list of folks we can personally vouch as we have worked with them in the past. There are reputable bullion dealers beyond this list!!)

3. INDIVIDUAL RETIREMENT ACCOUNTS VS. PHYSICAL PRECIOUS METALS

 Precious Metal IRAs are good for folks who want to roll their 401k or Roth IRA into Precious Metals and may not have the capacity to store a great deal of Gold and Silver. The various IRA companies provide an easy outlet to buy, to sell, they store it and they give you monthly or quarterly earning statements. With that said though, this means they control the entire process and the fees can get extremely expensive. Fees vary from company to company but they can hit you with storage fees, very high markups, brokerage fees, and take a fairly large percent when you go to sell. This isn’t to say Precious Metal IRAs are a huge scam just make sure to research into which trust company is the best for you.

4. SELLING GOLD AND SILVER

A common misnomer is that you will pay a premium for Gold and Silver when you purchase it but when you go to sell it, you won’t even get spot price. This is largely true if you decide to sell it to a local coin shop, cash for gold, or pawnshop. We recommend reaching out to actual bullion retailers to sell Gold and Sell Silver as often you will be able to sell it at spot with a premium (albeit usually small). This is because everyone will inevitably resell the bullion and need to make a profit but this is easily offset if you sell higher than when you purchased it. See the last section “Strategies” for more elaboration.

5. BUYING GOLD AND SILVER ONLINE

Buy Gold and Silver online has its pros and cons as well. As we covered above, there is a bit of research you have to do on each company to make sure you didn’t accidentally stumble onto a scam website. Besides that, there is much more variety to choose from than a pawnshop or LCS and you can easily tab through prices and find the best prices, for whatever it is your looking at, in live time.

Most online bullion retailers don’t have an inventory and pool their inventory together. This is because a shoebox of Gold could easily be a million dollars in inventory. The price fluctuation between retailers usually boils down to marketing and business overhead as well as efficiency and company optimization. The legitimate bullion retailers aren’t ripping you off, they are just adjusting their prices to keep their business running.