Purchasing Physical Gold

[scubablue]

Greetings: I am looking to add to my gold holdings and will finally make the transition from IAU to physical gold coins.  My question is this: Is there any substantial difference between Golden Eagles and Maple Leafs.  A local dealer quoted a 5 % above spot for the Maple Leafs and 6 % for the Eagles.  A comparison to online dealers shows the additional markup to be standard.  When I factor in shipping costs, the dealer or online costs are a wash.  So are the Eagles worth the extra 1 %?  Thanks for any input.

[Pointedstick]

Personally, I find the eagles prettier. Maple leafs are kind of dull IMHO.

[KevinW]

Maples are close to pure gold and are apparently soft enough that they could be marred or scratched by rough handling. Eagles are intentionally alloyed so it's probably impossible to damage them accidentally. Eagles probably have slightly better name recognition around the world but that's unlikely to ever really matter. Appearance is a matter of taste.

[dualstow]

There are tons of threads on this, but in short:

) Maples are closer to pure gold. Eagles are harder and more scratch resistant. // I see Kevin covered that while I was typing.
) Many people say you get the premium back when you sell the Eagles. I've never sold a coin so I don't know firsthand, but you can look at the buy and sell prices at ajpm.com for example.

[scubablue]

Thanks guys- my understanding is most places will pay spot price when buying back.  Since I plan on taking them from the dealer to my safe deposit box, it seems the Leafs at 1% savings are a better buy. 

[dualstow]

In that case, Krugerrands also offer bang for your buck.

[Bean]

Got to pitch sovereigns.  Durable, recognized, small premium, and a smaller denomination of gold weight.

Why not diversify your gold holdings with maples and ealgles?  I buy low premium slabbed gaudens every chance I can get, it really brings out my gold buggery.

[murphy_p_t]

i seem to recall that the IRS may distinguish between 90% and 999 metal? or some other reason to do so like ability to hold in an IRA?

none of this may be relevant...

[l82start]

fan of the maples myself, personal aesthetic taste as much as anything. i never really got the "to soft, to easy to scratch argument", you are going to put them in a safety deposit box inside a container and look at them every once in a rare while, maybe if you are in the box for other reasons, or handle them on the equally rare days when you sell to re-balance.. its not like you hand them out to use as poker-chips at the weekly home game...
a little bit of care and respect when you do handle them is all you need...

[WildAboutHarry]

Depending on how far down the rabbit hole you want to go, there are numerous options for gold coins outside of the standard bullion issues.  Numismatic gold coins obviously have premiums over spot well above what the bullion coins typically carry, but there are gold coins that carry reasonable mark-ups.

Sovereigns (already mentioned by Bean), various Mexican peso issues, Canadian commemorative gold, Swiss francs, Austrian ducats, etc. can be had for premiums comparable to bullion issues.  The Franklin Mint produced dozens (hundreds?) of gold coin issues, usually in fractions of an ounce, for smaller countries to sell to collectors.  These often carry the gold purity stamped on the coin.

A great site to explore the range what is available in the gold coin realm can be found here.

[portart]

Is there a company where you put in for limit buy on gold eagles like stocks so you can automatically lock in a price? I know the spread makes this unlikely and other costs complicate it. However if such a company, such as Golddealer.com had an account where you can keep the money and put in a price that automatically gets activated, say on a hard down day, that might be something that would be used. You might forgo any interest on your money but cash pays next to nothing anyway.

[Libertarian666]

Is there a company where you put in for limit buy on gold eagles like stocks so you can automatically lock in a price? I know the spread makes this unlikely and other costs complicate it. However if such a company, such as Golddealer.com had an account where you can keep the money and put in a price that automatically gets activated, say on a hard down day, that might be something that would be used. You might forgo any interest on your money but cash pays next to nothing anyway.

I believe Global Gold (mentioned in the book) allows you to put in limit orders to buy and sell, and leave money on account until that occurs.

[scubablue]

Thanks to all for your replies and insight!

[dualstow]

Thanks to all for your replies and insight!

I don't know if you've read any of the Harry Browne titles, Scuba, but if you're just starting out, you should probably stick with regular old bullion and not something numismatic. Keep it simple!  That means krugs, eagles or maple leaves, or if you hate those, maybe Austrian coins or American buffalos. There's a reason for it: easy to sell. If you start getting fancy, it's more complicated when it's time to sell.

That's not to say that the numismatic coins aren't really neat. But, they're not really what Browne had in mind for the pp.

[HB Reader]

In the early 1970's, I purchased and sold British Sovereigns and Mexican 50 peso pieces (they were among the few true "bullion" coins you could legally buy and sell then).  Since 1975, I have only purchased and sold one ounce Krugerrands and American Eagles.  The Canadian Maple Leaf and Chinese Panda are probably okay as well, but I have never had any direct experience with them.

I suspect it doesn't make too much difference now days which coins you buy or sell as long as the premium over the gold price is less than 5 or 6 percent.  I think it makes sense to physically hold as much of your gold as you can in a practical and safe way, but holding some with dealers overseas or in ETFs or closed-end funds (such as in retirement accounts) is not a terrible second choice for some portion of your holdings.

Just my opinion.     

 

[WildAboutHarry]

I don't know if you've read any of the Harry Browne titles, Scuba, but if you're just starting out, you should probably stick with regular old bullion and not something numismatic. Keep it simple!  That means krugs, eagles or maple leaves, or if you hate those, maybe Austrian coins or American buffalos. There's a reason for it: easy to sell. If you start getting fancy, it's more complicated when it's time to sell.

That's not to say that the numismatic coins aren't really neat. But, they're not really what Browne had in mind for the pp.

I got into my Harry Browne Wayback Machine and consulted You Can Profit From a Monetary Crisis circa 1974.  Here is what Harry was recommending back then (the ones with the asterisk were legal for US citizens to own at that time):

• Austria - 100 Crowns
• Belgium - 20 Francs
• Austria - 4 Ducats
• Dutch East Indies - 1 Ducat*
• France - 20 Francs
• Germany - 20 Marks*
• Great Britain - Sovereign*
• Great Britain - Sovereign "Elizabeth"
• Italy - 20 Lire
• Mexico - 50 Pesos*
• Netherlands - 10 Guilders*
• Russia - 5 Rubles*
• Russia - 10 Rubles*
• South Africa - 1 Rand
• South Africa - Krugerrand
• Switzerland - 20 Francs*
• Switzerland - 10 Francs*
• USA - Double Eagle*
• USA - Eagle*
• USA - Half-Eagle*

Of course this was all pre-HBPP (at least the modern incarnation).  The newer bullion coins (American Eagles, et al.) do have standardized gold weights which does make things simpler, but the premiums on fractional gold can get pretty high, while other fractional options (e.g. Swiss 20 Francs, sovereigns) often have more reasonable premiums.

Speaking of Premiums, Harry listed premiums for the coins in the list above.  They ranged from 7% for the Austrian 100 Crown, to a teeth-jarring 575% for the Swiss 10 Franc.  Although Harry attributed the high premiums to numismatic values, I suspect the inflationary craziness of the early 1970s had more to do with it.

My first gold coin was a Krugerrand, and certainly sticking with the bullion coins is a perfectly fine way to build a physical gold holding.

Harry's 1974 advice on when to buy gold?

The time to invest in gold is, generally, whenever you've decided that you want to invest in gold.

Still good advice 40 years later.

[dualstow]

Now where did I put my Dutch East Indies ducats? I know they're around here somewhere! 

[WildAboutHarry]

Now where did I put my Dutch East Indies ducats? I know they're around here somewhere! 

Looking at that list, and seeing what was legal back then, one might infer that the US had some sort of grudge with Queen Elizabeth but that we were OK with the Russians.  Or maybe we were OK with the Czar?

[Larshus]

Couple interesting things:

Swiss 10 Franc: About 4 years ago the Swiss central bank released hoards of them. Well, either they did or a massive customer at UBS did. No one really knows. Anyways, they were a rare coin up to that point. You can now pick them up for less than 5% over melt

For the PP buy the cheapest gold you can, be damned the coin. Make sure it IS a coin though.. don't trust a bar as you have no real assurance to the purity as the maker was not a government with a national standard. You have no idea how many holed, drilled, and plugged bars pass through the wholesale channels each day. Its disgusting.

Often times you can buy semi-numismatic coins for a few % over what a bullion coin might cost. You don't have to buy them for the PP. However they ARE cool and I'm a sucker for the old coins

[Pointedstick]

For the PP buy the cheapest gold you can, be damned the coin. Make sure it IS a coin though.. don't trust a bar as you have no real assurance to the purity as the maker was not a government with a national standard. You have no idea how many holed, drilled, and plugged bars pass through the wholesale channels each day. Its disgusting.

That's great information, Larshus. Are you talking about big kilo bars, or the smaller 1 oz bars too?

[systemskeptic]

If the difference is 1% ($13) I say buy whichever coin you think looks better...

Personally, Maple Leafs are probably my least favorite.

[portart]

It's not the best investment but those 1800's gold coins are really pretty, especially in MS 65 and higher..yikes!

[sophie]

I went with American Eagles.  I don't care as much about the premium as the buy/sell spread, which is pretty consistent with the other 1 oz coins.  The durability is a big consideration for me, as accidentally denting a gold maple leaf or buffalo coin and getting dinged when it came time to sell would be kind of annoying.  And the Eagles are beautiful!

I suggest sticking with coins that are widely available and on the IRS's IRA-approved list.  Not that I have any plans to put coins into an IRA, but it's nice to keep the option open.  That list includes Eagles, Buffalos, and Maple Leafs but not sure what else.  You can also buy 1/2 or 1/4 oz coins, but they tend to carry higher buy/sell spreads.

Regarding physical gold in an IRA:  you can do it with Fidelity (non-segregated storage) but it costs a lot more than keeping the coins in a safe deposit box, or stashed in your freezer.  Who knows if that might change though.

Note to any Internet snoops:  I don't keep gold coins in my freezer.

[Libertarian666]

It's not the best investment but those 1800's gold coins are really pretty, especially in MS 65 and higher..yikes!

I prefer the St. Gaudens, which are also relatively cheap in reasonable grades (lower than MS 65 of course).

[ns3]

I'm about 1/3 of the way converting my ETF gold to physical and so far I've only bought Golden Eagles......

http://www.youtube.com/watch?v=Lp-qF0MUAyI

PS. No gold coins in my freezer either but if you doubt it rest assured I'm also a strong advocate of the second amendment!