What You Should Know About Bullion Dealers

James McCollum

Know About Bullion Dealers

Are you searching for a long-term way to preserve your wealth? A tangible asset you can control directly? A safe haven against future economic crises? Then gold bullion makes an excellent investment option.

It also checks off boxes few other precious metals assets can and serves an irreplaceable role as a defensive choice in an uncertain market.  Here’s how you can analyze bullion dealers to find the best gold coins for investment and make sure you are getting what you paid for.

Choosing these budget-friendly online bullion dealers often means sacrificing knowledge and insight

Unlike us, many of these dealers are newcomers to the gold and silver market, having emerged in the past 26 years that we’ve been in business. Consequently, their grasp of this precious metals industry is limited. Relying on limited knowledge can lead to expensive mistakes over time. Their approach to selling gold and silver mirrors a point-and-click, Wal-Mart-style mentality. Interestingly, they avoid personal interactions and seldom assign a dedicated specialist to manage your account.

They assume that customers, including many first-time gold and silver buyers, can navigate their websites, selecting products based on their assumptions. However, this approach often leads buyers to realize, when selling time arrives, that their chosen products contradict their original investment goals. Essentially, these economical online bullion dealers expect buyers to be market experts before making their first purchase.

Furthermore, a gold dealer tends to offer less attractive buy-back or bid prices when compared to their initial sale prices. Truthfully, a company that might be slightly pricier during your purchase will likely offer more competitive bid prices when it’s time to sell your gold and silver, resulting in a better payout. In the end, many people have come to understand that the profit percentage remains the same, irrespective of the chosen company.

Unveiling a Hidden Truth

While many buyers understandably prioritize price, what often escapes their attention is the underlying counterparty risk associated with focusing solely on product costs. This risk becomes particularly prominent when dealing with prominent internet bullion dealers. Just as farmers mitigate the perils of natural disasters by hedging their crops, sizable bullion dealers must safeguard their inventory against downward price swings in the gold and silver they hold.

These hedges are typically established through a broker and cleared via entities like MF Global, once a substantial firm led by Jon Corzine, which infamously went bankrupt in 2011, leading to the “vaporization” of over $1 billion in client assets. Additionally, when bullion dealers hedge their inventory, their transactions transpire on the COMEX exchange, an institution openly admitting to leveraging their gold and silver trades to levels surpassing 100 times the actual physical metal in their possession.

Numerous investors speculate that COMEX could fail to fulfill its metal delivery commitments. In such a scenario, those who hold paper contracts, including major gold and silver bullion dealers, could find themselves locked out of the bullion market with restricted account access. This divergence does not apply to Austin Rare Coins and Bullion.

Selecting the Optimal Bullion Type

Navigating the array of available products can be bewildering when determining the best fit for your investment objectives. The choice ultimately hinges on your gold investment strategy and the duration you plan to retain your holdings before liquidation.

Commencing with silver is a common route for many investors, given its affordability and accessibility. Silver furnishes numerous advantages akin to its pricier counterpart, often exhibiting correlated price movements. Purchasing in bulk translates to potential savings due to volume-related premiums.

Your decision-making extends to the form of bullion as well: gold and silver coins or bars. Coins entail higher production expenses, consequently yielding elevated premiums. Nevertheless, a bullion coin and physical precious metals originating from esteemed global mints enjoy widespread trust and straightforward verification. Alternatively, gold bars from reputable refiners like Valcambi and PAMP Suisse are readily marketable, accompanied by comparatively lower premiums.

While the standard size is 1 oz for both silver bullion coins and silver bars, a range of sizes is available, from 1 gram gold to 1/10 oz gold coins, up to 1 kg gold bars. Your selection should align with your strategic plan. Opting for a single substantial bar can reduce costs if you aim to retain your position for extended periods, possibly even as an inheritance. Conversely, if you anticipate a shorter investment horizon, smaller units facilitate capitalizing on price appreciation without liquidating your entire stake.

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