Best Deal right now on Gold

Discussion of the Gold portion of the Permanent Portfolio

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SomeDude
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Re: Best Deal right now on Gold

Post by SomeDude » Sat Dec 05, 2020 2:49 pm

Those costs vary by the physical bar or coin. The factors include design complexity, volume, mint location, and many others. mints charge dealers to cover their costs and turn a small profit. This should not worry us as gold buyers. The physical coins and bars will always have a premium. We can even benefit from this if buying and selling at the right time. Even if we don't it doesn't matter.
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Re: Best Deal right now on Gold

Post by SomeDude » Sat Dec 05, 2020 3:04 pm

Ok so what do you get for the premium?

You get tangible wealth in your hands with zero counterparty risk.

You do not have to rely on any third party to honor their promise to you. I am certain, in a black swan event when promises are being broken and faith in paper money is failing you will not be able to get your gold. The custodian will either renege or be unable to get it to you.

You also get a profit oppty as times that metal spikes quickly often coincide with premium spikes. The premium could very well have gone up more than the metal. You might find yourself selling to rebalance and getting a higher return because physical is in such high demand.

Also, if you get government bullion coins, they are dated. Everything else being equal, older dates usually command higher premiums. That means buying coins today and holding them 10-20 years could result in a higher return than an etf for example because the coin is demonstrably older and a little harder for collectors to add to their collection. A pristine 1986 gold american eagle goes for more than a 2020.
Last edited by SomeDude on Sat Dec 05, 2020 3:19 pm, edited 1 time in total.
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Re: Best Deal right now on Gold

Post by SomeDude » Sat Dec 05, 2020 3:12 pm

Next point is physical gold is cheaper in the long run than ETFs.

Gld has an expense ratio of 40 basis points. Over 10 years you're paying about 4.5%

Eagles and other forms of bullion can be bought for that or less.

This advantage for physical only improves the longer you hold it, as well as any bullion with dates should see some small uptick based on their age (if you keep them mint)
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Re: Best Deal right now on Gold

Post by SomeDude » Sat Dec 05, 2020 3:15 pm

Here's a big advantage for physical. No one needs to know you have it. If you want to keep some of your net worth hidden from government, creditors, people intent on suing you, spouses, etc., you will not be able to with ETFs or other forms of paper gold. Even gold held in vaults will be at risk.

Physical coins you have hidden at home or elsewhere are really not subject to confiscation, although theft is something to be concerned about.
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Re: Best Deal right now on Gold

Post by SomeDude » Sat Dec 05, 2020 3:17 pm

Ok those are some extremely quick thoughts on physical premiums and why we should not use them as a reason to choose paper gold over the real deal.

There are legit reasons to buy paper gold, but premiums on physical are NOT.
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Re: Best Deal right now on Gold

Post by SomeDude » Sat Dec 05, 2020 3:19 pm

I need to take a break and deal with life and a newborn. When i get back to this I'll talk a little on my experience with physical premiums and how to minimize or get good value when paying them.
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vnatale
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Re: Best Deal right now on Gold

Post by vnatale » Sat Dec 05, 2020 3:43 pm

SomeDude wrote:
Sat Dec 05, 2020 3:15 pm
Here's a big advantage for physical. No one needs to know you have it. If you want to keep some of your net worth hidden from government, creditors, people intent on suing you, spouses, etc., you will not be able to with ETFs or other forms of paper gold. Even gold held in vaults will be at risk.

Physical coins you have hidden at home or elsewhere are really not subject to confiscation, although theft is something to be concerned about.
A MAJOR concern if one is buying, say, $200,000 of physical gold? Or, even more?

Plus, what does happen to gold in case of a fire? It melts? You have your "do-it-yourself" bullion but now not so readily accepted as are gold coins?

Vinny
"I only regret that I have but one lap to give to my cats."
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Re: Best Deal right now on Gold

Post by SomeDude » Sat Dec 05, 2020 5:03 pm

vnatale wrote:
Sat Dec 05, 2020 3:43 pm
A MAJOR concern if one is buying, say, $200,000 of physical gold? Or, even more?

Plus, what does happen to gold in case of a fire? It melts? You have your "do-it-yourself" bullion but now not so readily accepted as are gold coins?

Vinny
Fire proof safe. A few hundred bucks. Will withstand 1,500 degrees. Big enough to store millions in gold and other valuables.

I don't want to derail and talk about how to protect against theft. How about bury it in your yard in the dead of night?
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Re: Best Deal right now on Gold

Post by vnatale » Sat Dec 05, 2020 6:51 pm

SomeDude wrote:
Sat Dec 05, 2020 5:03 pm
vnatale wrote:
Sat Dec 05, 2020 3:43 pm
A MAJOR concern if one is buying, say, $200,000 of physical gold? Or, even more?

Plus, what does happen to gold in case of a fire? It melts? You have your "do-it-yourself" bullion but now not so readily accepted as are gold coins?

Vinny
Fire proof safe. A few hundred bucks. Will withstand 1,500 degrees. Big enough to store millions in gold and other valuables.

I don't want to derail and talk about how to protect against theft. How about bury it in your yard in the dead of night?
My concern with a safe is that it is a big time advertisement of that is where your valuables are. So either steal the safe or force me to open it.

This is an important component of buying physical gold. How to store it and the costs and risks of owning it.

Vinny
"I only regret that I have but one lap to give to my cats."
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Re: Best Deal right now on Gold

Post by SomeDude » Sat Dec 05, 2020 7:17 pm

vnatale wrote:
Sat Dec 05, 2020 6:51 pm
SomeDude wrote:
Sat Dec 05, 2020 5:03 pm
vnatale wrote:
Sat Dec 05, 2020 3:43 pm
A MAJOR concern if one is buying, say, $200,000 of physical gold? Or, even more?

Plus, what does happen to gold in case of a fire? It melts? You have your "do-it-yourself" bullion but now not so readily accepted as are gold coins?

Vinny
Fire proof safe. A few hundred bucks. Will withstand 1,500 degrees. Big enough to store millions in gold and other valuables.

I don't want to derail and talk about how to protect against theft. How about bury it in your yard in the dead of night?
My concern with a safe is that it is a big time advertisement of that is where your valuables are. So either steal the safe or force me to open it.

This is an important component of buying physical gold. How to store it and the costs and risks of owning it.

Vinny
I'm sure that's been covered in other threads. If not I'll start one at some point.
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vnatale
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Re: Best Deal right now on Gold

Post by vnatale » Sat Dec 05, 2020 7:39 pm

SomeDude wrote:
Sat Dec 05, 2020 7:17 pm
vnatale wrote:
Sat Dec 05, 2020 6:51 pm
SomeDude wrote:
Sat Dec 05, 2020 5:03 pm
vnatale wrote:
Sat Dec 05, 2020 3:43 pm
A MAJOR concern if one is buying, say, $200,000 of physical gold? Or, even more?

Plus, what does happen to gold in case of a fire? It melts? You have your "do-it-yourself" bullion but now not so readily accepted as are gold coins?

Vinny
Fire proof safe. A few hundred bucks. Will withstand 1,500 degrees. Big enough to store millions in gold and other valuables.

I don't want to derail and talk about how to protect against theft. How about bury it in your yard in the dead of night?
My concern with a safe is that it is a big time advertisement of that is where your valuables are. So either steal the safe or force me to open it.

This is an important component of buying physical gold. How to store it and the costs and risks of owning it.

Vinny
I'm sure that's been covered in other threads. If not I'll start one at some point.
You are correct. It has many times been prior discussed.

Vinny
"I only regret that I have but one lap to give to my cats."
SomeDude
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Re: Best Deal right now on Gold

Post by SomeDude » Sat Dec 05, 2020 8:34 pm

Ok the next point about premiums that I've seen is they typically go up over time with inflation. They are higher now on average in terms of absolute dollars than they were 5 and 10 years ago, again on average. At any given moment financial fears can drive a rush into physical as people get very skeptical of paper metal.

This was on full display earlier this year when gold and silver spot price sold off hard but that only applied to paper gold and silver.

Silver for example went from about 20 to 12 in a month or so, I'd have to check the chart. I can tell you that premiums on physical went way up though. Premiums on silver eagles went from 3 bucks to 6, then 7, then 8, then 10. It was nuts.

There is a community of physical stackers and we were debating whether or not it was safe to take a chance on paper silver as it was clear spot price had disconnected from physical and must move up. I didn't buy any paper silver but looked long and hard online for physical deals on stuff i normally ignore like 100oz bars, junk etc. I made some good pickups and got an LCS to sell me a horde of eagles for under 3 bucks over spot when spot was under 15. About a 20% premium. Money well spent.
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