Does Gold's Markup Bother You?

Discussion of the Gold portion of the Permanent Portfolio

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StdDeviant
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Re: Does Gold's Markup Bother You?

Post by StdDeviant » Wed Mar 15, 2017 2:09 pm

dualstow wrote:
StdDeviant wrote:My answer: No, gold's markup does not bother me at all. It's very, very small. And insignificant.

Here's my take on it (posted in another thread, so I'll just post the link):
viewtopic.php?f=5&t=8914&start=60
I was just reading that post. You make a compelling case for coins.
Thanks, dualstow. Certainly not original ideas on my part. If you haven't read Rowland & Lawson's book "The Permanent Portfolio," I highly recommend it. The most ubiquitous 1 oz. gold coins available are the #1 recommended way of owning gold. I don't own much this way YET. IRAs don't
make owning gold in any form other than an ETF very easy. But knowing I can try to fend off the zombies with a few American Eagles (and some 1/10 oz. Eagles as well) in my pocket gives me a tiny sliver more hope than carrying a thumb drive with my Quicken backup or a printout of my most recent Fidelity statement.
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Re: Does Gold's Markup Bother You?

Post by dualstow » Wed Mar 15, 2017 2:28 pm

StdDeviant wrote:Thanks, dualstow. Certainly not original ideas on my part. If you haven't read Rowland & Lawson's book "The Permanent Portfolio," I highly recommend it. The most ubiquitous 1 oz. gold coins available are the #1 recommended way of owning gold. I don't own much this way YET. IRAs don't
make owning gold in any form other than an ETF very easy.
It is indeed a fine book, and the kindle version is usually one of the open tabs in my browser. If I remember right, I started with Craig's posts at bogleheads, then bought Harry's 'Fail-Safe Investing' and 'Best Laid Plans...' I already had most of my coins by the time Craig & MJ's book was out, but it's a great resource. EDIT: and Harry Browne's Money Talk radio show archives, which I first found through this forum. Very helpful indeed. I think one can still find a torrent for them.

I have a love-hate relationship with ETFs, but mostly hate. O0
But knowing I can try to fend off the zombies with a few American Eagles (and some 1/10 oz. Eagles as well) in my pocket gives me a tiny sliver more hope than carrying a thumb drive with my Quicken backup or a printout of my most recent Fidelity statement.
Trivial prediction: 9 out of 10 forum members will reread the word "sliver" above thinking it said silver.
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Re: Does Gold's Markup Bother You?

Post by Libertarian666 » Wed Mar 15, 2017 6:24 pm

How about trading on a (roughly) 1% buy-sell spread on popular coins?

You could apply for a dealer's account at Dillon-Gage in Dallas. That's what they usually have as a spread for the American Eagle, obviously depending on the market.

I don't know exactly what their requirements are, but it couldn't hurt to ask if you are planning to trade at least 20 or 30 ounces at a time on occasion.
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Re: Does Gold's Markup Bother You?

Post by dualstow » Wed Jul 12, 2017 12:46 pm

Libertarian666 wrote:Markup is not the issue. Spread, including all costs, is the issue.
Is there any point to buying fractional gold coins, or is that just too costly, like buying silver?
(I have only bought 1oz coins).
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Re: Does Gold's Markup Bother You?

Post by Mark Leavy » Wed Jul 12, 2017 5:36 pm

dualstow wrote:
Libertarian666 wrote:Markup is not the issue. Spread, including all costs, is the issue.
Is there any point to buying fractional gold coins, or is that just too costly, like buying silver?
(I have only bought 1oz coins).
No sense in buying a large amount of fractional coins. As noted, the spread will kill you. But 1/2 oz coins are about the size of a quarter and go through an airport scanner just fine in a bundle of change. They make a fine plan B or C. A small number is plenty.

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Re: Does Gold's Markup Bother You?

Post by dualstow » Wed Jul 12, 2017 6:15 pm

Thanks, Mark.
I once read about wealthy people and high value numismatic coins going through a scanner.
It was either an article or a post by Medium Tex.
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Re: Does Gold's Markup Bother You?

Post by ochotona » Wed Jul 12, 2017 8:05 pm

dualstow wrote:Thanks, Mark.
I once read about wealthy people and high value numismatic coins going through a scanner.
It was either an article or a post by Medium Tex.
Must be lots of that going on in Venezuela.
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Re: Does Gold's Markup Bother You?

Post by vnatale » Sat Feb 22, 2020 6:28 pm

dualstow wrote:
Thu Feb 02, 2017 1:49 pm

Well, maybe there is some reason you should divide the cost. You've been holding gold longer than I have and I'd like to hear it, because I am still in the accumulation phase, and that includes physical. Coins, because bars are too rich for my blood and they're they were very difficult to counterfeit.



Blue text edited in later.
Confirming that you are stating that it is coins (and not bars) that are "very difficult to counterfeit"?


Vinny
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Re: Does Gold's Markup Bother You?

Post by dualstow » Sat Feb 22, 2020 6:49 pm

That’s odd that you kept the line about blue text but no other actual blue text. ???
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Re: Does Gold's Markup Bother You?

Post by vnatale » Sat Feb 22, 2020 7:40 pm

dualstow wrote:
Sat Feb 22, 2020 6:49 pm
That’s odd that you kept the line about blue text but no other actual blue text. ???
Sorry. When I was writing and seeing what I was quoting it was not easy to tell if anything in it did or did not have blue text.

But back to my question...would still like a confirmation I was correctly interpreting you.

Vinny
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Re: Does Gold's Markup Bother You?

Post by dualstow » Sat Feb 22, 2020 7:53 pm

Affirmative
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Re: Does Gold's Markup Bother You?

Post by dualstow » Mon Feb 24, 2020 6:43 am

But notice, Vinny, that I crossed out “are very difficult” and wrote were very difficult.
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Re: Does Gold's Markup Bother You?

Post by vnatale » Mon Feb 24, 2020 9:20 am

dualstow wrote:
Mon Feb 24, 2020 6:43 am
But notice, Vinny, that I crossed out “are very difficult” and wrote were very difficult.
Did not notice that. And, for some reason, it just took me awhile to comprehend that. But now I do.

Vinny
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Re: Does Gold's Markup Bother You?

Post by Xan » Mon Feb 24, 2020 11:39 am

Are coins now easy to counterfeit?
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Re: Does Gold's Markup Bother You?

Post by ppnewbie » Mon Feb 24, 2020 1:07 pm

I'll just throw in my opinion here. The mark up does not bother me too much. It seems like there is much more built in friction in this market that is part of the reason it is a considered a safe (and very old) form of money.
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Re: Does Gold's Markup Bother You?

Post by dualstow » Mon Feb 24, 2020 2:39 pm

Xan wrote:
Mon Feb 24, 2020 11:39 am
Are coins now easy to counterfeit?
Not easy, but once the makers of The Balance rescinded that guarantee on eagles, there were stories here and there.
I didn't hear anything about platinum at the time, just that some testers like The Balance had possibly failed to detect some fakes.
I'm not the one to ask, but I would think it's still difficult.

Bars, of course, are easy to fake. It has been done with tungsten.
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Re: Does Gold's Markup Bother You?

Post by Libertarian666 » Mon Feb 24, 2020 2:49 pm

dualstow wrote:
Mon Feb 24, 2020 2:39 pm
Xan wrote:
Mon Feb 24, 2020 11:39 am
Are coins now easy to counterfeit?
Not easy, but once the makers of The Balance rescinded that guarantee on eagles, there were stories here and there.
I didn't hear anything about platinum at the time, just that some testers like The Balance had possibly failed to detect some fakes.
I'm not the one to ask, but I would think it's still difficult.

Bars, of course, are easy to fake. It has been done with tungsten.
The solution is going to be some sort of sonic test. The speed of sound in gold is quite different from that speed in any of the metals that are even close to its density.
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Re: Does Gold's Markup Bother You?

Post by vnatale » Mon Feb 24, 2020 8:42 pm

Libertarian666 wrote:
Mon Feb 24, 2020 2:49 pm
dualstow wrote:
Mon Feb 24, 2020 2:39 pm
Xan wrote:
Mon Feb 24, 2020 11:39 am
Are coins now easy to counterfeit?
Not easy, but once the makers of The Balance rescinded that guarantee on eagles, there were stories here and there.
I didn't hear anything about platinum at the time, just that some testers like The Balance had possibly failed to detect some fakes.
I'm not the one to ask, but I would think it's still difficult.

Bars, of course, are easy to fake. It has been done with tungsten.
The solution is going to be some sort of sonic test. The speed of sound in gold is quite different from that speed in any of the metals that are even close to its density.


Isn't Mark saying here that the solution was available six years ago?

Vinny


Mark Leavy wrote:
Fri Jun 06, 2014 8:42 pm
goodasgold wrote: This new type of fraud has me concerned. I was thinking of buying a few coins, but now I will wait until a secure method is developed to weed out the fakes.
Maybe I wasn't clear in my earlier post.
Audio Spectrum is 100% accurate.

If it even remotely looks like an Eagle, then if the audio spectrum has the three spikes in the right place, it IS an Eagle. Realistically, you don't even need the iPhone app - your ear is pretty damn good. Drop your known good eagle a couple of inches onto the counter, do the same with the "Device Under Test". Impossible to fake.

If the app that I mentioned earlier is too expensive, then pick another one. It's a very simple function and any "audio equalizer" type of app should work just fine.

You can test this with your pocket change. Drop some quarters and dimes and pennies. Every year that they changed the metal content produces a different audio signature. It's clear and obvious.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Does Gold's Markup Bother You?

Post by dualstow » Mon Feb 24, 2020 9:46 pm

Yep, I remember that, plus a more poetic post he had on the sounds of gold coins.
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Re: Does Gold's Markup Bother You?

Post by vnatale » Sun Oct 17, 2021 11:06 am

Libertarian666 wrote:
Thu Feb 02, 2017 12:58 pm

Markup is not the issue. Spread, including all costs, is the issue.

The spread on a 10 oz. bar at Kitco is about 1% at present. Shipping, including registered insurance, is going to cost about $50 (each way), which is about 1/2% extra, so let's call it 2% round-trip altogether. You can get it a bit cheaper by buying 20 of them, but let's say it is still 2% round trip.

If you keep it for 10 years, that makes 0.2% yearly, which amounts to about $500/year vs. the $125 for the s&p fund. Is that $375/year too much to pay for insurance against financial catastrophe? Hmm...


Is it a correct assumption that for most of you who own your physical gold in your possession that it is in the form of coins and NOT bullion bars?

I think I've seen a lot of discussion here regarding gold coins but relatively little regarding gold bullion?
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Does Gold's Markup Bother You?

Post by dualstow » Sun Oct 17, 2021 12:08 pm

vnatale wrote:
Sun Oct 17, 2021 11:06 am
Is it a correct assumption that for most of you who own your physical gold in your possession that it is in the form of coins and NOT bullion bars?

I think I've seen a lot of discussion here regarding gold coins but relatively little regarding gold bullion?
Coins can still be bullion. Of course, not all coins are. If you’re not a coin dealer and you’re buying from the mint, that’s not bullion. But bullion coins are … bullion. Does that make sense?

And anything in fractional ounces is going to cost more. Look at the price of two ½ oz coins vs a 1 oz. A 1 oz coin is the sweet spot. you’ve seen that in the pp books.

But also, gold is frickin expensive. I know wealthy people (and Palantir) are buying bars, but that’s too rich for my blood. I would think that, besides the counterfeiting issues discussed above, more people buy coins because they’re more affordable. They’re almost like fractional bars.
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Re: Does Gold's Markup Bother You?

Post by vnatale » Sun Oct 17, 2021 12:16 pm

dualstow wrote:
Sun Oct 17, 2021 12:08 pm

vnatale wrote:
Sun Oct 17, 2021 11:06 am

Is it a correct assumption that for most of you who own your physical gold in your possession that it is in the form of coins and NOT bullion bars?

I think I've seen a lot of discussion here regarding gold coins but relatively little regarding gold bullion?


Coins can still be bullion. Of course, not all coins are. If you’re not a coin dealer and you’re buying from the mint, that’s not bullion. But bullion coins are … bullion. Does that make sense?

And anything in fractional ounces is going to cost more. Look at the price of two ½ oz coins vs a 1 oz. A 1 oz coin is the sweet spot. you’ve seen that in the pp books.

But also, gold is frickin expensive. I know wealthy people (and Palantir) are buying bars, but that’s too rich for my blood. I would think that, besides the counterfeiting issues discussed above, more people buy coins because they’re more affordable. They’re almost like fractional bars.


Thanks for response.

Understand what you are saying.

In all my buying I try to buy a bulk buyer as much as possible to get the best pricing.

When (date indeterminate) I finally implement Permanent Portfolio I will be making one large purchase to get started. Seems clear that the lowest markup is on bars. But it also seems that coins are more practical and less likely to be counterfeited? Or, less likely to be questioned?

My concern would not be buying something that is counterfeit (I have clearly got the message to only buy from reputable dealers) but with someone questioning whether my bar was real when I went to sell. Seems like there would be less questioning about coins? Or, coins are easier and less expensive to check for authenticity?
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Does Gold's Markup Bother You?

Post by dualstow » Sun Oct 17, 2021 1:18 pm

I think someone who actually owns bars can answer more completely. For example, I don’t really know what’s stamped on bars.
Bars are easier to fill with tungsten. Dealers have been fooled. I believe coins *have* been faked so well that some dealers were fooled, but it’s harder. You have to get the stamp right, the weight, and the dimensions. Common sense says that’s going to be harder to do with a little one ounce coin.

Do you know why many coins have that rough edge? I forgot the proper term, but think of the knurled edge on a radio dial that is easier to grab than a smooth dial. Originally, it was to prevent the coin being shaved. Well, it’s easier to shave gold off of a bar, an authentic bar, than off of an authentic coin.

As for selling your bars to a dealer, don’t worry, Vin. By the time you buy gold you’re going to be like 90 and someone else can deal with the selling. O0
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Re: Does Gold's Markup Bother You?

Post by vnatale » Sun Oct 17, 2021 1:34 pm

dualstow wrote:
Sun Oct 17, 2021 1:18 pm

I think someone who actually owns bars can answer more completely. For example, I don’t really know what’s stamped on bars.
Bars are easier to fill with tungsten. Dealers have been fooled. I believe coins *have* been faked so well that some dealers were fooled, but it’s harder. You have to get the stamp right, the weight, and the dimensions. Common sense says that’s going to be harder to do with a little one ounce coin.

Do you know why many coins have that rough edge? I forgot the proper term, but think of the knurled edge on a radio dial that is easier to grab than a smooth dial. Originally, it was to prevent the coin being shaved. Well, it’s easier to shave gold off of a bar, an authentic bar, than off of an authentic coin.

As for selling your bars to a dealer, don’t worry, Vin. By the time you buy gold you’re going to be like 90 and someone else can deal with the selling. O0


Thanks for allowing me know more than I knew prior to reading what you wrote.

Also, thanks for the humor...humor, which as usual, generally has a fair amount of truth in it.
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Re: Does Gold's Markup Bother You?

Post by dualstow » Sun Oct 17, 2021 3:51 pm

Thank you for being a good sport about the humor.
If I start a separate thread asking what your portfolio is now, before dipping your toe into the pp, would you answer? I don’t mean a poll of everyone- just you.
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