Gold Buying Made Simple
Buying gold should be simple and easy to understand. Many dealers confuse the issue with collectable coins and limited mintage issues. Some try to sell “certified coins” with high grades, which is normally only needed for rare coins.
THE KEY IS TO KEEP THINGS SIMPLE
Many people think of gold BULLION as a bar or wafer.
That is certainly one terrific way to buy gold and typically will be the lowest cost. Most major nations sell gold (and silver) bullion coins. These coins are based on the price of gold at any given time. These include but not limited to:
In most cases it is just a personal preference as to which one to buy. One is not necessarily better than another. Prices per coin or bar will vary slightly from one to another, but the differences are usually not great.
I find the US Eagle to be the most popular gold bullion coin.
PREMIUMS
The premium is the amount you pay above the spot price of gold, silver, platinum, or palladium.
The “spot” price is the price you see quoted in newspapers, TV or by many online dealers. It is the price used to trade contracts, options, or futures.
The spot price is the price you typically hear quoted or see on a ticker on a dealer’s website. Spot price is the basis for your cost. Your “out the door” price is the spot price and a premium cost.
Premium refers to the amount above the quoted spot price that you pay for a coin or bar.
The lower the premium the lower your cost per ounce.
Expect higher premiums on silver than gold. Silver is much more bulky and costly to produce and ship. A one-ounce silver coin, worth around $30 costs just as much to produce as a one-ounce gold coin worth $2400. To put this in perspective think of the volume of $15,000 of silver to $15,000 of gold.
You can easily put $15,000 worth of gold in your pocket or purse. The same amount of silver will weigh close to 40 pounds!
PRICING
Bullion bars and coins are based on the market price of gold as it trades all day long.
Again, the “spot “price is what you will see quoted online or in the papers. You will not usually be able to buy gold at the spot price. That is just the basis for pricing coins and bars.
The premium-the amount you pay above the spot price-is what determines the actual out the door price. The premiums can occasionally change during crazy market conditions and is based on actual supply and demand. For example, the premiums were higher than normal during 2023 because of the huge demand by private investors for gold.
We make sure you understand your actual cost before you agree to purchasing any bar or coin.
Some examples of typical premiums are as follows:
- 1 oz gold bars Spot + $80 to $100
- Krugerrands, Kangaroos Spot + $100-$120
- Gold Eagles Spot + $125-$150
The reason for the variation is that the premiums can change slightly from week to week. However, you can see there really is not a big difference from one item to another.
Stay away from special issues or limited issue coins. Typically, dealers price them much higher per ounce and you will RARELY get that extra premium back when you sell. Salespeople love selling coins with added “collector” value because they make a greater commission when the company makes a larger profit on your purchase.
MARKUPS AND COMMISSIONS
Markups on bullion bars and coins are normally 3%-5% on gold and 4%-10% on silver. That is IF you are dealing with a transparent dealer.
I should add that these markups are on top of what the refiner or Mint charges dealers.
For example:
The US Gold eagle typically cost the dealer about 3.5% above spot. After all the Mint must make a small markup to produce the coin.
The dealer then adds 3%-5% on top of that to cover our costs and make a small profit. Your cost in a normal market is about 7%-9% over spot depending on the quantity you purchase.
You are not buying bullion if your dealer charged 20%-30% or even 100% more than the spot price of gold. Do the math before you commit to any purchase.
Keep in mind that there are hundreds of assorted sizes and types of gold and silver coins. You can buy as little as 1 gram of gold (31.1 grams in an ounce). Some other popular sizes are 1/10-, 1/4- and 1/2-ounce gold coins.
There are many reasons people like smaller coins. Keep in mind that the smaller the coins the larger the premium. It takes the Mint just as much effort to make a 1/10th oz coin as a 1 oz coin.
HIDDEN FEES
Some dealers advertise extremely low prices but then add fees. These fees can be any variety of add-ons such as “Handling fees” that make the true price higher.
At AmFed we do not add any fees to your transactions. The only additional charge is shipping if your order is less than $5000. Shipping is typically $25-$50 depending on whether it is silver or gold.
FIND A REPUTABLE DEALER
- Check the dealer’s reviews on Google and Trust Pilot. Make sure they have been in business long enough to have experience in a variety of market conditions.
- Check the Better Business Bureau ratings.
- Make sure they belong to the major industry associations. Some are:
- NCBA - National Council for Tangible Assets (formally ICTA) PNG -
- Professional Numismatists Guild
- CAC - Certified Acceptance Corp
- ANA - American Numismatic Association
- PCGS - Professional Coin Grading Service
- NGC - Numismatic Guarantee Corp
- NCBA - National Council for Tangible Assets (formally ICTA) PNG - Professional Numismatists Guild
- CAC - Certified Acceptance Corp
- ANA - American Numismatic Association
- PCGS - Professional Coin Grading Service
- NGC - Numismatic Guarantee Corp
I always recommend calling the dealer and talking to a broker or the owner. If you get the hard sell or if they attempt to sell you some type of low mintage, rare, exotic, or even Certified coins- BEWARE and hang up.
Ask tough questions like what would you pay for the coins you are offering me. Beware of dealers that tell you they do not charge fees when they buy coins, they usually are unwilling to buy back when you want to sell.
Coin and Bullion dealers are not regulated or licensed, so it is necessary to ensure that you have a dependable and reputable company.
STAY AWAY FROM GIMMICKS
There are always gimmicks that dealers use to entice you to spend your money. I won’t go into great detail here, but I have written a Special Report that talks in more detail. You can call or email me for a copy 800-221-7694 or info@americanfederal.com.
One gimmick I see quite frequently is FREE gold or silver. There is no such thing. You must spend a certain amount and then the dealer gives “free” bonus silver. The only way that is possible is if they over charge you enough to pay for the “free” silver or gold.
I have compared what one of my clients was offered for $100,000 plus the $10,000 of FREE silver and found that if they invested the $100,000 with AmFed they would get almost 20% MORE silver even after getting their “Free” silver from the other dealer.
Another gimmick is to claim that they have one of only five hundred coins graded and you need to buy today or miss out. Usually, the 1 of whatever number they quote is a sham. Anyone can request special message labels from the certification service.
Some dealers will offer gold coins below cost. But when you try to buy them, you must also purchase a variety of other coins. They more than compensate for the "loss" on one coin by overcharging for the rest.
“KEEP IT SIMPLE” is the key.
The more the dealer pushes the purchase with "special" coins or limited quantities or complicated explanations, the more likely you are being overcharged.
It should be remarkably simple to get a price, figure out the premium and decide if it is right for you. If you do not understand what they are proposing - don’t buy.
MAKE THE PURCHASE
Once you commit to purchasing your bullion bars or coins it is important to understand how it works.
When you confirm or “lock in” a price you are committed at that price no matter what the price of the metal does after that. If gold goes down - you still own it at the price you confirmed. Likewise, if gold goes up you own it at the lower price you locked in.
The same applies if you are selling coins or bars to me or any other dealer.
At AmFed, we immediately email a confirmation invoice confirming your purchase or sale. If you don’t have e-mail, we can mail it or fax it or even text it to you.
PAYMENT
AmFed accepts personal checks, bank wires, cash and ACH.
ACH is an electronic check. We simply use the routing number and account number on your check to deposit it electronically. It speeds up the process if you decide to do that.
Once payment clears, we ship your metals to you and provide you with the tracking number. Everything is 100% insured.
CALL US
The easiest way to get more information is to call us.
American Federal (AmFed) has been in business in the Phoenix area since 1983. We belong to a variety of industry organizations including those listed above.
We are recommended by Dennis Prager, Hugh Hewitt and Michael Medved.
Our brokers - there are only 5 of them, wont fast talk you or pressure you to buy anything. We believe in giving you the information you need to make a decision and feel good about your investment.
Dennis Prager says, “I'm delighted to be associated with Nick Grovich”
“Nick Grovich is my choice for coins and precious metals. Nick knows a tremendous amount and he is honest. It takes a lot for me to personally endorse someone because it’s my reputation at stake! With Nick, I do not hesitate to do so ... I’m delighted to be associated with Nick Grovich.”
—Dennis Prager, best-selling author and syndicated radio talk show host
Michael Medved: “The only dealer that I personally trust”
“I have worked with several precious metals’ dealers over the years and American Federal Rare Coin & Bullion is the only dealer that I personally trust with my precious metals’ portfolio. It’s been my great pleasure to work with Nick Grovich, American Federal’s President and CEO. I am so happy with American Federal’s expertise and the knowledge they share to enable me to make informed and educated decisions."
—Michael Medved
The Michael Medved Show,
America’s #1 Show on Pop Culture and Politics
Hugh Hewitt: “Nick is exactly what I want.”
"Nick Grovich is exactly what I want. Whatever you want, he will do it for you in precious metals. You want to sell your gold coin, he'll buy it from you. You want to buy bullion, he'll sell it to you. You want to buy an American Eagle for the Grandkids and not pay an arm and a leg, he'll make his commission and tell you what it is."
—Hugh Hewitt
The Hugh Hewitt Show.
CALL US 1-800-221-7694
Or email info@americanfederal.com
