Buying physical gold

[jonathan2260]

Hi there.

I'm new to this forum and this is my 1st post.

I am interested in buying physical gold and silver coins.
I know I can get them from Royal Bank here in Montreal but what I don't like is that they have a system where should I decide to cash them back into Canadian dollars that they take the coins back at lower prices then they sell them. I feel like this is a rip off.
Is there a better place to obtain 1 once maple leaf Gold and Silver coins or Bullions?

Thanks you.

[mrcheap]

jonathan2260: I was JUST talking to a buddy whose mother does this in Pakistan (buys physical gold and stores it). Apparently with her (she owns 400 grams or some such thing), it's even worse as she needs to find a buyer, and anyone who'd be willing to buy such a large quantity will want a discount.

Most investments have transaction costs, and the difference between what they sell and buy the coins for is the transaction cost for the bank. If they didn't earn anything on them, why would they be willing to buy or sell them to you?

You may want to consider a gold derivative (such as <a href="http://cxa.marketwatch.com/TSX/en/Market/companyinformation.aspx?symb=IGT&sid=2158747">iShares ETF</a>) instead of buying the gold directly. There will still be transaction costs, plus an MER (apparently for that ETF it's 0.4 in America and may be higher in Canada).

Ultimately, I'd consider why you're buying gold. Everything I've read about it (especially in Stocks for the Long Run and Four Pillars of Investing) indicate its a very speculative, low return investment.

[CanadianCapitalist]

I've purchased maple leaf coins from here:

http://www.bullioncoinsandbars.com/

They are a mail order company out of BC. Note that I'm not recommending them, simply saying that I've ordered from them in past and have been satisfied with them. Also, I don't buy to invest; my purchases were for giving them as gifts. They also sell gold bars, which are cheaper than coins.

[Jon Chevreau]

Why is a financial thread [assuming you view gold as money!] in the "off-topic" forum? This is supposed to be the grab-bag "anything but money" forum!

[daveking]

GOLD is an investing topic.

If you want to invest in GOLD don't buy real gold, buy the ETF.

check out GLD and HGU.

I think the price of GOLD is on the high side. Today spot rate is $958 per ounce. It still has room to move up with the way America is printing money. I rather invest in Platinum because the price of Platinum still hasn't recover from the October meltdown. Platinum has a bit more room to move up.

http://i44.tinypic.com/2nr38tv.jpg

http://i43.tinypic.com/216ddf.jpg

My pick for platinum is Eastern Platinum (ELR). A Canadian mining operation in South Africa.

Disclosure: I own shares of ELR at $0.45

[Mockingbird]

Hi there.

I'm new to this forum and this is my 1st post.

I am interested in buying physical gold and silver coins.
I know I can get them from Royal Bank here in Montreal but what I don't like is that they have a system where should I decide to cash them back into Canadian dollars that they take the coins back at lower prices then they sell them. I feel like this is a rip off.
Is there a better place to obtain 1 once maple leaf Gold and Silver coins or Bullions?

Thanks you.

Gold bullion (or any other commodities) price is based the fluctuating daily spot prices. When you buy or sell them, each dealer will give you the spread (premium/discount) based on that price. You cannot avoid it, but you can always minimize it.

e.g. If gold is trading at $1000/oz, the dealer might sell you one at $1050 ($50 premium) or might buy one from you at $980. This is the spread and this is how the retailers make money.

So, with this scenario, if you buy 1oz of gold and sell it on same day to the same dealer, you could lose $70 immediately. Various dealers will give you different size spread so you need to shop around. You can buy physical gold at banks, Canadian Mint, eBay, local coin dealers, or even at online like Kitco (www.kitco.com).

If you really don't want to pay the high spread, then you can always buy the gold index fund or trade the actual gold futures. :)

"In general, this additional cost over the spot price for any bullion coin stems from a number of factors, including the manufacturing, distribution, and administration costs incurred by the mint or refiner in making the coin, plus a "mark-up" representing the cost of sale and the profit for the wholesaler selling the coin to a retail dealer. The retail dealer, in turn, will also "mark-up" its wholesale price of the coin to cover its own sales costs and realize a small profit when selling the coin into the investor market." More Info (http://news.goldseek.com/GoldSeek/1196870820.php)

[dogcom]

Daveking besides the reverse head and shoulder pattern it also looks like a consolidation much like the April 06 to summer 07 pattern of gold shown in your graph. We could be close to a big break to the upside by looking at that chart.

[mfd]

If you want to invest in GOLD don't buy real gold, buy the ETF.



I don't own anything gold related right now but if I were it would be physical gold. I think if you are going to move into gold then you need to move into the real stuff. The benefit of gold is that you have something real. If you buy an etf then you are just buying paper (and now a days not even that).

[moneymusing]

I believe that many gold ETFs actually buy and store gold, while others buy contracts, or simply buy gold related stocks. This is where due diligence comes in to play.

Stay away from HGU though. That's a day traders game and you'll lose your shirt trying to go long with HGU

[daveking]

John Paulson who made billions last year shorting the market is BULLISH on Gold. Read it here (http://www.gurufocus.com/news.php?id=56711).

This is what his portfolio looks like:

K.TO, Kinross Gold, 30,780,800 shares
AU, Anglogold Ashanti, 2,938,582 shares
GDX, Market Vector Gold, 17,300,000 shares
GLD, SPDR Gold Trust, 31,500,000 shares
GFI, Gold Fields, 18,268,589 shares

He bought the shares before March 31, so it may be a bit late to jump on gold right at the moment.

If you want to buy gold I suggest you wait until the price drop a bit.

[dwintschel]

If you want to invest in GOLD don't buy real gold, buy the ETF.

I have to say I strongly disagree with this. If you're going to buy gold, I would definitely buy it and hold it physically.

There are many places you can get gold - I think if you're in Montreal a lot of poeple like to buy online from Kitco (http://online.kitco.com/).

I'm BC based - so Border Gold (http://bordergold.com) and J&M (mentioned previously - http://bullioncoinsandbars.com) are good places (I don't have any affiliation - I just know that both are HIGHLY reputable dealers).

You can also look into the storage programs at the Perth Mint in Australia, or if you have an online brokerage account with Questrade (probably others as well) - you can buy and hold gold in your RRSP (I believe it's stored at the Royal Canadian Mint).

As far as buy/sell spreads go - that's just part of buying and selling metals - so try to find the place with the lowest spread, and go with it.

I'm also of the mindset that gold and silver are a bargain right now - although they've been climbing steadily for the past week or so.

Disclosure: Long physical silver, long physical gold.

[$1600 Gold by 2011]

Previous posts are correct. Avoid ETF's unless you KNOW they hold as much physical gold as they claim. Some gold/silver ETF's are a tool of those who want to suppress the gold/silver price by diverting funds from the physical to worthless paper.

Physical gold is the safest of course. Store it by yourself in a vault or safety deposit if you can. Keeping it at the mint doesn't look like a safe bet these days.

Don't bother waiting for more pullback. $930/oz is dirt cheap.

[refutor]

wish me luck! the gold bugs have gotten to me (not this post necessarily)...i'm moving 10% of my portfolio to gold today

10% gold
30% bond index
60% equity index

[canadianbanks]

wish me luck! the gold bugs have gotten to me (not this post necessarily)...i'm moving 10% of my portfolio to gold today

10% gold
30% bond index
60% equity index

Good for you. There's no need to be a gold bug to keep a small part of your net worth in gold.

[$1600 Gold by 2011]

Congrats on the gold purchase. You won't have to wait long to know you've made the right decision. I'll be back to tell you not to sell just yet, after golds upcoming breakout.

[Jon Chevreau]

Marketwire had something this week on BMG BullionBars, which lets you buy gold, silver or platinum bars in various sizes. You can take delivery or let the BNS hold it.

http://www.bullionbars.ca

[canadianbanks]

Marketwire had something this week on BMG BullionBars, which lets you buy gold, silver or platinum bars in various sizes. You can take delivery or let the BNS hold it.

http://www.bullionbars.ca

Thanks for the link Jon. I've never heard of BMG before, is this a new company?

[Jon Chevreau]

No, they've marketed the BMG Bullion Fund for most of the decade, previously known as the Millennium Bullion Fund. It holds equal parts gold, silver and platinum bullion -- a mutual fund with the usual MER, and can be held inside RRSPs/TFSAs.

[$1600 Gold by 2011]

Take delivery if you choose something like this!!

[canadianbanks]

No, they've marketed the BMG Bullion Fund for most of the decade, previously known as the Millennium Bullion Fund. It holds equal parts gold, silver and platinum bullion -- a mutual fund with the usual MER, and can be held inside RRSPs/TFSAs.

Thanks Jon


Take delivery if you choose something like this!!

I wouldn't invest in anything using mutual fund, especially gold :)

[MoneyEnergy]

I've bought gold through GoldMoney before (Goldmoney.com); reputable dealer. They explain how they store it for you, etc. Worth checking out if you're serious. I don't have any with them right now, though, since they changed certain purchasing rules which make it just slightly more inconvenient (though not impossible) for Canadians to buy through them.