Three Things Gold Buyers Must Know First
Recent news stories questioning what some dealers charge when selling gold coins reinforces what experts have advised for years: do your homework first. Investors should become knowledgeable before purchasing precious metal bullion coins as a financial investment or economic hedge, according to officials of the Professional Numismatists Guild (www.PNGdealers.com), a nonprofit California-based organization founded in 1953 that’s composed today of the country’s top rare coin and bullion coin dealers who must adhere to a strict Code of Ethics in the buying and selling of numismatic merchandise.
“If you don’t know your gold, silver or platinum coins, you’d better know your coin dealer to help you make responsible decisions,” advises PNG President Jeffrey Bernberg of Willowbrook, Illinois. “To make an informed purchase of gold, silver or platinum, investors need to be aware of three crucial marketplace factors: the actual cost per ounce of the precious metals; the bullion value versus any collector value of the coin; and timely delivery of the merchandise.”
Price: Gold Investors should be aware that gold bullion coins trade at a small premium over the actual spot gold price because they are minted by sovereign governments that charge a fabrication fee. The spot gold price is based on 100 ounce or larger .999 fine gold bars. Gold bullion coins ranging from 1/10 oz to one ounces trade at 3% to 15% premium over spot, based on the coin, it’s size (for example, 1/10th, 1/4th, 1/2 or 1 full ounce), and the quantity being purchased. Many major gold bullion dealers typically will sell a single, one-ounce gold American Eagle gold coin at approximately four to five percent over the current spot/melt value (and purchase them from customers at about two percent less than their selling price.) American Eagles, Canadian Maple leafs and South African Krugerrands are some of the most popular gold bullion coins. Investors should contact several creditable precious metal dealers and shop for the best price.
Bullion vs. Collector Coins: Investors should distinguish between bullion coins whose values generally fluctuate according to the current price of gold, silver or platinum, and “rare coins” that can carry a significant collector premium based on historical supply and demand.
Some U.S. gold and silver coins may be readily available in circulated condition for a modest premium over their bullion content, but those same coins in superb condition may have significantly higher value — perhaps thousands of dollars above their melt value. The market for accurately graded, high-quality rare coins is quite strong now.
Delivery: Under normal conditions delivery of coins you’ve purchased should be received with 10 to 14 days. However, if at the time of purchase the seller may be aware of a mint delivery problem it should be disclosed to you that there may be a delay. The PNG does not recommend having coins stored by dealers, instead, verified storage at an independent, accredited depositary is acceptable for many investors, especially if it involves a large quantity of gold.
Members of the Professional Numismatists Guild must adhere to a Collector’s Bill of Rights and a Code of Ethics that prohibit use of high pressure sales tactics and misrepresentation of the value of items being sold. PNG members must demonstrate knowledge, responsibility and integrity in their business dealings. They also must agree to binding arbitration to settle unresolved disagreements over numismatic property. A complete list of PNG member-dealers can be found online at www.PNGdealers.com.
For a copy of the informative pamphlet, “What You Should Know Before You Buy Rare Coins,” or a printed directory of PNG member-dealers, send $1 to cover postage costs to: Robert Brueggeman, PNG Executive Director, 28441 Rancho California Rd., Suite 106, Temecula, CA 92590. Phone: (951) 587-8300. Email at info@PNGdealers.com, or visit the web site at www.PNGdealers.com.