When purchasing gold and silver bullion you are most likely motivated by the spot price, or market driven price, of your desired commodity. However, when it comes to purchasing your physical bullion there’s a little thing called a “premium” that can increase your overall purchase by a significant margin.
In an ideal world you’d get what you paid for at the intrinsic price, but in the wonderful world of business and economics the product must be processed, shipped to a wholesaler, then sometimes to a retail distributer, and finally to your bullion dealer. Precious metals are no different than the shirt on your back and the iPhone in your pocket. There’s a “premium” or an additional cost to bullion above and beyond the market value of the precious metal commodity it contains.
Premiums can also vary in the type of coin or round. Even at the same weight, the price could differ. An American Eagle can have a higher premium than let’s say your run of the mill one ounce round because of wholesale pricing, demand, and condition.
But what is a fair mark up on an ounce of gold or silver?
In the industry anything below 7% seems to be a fair markup. Or at least that’s what the market seems to be spouting. So before adding in your tax on the purchase (which is isn’t a problem in some states) you also need to add the 5-7% premium to the current spot price to find what you’ll actually be paying for the metal. If you’re purchasing from a dealer that is tacking on more than 7%, you should reevaluate. Might I add, that even 7% is the high end of the fair premiums. There are plenty of places online and near you that can probably offer you a much better price.
For more advice on how to shop for the best bullion dealer, read Peter Schiff’s latest Gold Scam Report.
NumberSleuth.org took on the ever interesting task of breaking down the life of gold, including where it is, who has it, and where it’s going. Some of the facts pulled from this beautiful graphic are astonishing.
Did you know that all the gold in the world could be broken down to 5 golden rings per person on the planet? Or that contrary to most of you reading this, jewelry is the main use of gold, not investments!
Click the image to see the entire graphic!
With gold becoming an increasingly popular topic of discussion within investing, now’s the time to learn all there is to know about this bullish metal. With knowledge of what its industrial uses are, as well as its largest producing country, can help you see dips and climbs before they come. As we all know the market can zig when you thought it might zag, but becoming in tune to your investment can help you make more educated decisions.
Reading Peter Schiff’s Gold Scam Report will do the same!
What is with people purchasing very important investments in shopping plaza parking lots?! I must stress that skepticism is your best friend when loading up your car at the local Target or Wal-Mart and you’re approached by a bullion dealer. The chances of a legitimate bullion salesperson meandering through the lot selling legitimate silver are very slim. However, to remain open minded, there are deals out there that you can score in one of those serendipitous moments.
In Saginaw, Michigan last week silver scammers were going door-to-door in shopping plazas with silver bars stamped with .999 pure silver on the back…the front sported a marijuana leaf. Police were tipped off that the silver was in fact only paint, and warned witnesses to not buy the faux silver and report the event immediately. Truthfully the “.999 pure silver” stamp in the metal could mislead knowledgeable buyers, but using your context clues as an educated investor you can avoid temptations as such by following the first rule of thumb, read the Peter Schiff Gold Scams Report. Then do a business background check on your salesperson. Whether it be through a simple google search or ask for their website, there are ways to find out the quality of business you are dealing with.
The most interesting part about this story is the “.999 pure silver” stamp on the back of the bar. The most suspicious would be the green marijuana leaf, not that marijuana is bad…but it’s not terribly often bullion is sold with colored paint. Although, that is possible. The “.999” stamp assures a buyer that the silver is of the highest quality. However, that wasn’t the case this time around. Another good thing to try out is getting a feel for real silver. Toss an ounce or ten around in your hand next time you have a chance. You can really get familiar with the weight distribution and feel for the metal. Although it’s not always the easiest.
By buying from a known bullion dealer you can lessen your chances of fraud. Private trades and deals happen in the bullion world. We realize this. However, avoiding sketchy scenarios like the one in Saginaw can assure your money goes into a safe, sound investment.
Happy buying all,