Ordering a large amount of bullion

[williswine]

Hi everyone,

I have not purchased physical gold bullion for my PP (but am increasingly thinking about doing so).  There are many reasons in my situation for not doing so.  The main one is that the dollar amount needed to be purchased is in the six-digit range.  My problem at first was w.r.t. insurance.  I could only sleep at night if such amount was in a safe deposit box and insured.  A rider on my home owner insurance would not make sense financially.  Fortunately, based on a recent thread here, it seems one can insure the bullion stored in a safe deposit box for less than .4% of the bullion value per year.  This changes the game for me.  My problem now is how to purchase that much physical gold bullion...

While doing some research online, I found the following article: http://www.kiplinger.com/columns/kiptip ... -gold.html

I have several questions about this.

The article provides a list of dealers that are said to be "authorized purchasers".  Yet when I use the dealer locator of the US Mint at http://www.usmint.gov/mint_programs/ame ... ion=lookup, I get a list of all national dealers and a list of local dealers for my state, no mention of "authorized purchasers".  Are the national dealers those that the US Mint currently considers to be "authorized purchasers"?  How can I obtain a current list of "authorized purchasers"?

I am obviously trying to find a dealer that I feel I can fully trust to deliver the fairly large amount I am seeking to purchase.

My reluctance to trust a dealer goes back to my once loosing a significant amount.  I thought I would receive services I had paid for from an apparently legit business with a physical store front.  One day I found closed doors as the business owner had left the country with the money he had collected from several hundred customers.  Needless to say end customers like me were far from being first in line to recover from the theft.  Filing a lawsuit did not help.  To date, and more than 20 years after this unfortunate event, I have not recovered the amount that was stolen... but I digress.

What assurance do I have that the gold bullion dealer I pick will collect the funds I wire then diligently ship my order?  How do you know a dealer is reputable?  For a long time, I would have trusted the Better Business Bureau ratings but a recent ABC News story about it (http://abcnews.go.com/Blotter/business- ... 843&page=4) has me rethinking this...  I know I will have a hard time sleeping at night the moment the wire transfer becomes effective and I have to wait possibly several days before receiving my insured shipment.  Is there any protection against the risk of theft by the dealer I wire to?

How do you handle such large purchase?

Thank you in advance,
Williswine

[MediumTex]

I would be inclined to buy in person and perhaps break it up into several transactions.

[craigr]

First of all you are right to not ever let a dealer "store" your gold. I have read similar horror stories to yours.

Secondly, for the purchase price you are discussing I would seriously consider holding only part in bullion in a safe deposit box and perhaps just sucking up the slight additional risk and use an ETF, Perth Mint, GTU, Everbank or other similar offering. Those amounts probably require a hybrid solution. In other times I'd recommend storing it in a Swiss Bank, but that is becoming quite difficult today.

Many bullion dealers like ajpm.com and coloradogold.com are reputable and can handle larger bullion purchases. As Tex stated, perhaps smaller purchases over time are more appropriate until you hit your full allocation.

But your instinct is right that you don't want to have the dealer hold your gold. Take physical possession or use one of the other common options available today.

Also, if you haven't read my Gold FAQ you may find more ideas there:

https://web.archive.org/web/20160324133 ... ation-faq/

[murphy_p_t]

you may also wish to develop a relationship with local pawnshop, espec if they deal in bullion...i've found their commissions to be very competitive (1/2 or better of local coin dealer). this may involve multiple transactions.

[williswine]

Impressive to see three replies so fast!

Craigr, to clarify, the business owner who left the country was not a gold dealer, and my story is not related with stored gold either.  The services I purchased were of a totally different nature, and completely intangible.  As HB would say IIRC anything can happen, nothing has to happen.

Some online reviews of AJPM indicate this business may have recently changed ownership and quality of service may have gone downhill since.  One reviewer indicated having been lied to.  I found them after having consulted the Gold FAQ.

For me to feel comfortable with any online gold bullion dealer, I would need to know what happens to my funds once wired to the dealer.  I mean, the dealer can hold on to them indefinitely and never deliver (or can't she?).  While I assume bank wiring proves the funds have been received by the dealer's bank, I don't know what, other than honesty, forces the dealer to use them to procure bullion then ship/remit it to the customer.  As the amount ordered increases, so does the potential loss in case of non delivery: in the case of a 100% PP 0% VP configuration, up to potentially a fourth of one's life savings.  Ouch!

I see that there is a binding agreement upon placing a bullion order meaning I, as a customer, have to pay the dealer but does this agreement extend to the dealer so that she has to remit the bullion?  I am no attorney but I sure would feel better knowing such agreement is such that the customer is protected by ensured delivery from the dealer.

I haven't investigated yet the logistics involved with taking delivery of a large amount of cash at a bank.  I know some of them require advance notice for amounts less than $10,000.  I don't know what happens beyond $10,000.  And I don't know how a dealer would react at the sight of a large cash amount.  Cash appears preferable in my situation as credit cards are reserved for small transactions, and a check or cashier's check both require holding periods at most dealers: here again, assuming the dealer does not disappear overnight, the customer has to trust that the dealer delivers once the check or cashier's check clears.

murphy_p_t: I haven't looked at local pawnshops yet...  (any recommendation?)

All this so far points towards sticking with MT's inclination: in-person transaction/s if one does not want to mostly rely on paper gold or die worrying

Another problem I didn't mention is that as gold spot price continues to increase, purchasing bullion in bulk to lower the premium requires higher and higher dollar amounts...

Thank you,
Williswine

[Lone Wolf]

I'd recommend making a few calls to the local coin shops in your area and seeing how they price bullion coins.  You may be surprised to find that you can get a fairly decent deal sometimes.  A live exchange with a human being seems like the method most likely to set your mind at ease.

Also, for whatever reason, I've found most coin shop owners I've dealt with to be very likable people.

Even though I don't buy any numismatic coins or historical money, checking that stuff out is pretty cool.  Walking past pile after pile of decommissioned currencies really puts one in the right frame of mind to build up a nice holding of gold! 

Re: methods of payment.  I would be surprised if a cashier's check requires any kind of holding period.  I'd check with whatever shop you choose.  Typically the way I've seen it work is that you cut a cashier's check that will be at least big enough to cover the entire purchase.  You are then given your purchased bullion and then cash (physical Benjamins) for whatever "excess" you might have had in your cashier's check.  I agree with you that I would require an immediate exchange to feel comfortable.

[HB Reader]

I have dealt with Kitco, American Precious Metals Exchange and Michaels Jewelers Precious Metals online (and several smaller coin dealers in person over the years) and have had good service from all of them.  They are more interested in maintaining their good reputation then cheating customers.  While six figure purchases are not that unusual, I would use MT's suggestion of breaking your order up into three or four purchases if you are nervous about the transactions.  Buy Krugerrands or American Gold Eagles and you should not have any problems. 

[Wonk]

A lot of good advice here so far.  I would add that I use tulving.com for my purchases because I haven't found lower spreads anywhere else.  They have all been in the mid to high-5 figure range and I've had no problems.  I also agree that you should check your local dealers first.  If the prices are good, you can deal with them face to face and receive your bullion on the spot(so to speak).  Additionally, I agree you might want to break up your purchases into smaller segments.  Lastly, if you are putting  a sizable buy order over the phone, you might want to record the phone call in the event you need recourse.  They should have no problem agreeing to document the order.

Good luck.

[6 Iron]

I have also received excellent service from Tulving, but they do have a 20 coin minimum for 1 oz coins.

[Pkg Man]

For bullion orders, I would recommend multiple purchases from multiple sources. In addition to the dealers already mentioned, you might want to consider Bullion Direct, Gainesville Coin, and Merit Financial. I would also space out the purchases, request different carriers (UPS, FDX, and the USPS) so it is not the same person making all you deliveries.  You might also use different delivery addresses if possible.

I always worry a bit while the package is in transit, but have never had an issue.

[dualstow]

Some online reviews of AJPM indicate this business may have recently changed ownership and quality of service may have gone downhill since.  One reviewer indicated having been lied to.  I found them after having consulted the Gold FAQ.

Interesting to hear this. For what it's worth, I have only dealt with AJPM so far for physical gold. I'm doing this in bits -- still in five digits so far. I haven't had any problems with them. You can read my nervous posts here about getting gold very late in the mail, and about getting a coin that looks like it has nickel-colored metal where scratched, but honestly, I got my deliveries, and they were a pleasure to deal with on the phone.

I am curious, however, about the possible change in ownership. 1) I've never felt like I was talking to an owner on the line. 2) They needed help spelling the city where I was receiving delivery, and I'm talking about a city with a U.S. Mint. 3) During my most recent order, I could clearly hear the operator who took my order being coached by a woman standing next to him. 4) In an email exchange, one guy mentioned the silver content in krugerrands, but I believe there is silver in American Eagles, not krugerrands.
However, I merely felt like they hired extra help, which would make sense what with the gold-buying frenzy we've seen in the past few years.

@craig - didn't you get into the PP all at once? If you sold a tech company, you must have had, well, quite a few digits in your purchase as well. :-)

[Gumby]

It's worth mentioning that Tulving only deals with large orders of Gold (20oz minimum order) and their shipments are insured by Lloyds of London.

http://tulving.com/New%20Pages/quote_fr ... arrier.htm

They offer very good spreads due to their minimums and they have an excellent reputation.

The nice thing about gold is that even a very large order tends to fit in a relatively small package. I was shocked to discover that my entire net worth in gold could fit into a tiny glove box.

You could easily buy a few orders in 20oz or 40oz increments just to get a feel for it — 40oz is a very small order for Tulving.

[williswine]

The nice thing about gold is that even a very large order tends to fit in a relatively small package. I was shocked to discover that my entire net worth in gold could fit into a tiny glove box.

This is obviously truer today than when a troy ounce of gold retailed for ~$200...

I always worry a bit while the package is in transit, but have never had an issue.

Funny that you would: I think I would be pretty satisfied to see the order shipped (assuming it is insured of course).  Depending on the order's size, the shipment weight, that at least UPS reports, may even give you an indication of whether it contains heavy gold bullion or something else.

Another point I haven't had time to research yet: one of the dealers (should have taken note of which one) mentioned that only the United States Postal Service can insure shipments for large amounts, and if another carrier is used then large orders have to be split to allow insurance coverage.

I would be surprised if a cashier's check requires any kind of holding period.

I have spent quite some time checking out the websites of many national or local dealers.  At least for online or phone orders, they all seem to put a hold on cashier's checks, regular checks, even wired funds.  I don't know which one of them would not wait to ensure they have received the funds in their account before shipping the corresponding order.  This being said, I recently bought a vehicle cash using a personal check (drawn onto my Money Market Fund account) and the dealership did not make me wait whatsoever: I got the keys immediately and my MMF account was debited a few days later.  I unfortunately am short on time to check how my local gold dealers operate if I present a personal check (or a cashier's check) in person but will.

I see Tulving being mentioned quite a lot, both here and on the BH forum, however reviews are mixed elsewhere online.  People do seem to receive their orders but sometimes with long waits.  In my research however, I found the FTC charged them with fraud in the past.

One thing I noticed while checking HB's "Why the Best-laid Investment Plans Usually Go Wrong" is that HB listed Blanchard and Co. of New Orleans, LA as one of several gold dealers to do business with.  They are still in business, and I believe I read them claiming they invented the concept of selling gold bullion online.  (And no I don't work for them or else life might be simpler  )

I still would like to find a way to obtain the current list of "Authorized Purchasers".

Anyway, thank you all for the helpful advice.

[BobS]

I've used Northwest Territorial Mint for a couple of years now and have had no issues - other than some late paperwork.  One can find them at - http://nwtmint.com/

I never bothered breaking the shipments up - they are insured.  The big shipment was to my IRA custodian.  The smaller ones were via USPS directly to me - and I had to go and sign at the Post Office to retrieve them.

Bought and sold multiple times - the only errors encountered were with the IRA custodian and the depository, and Northwest took care of the issues.

[Lone Wolf]

At least for online or phone orders, they all seem to put a hold on cashier's checks, regular checks, even wired funds.

Interesting!  I'm certainly not surprised that there's a hold on personal checks, but wired funds is a bit of a shocker.  My only experiences are face-to-face transactions (not online or over the via mail) so perhaps the general rules are different.  Certainly, though, cashier's checks are much more appealing to a gold dealer than a personal check.  At the very least I'd expect a long clearing period for a personal check.  So far with cashier's checks, though, it's just in and out.

Good luck with your purchase!

[steve]

When I purchased a large amount I was very apprehensive about buying it online. I found a local dealer through a friends recommendation (about an hour drive away) that could handle what I wanted. I may have paid a little bit more in premium at the time but it was well worth it, I walked in with a cashiers check from my bank and walked out with my gold no shipping no waiting. I also have GTU to rebalance with.