Gold dealer choices

May 8, 2016 by Buy-Gold.Link in Precious Metal Investing

Searching options where to invest your hard earned money or maybe you are already looking for a gold dealer? It is well known that gold is considered a safe haven in times of economic turmoil as the price of gold tends to rise when shares and bonds tumble. When I say gold, of course I mean physical gold bullion (and not paper gold) in the form of coins or bars.

The first advantage of physical gold bullion compared to paper gold is liquidity. If you ever wanted to sell your bullion again, you could just visit the nearest gold dealer in your area. Most gold dealers would make you an instant offer to buy your gold on the spot (unless they are doubtful whether you obtained it legally or for some other special reasons). An increasing number of online gold dealers also offer to buy back gold from their customers. There is usually a section in the terms and conditions on their website that stipulates whether they buy back gold or not, so it’s easy to check that out.

Secondly, gold is traded as a commodity worldwide. The current price of gold as a commodity, the spot price, can be found online with a couple of clicks (it also appears on Buy-Gold.Link’s homepage). The price of gold may rise or fall, just like the price of any other commodity. However, it tends to rise when other markets (stocks and bonds for example) fall. That makes gold (and other precious metals) especially attractive in difficult economic times. If we were to experience another financial crisis like in 2008, gold would not only retain its current value but most likely (looking at historical data) see it substantially increased.

Finally, if paper cash ever became worthless (like in Zimbabwe in 2008), you could easily carry gold with you and pay your groceries and other necessities with it. Some readers may now be wondering how to carry these huge gold bars you usually see in movies in your pocket. What may surprise some is that gold bullion coins exist in such tiny sizes as 1/20 oz and even 1/40 oz, valuable enough to buy some groceries with it. Even gold bars exist in super small sizes from as low as 1 gram. For convenience, you could buy bars that can be broken down into smaller segments like the Valcambi Suisse CombiBars or the PAMP Suisse MULTIGRAM Bars.

Zimbabwe Dollars 2008

One Hundred Trillion Zimbabwean Dollars – issued during the country’s financial crash in 2008

So where to buy your gold? Finding the right gold dealer might seem daunting considering that there are so many of them. Since you’ve come to this page, you probably want to buy your gold online instead of from a local gold dealer.

Buying from an online gold dealer

That is a smart choice since most online gold dealers have lower prices than local dealers. Why is that so? Online gold dealers generally don’t face all those fixed concrete costs that are associated with every sort of “bricks and mortar” business. However, some online gold dealers also maintain a shop in the locality where their business is registered. Maintaining a large inventory (with the associated security costs) is also unnecessary for online gold dealers. The sales conditions of most online gold dealers stipulate that the dealer might not have all the bullion products that are listed on its webpage immediately at hand. The dealer will simply order them as demand arises (from a wholesaler or directly from the mint).

Gold Dealer shop

“Bricks and Mortar” Gold Dealer shops are much rarer now than they used to be

The manufacturing mint as the producer of the gold bullion typically adds a markup of about 3% that covers the production, shipping and other costs it has incurred. The online gold dealer then adds a further premium to that which typically results in a total markup of about 5% to 8% above the gold spot price.

The premium you pay above the spot price also depends on what type of gold bullion you buy. Gold bars are cheaper to produce than gold coins, so their markup is typically lower. The less common gold rounds would fall in between gold bars and gold coins. They are cheaper than gold coins but not quite as cheap as gold bars. Size also matters. The larger the coin or bar (or round), the lower the premium you pay. Therefore you could say that pure investors are better off buying larger sizes (for example 1kg gold bars). On the other hand, customers who primarily buy gold to be protected in case the Dollar implodes should also buy some smaller coins and bars which might be used as forms of payment some day.

Proof coins, graded coins (by the NGC or PCGS) and certain rare historical coins (not all historical gold coins can be considered scarce today!!!) should only be bought by collectors who still have faith in the current financial system. Even though these coins might appear to increase in value much faster (on paper) than ‘regular’ gold bullion coins, good luck finding an actual buyer for that price when (or if?) the economy and financial markets implode. Until that day however, collectors might achieve substantial gains in value with these coins within even a few years. So if you decide to buy historical gold coins for example, do your homework and find out how many of those were once minted and how many are still believed to exist. Higher premiums for truly rare coins are justified but some gold dealers will try to sell you historical gold coins that still exist in relative abundance for the same high premiums (often above 50%). Beware of that!

How to find a trustworthy gold dealer?

Another potential pitfall is that some gold dealers don’t give you actual possession of your gold but claim to hold it for you in a vault somewhere. That could be dangerous especially if the gold dealer also runs the vault. Accounting can be easily fudged and you can’t be sure then that your gold really exists. If you want to hold your gold in a vault, choose an independent secure storage company (instead of the dealer’s vaults) that has built a solid reputation like Brink’s Global Services.

A gold dealer that has been in the business for many years already is also preferable to a newer outfit or even startup. As the gold price continues to rise, there will be more and more dealers popping up and trying to cash in. The fact that a gold dealer has been in business for many years can also be an indicator of their good sales ethics. With questionable sales practices, they would have most likely gone under. That is especially true in times of the internet when gold dealer reviews can be found at various sites.

Another great place to check is the Better Business Bureau (BBB). Every reputable gold dealer should have a profile with them. The BBB site lists the gold dealer’s rating along with the number of complaints against them and how those complaints were handled. A dealer with an A+ rating with zero complaints is what you’re looking for. The BBB awards the annual Gold Star Certificate to companies without any complaints during a 3 year period. Another sign of trustworthiness is to find the BBBOnLine Reliability Seal displayed on the gold dealer’s website.

Buy-Gold.Link already lists many reliable gold dealers on its site (with more to come step by step). Currently, there are thousands of precious metal dealers in the United States. This page by the US Mint allows you to search for gold dealers in your vicinity. Listing these dealers on its site doesn’t mean that the US Mint vouches for them however. Neither the US Mint nor the US government has much if any oversight over the growing gold trade. All the more reason to be careful and only buy from reputable gold dealers, such as the ones listed on this site.


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