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.
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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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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
Above provided by: Vinny, who always says: "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
Above provided by: Vinny, who always says: "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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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
Above provided by: Vinny, who always says: "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 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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Re: Best Deal right now on Gold

Post by SomeDude » Sat Dec 05, 2020 8:36 pm

Silver is a different animal than gold and not part of the PP so I'll get back to gold.

Silver coin and bar premiums are a MUCH bigger factor than on gold.

If you buy a lot of silver, buying gold feels like you're buying at spot. It's a big plus for stacking gold.
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Re: Best Deal right now on Gold

Post by Mark Leavy » Sat Dec 05, 2020 8:43 pm

I like having a few rolls of Mercury dimes on me. Just for fun. Similar to a wad of two dollar bills.
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Re: Best Deal right now on Gold

Post by SomeDude » Sat Dec 05, 2020 8:44 pm

So in dollar terms gold premiums tend to rise over time with inflation, as again the mints and dealers have to cover rising costs. Since gold trends to rise with inflation (with a 1-2% real rate of return) over time, the percentage over spot is pretty static.

And that is the number that matters, not the dollar figure.

I think cort mentioned buying eagles for 35 over spot. Now i have never seen it that low, because that is under what the US mint charges it's dealers and has for a long time. Its possible these were beat up coins or "cull" grade as we say.

Regardless, the 35 was in the past. It might have been when gold was under 1,000 so that means close to 4% again. And this is what matters and what can affect your return, the percent you pay over spot, not the dollar number.
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Re: Best Deal right now on Gold

Post by SomeDude » Sat Dec 05, 2020 8:56 pm

So we know premiums will rise over time with inflation. We know they spike when there is market instability. Ironically, i have seen them spike when spot price crashes and demand for physical explodes. I've seen them spike when spot moves up quickly as well. Those spikes have ALWAYS petered out though.

Basically my experience has been that physical gold gets disproportionately expensive relative to paper gold wherever volatility goes up and big price moves occur.

With gold it's a fraction of the craziness in silver, but i was seeing premiums on 1oz gold eagles at 10% and even more earlier this year when spot dropped.

Part of that was the denominator (spot) was suddenly lower, but the numerator (premium) was also going up as physical demand surged.

This was true at my LCS's and online.

Lesson here is......if you feel comfortable with the risk.....buying paper gold after a big sell off then switching it out for physical when price moves back up and premiums cool might be a great play.
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Re: Best Deal right now on Gold

Post by SomeDude » Sat Dec 05, 2020 8:57 pm

Ok i need to warm up a bottle of milk and serve my 8lb master......
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Re: Best Deal right now on Gold

Post by SomeDude » Sat Dec 05, 2020 8:59 pm

Mark Leavy wrote:
Sat Dec 05, 2020 8:43 pm
I like having a few rolls of Mercury dimes on me. Just for fun. Similar to a wad of two dollar bills.
Ohhhh yeah love em. I actually clean my junk silver which is heresy in the community but its so cool having US coins that shine like crazy. I've got several large bags of dimes, quarters, and halves. Some back to 1915.

Very cool to think about all the hands they passed through and trade they facilitated.
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Re: Best Deal right now on Gold

Post by Mark Leavy » Sat Dec 05, 2020 9:45 pm

SomeDude wrote:
Sat Dec 05, 2020 8:59 pm
Mark Leavy wrote:
Sat Dec 05, 2020 8:43 pm
I like having a few rolls of Mercury dimes on me. Just for fun. Similar to a wad of two dollar bills.
Ohhhh yeah love em. I actually clean my junk silver which is heresy in the community but its so cool having US coins that shine like crazy. I've got several large bags of dimes, quarters, and halves. Some back to 1915.

Very cool to think about all the hands they passed through and trade they facilitated.
Well, yeah. That is pretty cool. But if you’ve ever dated a Voodoo priestess ...

;)
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Re: Best Deal right now on Gold

Post by Kriegsspiel » Sun Dec 06, 2020 5:48 am

SomeDude wrote:
Sat Dec 05, 2020 8:59 pm
Very cool to think about all the hands they passed through and trade they facilitated.
That is cool to think about. I also have some junk silver with a long life (in fact, they may be the oldest items I own). It reminds me of this observation:
Many a gem which hangs now on an English lady’s wrist saw Alaric sack Rome—and saw before and since—What not? The palaces of the Pharaohs, or of Darius; then the pomp of the Ptolemies, or of the Seleucids—came into Europe on the neck of some vulgar drunken wife of a Roman proconsul, to glitter for a few centuries at every gladiator’s butchery in the amphitheatre; then went away with Placidia on a Gothic ox-wagon, to pass into an Arab seraglio at Seville; and then, perhaps, back from Sultan to Sultan again to its native India, to figure in the peacock-throne of the Great Mogul, and be bought at last by some Armenian for a few rupees from an English soldier, and come hither—and whither next? When England shall be what Alexandria and Rome are now, that little stone will be as bright as ever.
- Charles Kingsley
I feel dumb for not mentioning jewelry in the Hard Assets thread.
One horse can carry 125 kg on its back, but it can drag 2500 kg on a cart. If it pulls a barge along a river, it can drag 30,000 kg, 30 tonnes, and it can drag 50 tonnes if the weight is on a barge in quiet water, i.e., on a canal.
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Re: Best Deal right now on Gold

Post by jatwell » Tue Dec 08, 2020 9:19 pm

Any concern on shipping via Fedex or UPS?

I believe their T&C's prohibit bullion/precious metals yet a lot of the online retailers seems to use them vs USPS.
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Re: Best Deal right now on Gold

Post by Mark Leavy » Wed Dec 09, 2020 2:22 am

jatwell wrote:
Tue Dec 08, 2020 9:19 pm
Any concern on shipping via Fedex or UPS?

I believe their T&C's prohibit bullion/precious metals yet a lot of the online retailers seems to use them vs USPS.
In real practice, I don't think it is an issue. I would go for it.
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Re: Best Deal right now on Gold

Post by SomeDude » Fri Dec 11, 2020 11:21 pm

I need to get back to the physical premium discussion now that it's the weekend.

Work was murder this week. My newborn needs a bottle every 2-3 hours so i sleep from 6-8 PM and 4AM-8AM. My wife sleeps in the middle of that. Brutal.

I did get my 1/4 oz US mint coins i bought for $446 on black friday. Cheapest price now is $465 so that's about 3.5% up.

They're really nice, an '87 and an '88. An eagle and statue of liberty design respectively.

They're .242 oz of gold each and a 90% alloy, just under 22kt.

I'll post some pics. Highly encourage these $5 face value us commemorative coins if you can get them for low over spot.
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Re: Best Deal right now on Gold

Post by SomeDude » Mon Dec 21, 2020 12:45 pm

These are back on sale:

https://sdbullion.com/5-us-commemorativ ... prices.com

fractional, US mint, legal US tender, collectible variety, about 2% over spot.

It really doesn't get much better.

My first two were the statue of liberty and an eagle.

I'm going to order more today, just not sure how many.
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Re: Best Deal right now on Gold

Post by Kriegsspiel » Mon Dec 21, 2020 6:43 pm

It's good to know SDBullion has regular sales, I'll make sure to check them next time I am buying. I'd like to now, after reading about the newest stimulus bill, but I'm quite overweight gold as it is.
One horse can carry 125 kg on its back, but it can drag 2500 kg on a cart. If it pulls a barge along a river, it can drag 30,000 kg, 30 tonnes, and it can drag 50 tonnes if the weight is on a barge in quiet water, i.e., on a canal.
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