Understanding the pricing structure of gold dealers and the products they sell is an important step that one must take to become a successful gold investor. Not only does the price at which you buy gold determine how well the market must perform for you to see a profit, but it is a little-known fact that every year investors overpay for gold by 100s of millions of dollars.
The vast majority of investors who overpay for gold do so with the “help” of celebrity-endorsed firms that contract independent brokers to force sales at any and all costs, because the commissions in this industry can be staggering. While it is impossible to “red flag” every less-than-reputable gold dealer due to the fact that many of these shady companies are “fly-by-night” operations run by greedy individuals who have mastered the art of staying under the radar by changing addresses, telephone numbers and web sites, the Certified Gold Exchange has identified 7 secrets that investors can use to ensure the best possible price when buying gold:
- All precious metals products have a buy price and a sell price. The price that you pay to buy gold will always be higher than the price you would pay to sell the same amount of the same product to the same dealer on the same day. The difference between the buy price and the sell price is known as the “buy/sell spread.”
- Bullion has a lower buy/sell spread than certified gold and silver coinage. The typical buy/sell spread for bullion is between 1% and 8%. The buy/sell spread for certified coinage is between 8% and 35%, although the exact amount will vary depending on your gold dealer, your investment volume and the product(s) you select.
- Certified coin buyers are often led to believe that the prices listed by PCGS and NGC are the official, live certified coin prices. This can lead to paying too much as prices found on NGCCoin.com and PCGS.com are the national average retail values of coins and not exact market indicators. You deserve discounts from the listed prices, especially if you are buying in bulk.
- Some sneaky companies like to call themselves “discount dealers” because they claim to have a relatively low buy/sell spread. What they don’t tell you, and what is barely legible in the fine print of these companies’ contracts, is that broker commissions don’t count towards the buy/sell spread. Some companies advertise a 5% buy/sell spread on certified coins but also tack on 20%-30% in commission charges.
- Not all gold is created equal. It may seem like gold bullion is easier to track because of the widely-available gold spot price, but historic precedent and U.S. federal law are two reasons why bullion seems so cheap. That’s right, gold bullion can be (and has been) confiscated by the U.S. government during a state of emergency. What’s more, failing to comply with an Executive Order could translate into 10 years in prison and/or a hefty fine, and in case you plan on burying your gold in the backyard or protecting it with your shotgun, hold your horses: the last time the U.S. government confiscated gold lots of people refused to turn it in, but no one was willing to take black market gold bullion in exchange for food or fuel. Gold bullion hoarders lost their purchasing power and became felons. And you thought the “eminent domain” laws surrounding real estate were unfair.
- If a broker seems over-eager about 24-karat coins, especially if you have asked for more information on a 22-karat coin, BUYER BEWARE! “One ounce” coins of either type contain the same amount of pure gold. The difference lies in the purpose: 24-karat coins are extremely malleable and are never meant for circulation, only investing. 22-karat coins are 10% alloy, usually silver or copper, and many 22-karat coins were originally meant for circulation as currency, notable exceptions being coins minted after 1975.
- The certified coin market is comprised of two sectors: sight-seen coins and sight-unseen coins. If you were to line up, for example, 100 MS63 Saint Gaudens gold coins, they would all look slightly different despite all receiving a grade of 63. This is known as the “grading range.” About 10%-15% of these coins (sight-seen) are closer to a 64, while the remaining 85%-90% (sight-unseen) are closer to a 62. Sight-seen coins cost more than sight-unseen coins, but sight-unseen coins have a much lower buy-back price. While the average buy/sell spread for sight-seen coins is 8%-15%, sight-unseen coins can lose 28%-35% of their back end value. In fact, it has become so common for dealers to bypass the sight-seen/sight-unseen explanation that grading companies are now recommending that investors have coins re-certified. Such confusion can easily be avoided. The Certified Gold Exchange does make sight-unseen coins available to other dealers but we only sell sight-seen coinage to household investors, hence our flawless Better Business Bureau rating.
The 7 gold pricing secrets found in this special report should help you shed the veil of ignorance so that you can see through the shady, deceptive practices that some gold dealers engage in to make money. Yes, gold dealers need to make money to stay in business but the reputable firms know how to make money while at the same time giving you a solid shot at seeing profits. If you would like to use a portion or all of this special report to help others discover the pricing secrets that save money when buying gold, or if you are interested in learning more about gold investing, call the Certified Gold Exchange today at 1-800-300-0715 for a hard copy of this report as well as the latest edition of Real Money Magazine, produced and distributed exclusively by Certified Gold Exchange, Inc.