# Precious Metals question



## pnky (Jul 16, 2012)

I want to add some precious metals to my portfolio. Right now, I am looking to make a $1000 investment which is < 5% of my portfolio. need some advice from the forum members. I have the following questions

1. What might be a better commodity to invest in, for a 10 to 15 year horizon? Gold or Silver ? (I am inclined towards Silver)

2. What is the best and cheapest way to hold this? Physical form ?

3. What is the best place to buy it? I only know Scotiabank Mocatta or Royal Canadian Mint


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## dime (Jun 20, 2013)

In my thinking physical is the way to go. As the saying goes, "if you don't hold it, you don't own it". 
Take a look at Silver Gold Bull... they're the best company to deal with in my experience. 
Neither metal gives you any yield, but it has a few good other aspects... 

Silver price moves come from partly investment and partly industrial. In the long term there's research to suggest demand could overcome supply and result in a shortage. Gold is used much less for industry any rise in value comes less from industrial demand and more as an alternative investment as a hedge against inflation. There's really not that much gold available on the planet considering how many people want to have some. 

Also consider platinum. Over the long haul platinum should be worth far far more than gold as it is so very rare in comparison. 

The challenge is to obtain it with paying a low premium over spot price, including shipping costs. 
Often the premium on an ounce of gold is half that of the premium on 10 oz of silver!


Hope that helps. I'm up for chatting about metals any time!


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## hickupper (Sep 22, 2014)

Sorry for the newbie question, but do people actually purchase physical gold and silver pieces? 

if so, mind = blown


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## Rusty O'Toole (Feb 1, 2012)

If you believe in the "buy low, sell high" theory now is a good time to buy low.

Silver is more volatile, and will probably appreciate more over time. I agree that you would do better to buy silver.

I bought my PMs from the local Royal Bank. They gave me the best price, delivered to the local Royal Bank branch.

Some like to buy bags or rolls of "junk" silver coins, coins from before 1967 that have no collector value. They have the lowest premium cost.

Incidentally I don't regard precious metals as an investment, even though I have 10% of my net worth in them. I regard them more as disaster insurance. I am confident they will always have value, no matter what, and that helps me sleep nights.


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## GoldStone (Mar 6, 2011)

A bet on precious metals is a bet against US dollar. Now is precisely the wrong time to make this bet. US dollar is in a strong uptrend, due to rising spread between US rates and international rates.


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## birdman (Feb 12, 2013)

There are a number of dealers around but the only one I have used is "J and M Coin & Jewellery" in Vancouver. Try JandM.com 
Never had any problem and I find their prices are competitive. There are others with good reports but I have never used them.


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## james4beach (Nov 15, 2012)

> 1. What might be a better commodity to invest in, for a 10 to 15 year horizon? Gold or Silver ? (I am inclined towards Silver)


I think both would do just fine, I can't see any big reason to prefer one over the other. Gold is a more compact storage of wealth (as in, more value is contained in less weight).



> 2. What is the best and cheapest way to hold this? Physical form ?


The _best_ way is certainly physical ownership. It's also likely the cheapest in the long term, provided that you have a very safe place to store it. However if you start paying for a bank safe deposit box, then this becomes rather expensive for a small amount of precious metals. If you can add the precious metals to your existing safe or safety deposit box, then you're getting storage for free (no incremental cost).

Personally I also hold the stock-traded CEF.A which holds 50/50 gold and silver bullion. Central Fund of Canada is a domestic company and their metal is stored in the vaults of CIBC at several locations. It's been listed on the TSX since 1965 and has held bullion since 1983, which is amazingly long track record. Another advantage, you can buy it today at a pretty steep discount to NAV (something like 6% discount to the actual value of its metals) -- this is due to precious metals being so unpopular right now.

But I own more physical precious metals than CEF.A



> 3. What is the best place to buy it? I only know Scotiabank Mocatta or Royal Canadian Mint


Before you start, use active market spot prices (for instance kitco.com) to know exactly what the value is. This will let you calculate fees you're paying. Obviously, minimize fees but always buy from a reputable dealer. DO NOT buy on craigslist or other internet sources you're unfamiliar with. I think all the large Canadian banks sell precious metals, I would just stick with them. It's not worth going to any lower/questionable dealer because it's worth paying a little extra for top quality and authenticity.

Your membership location says Toronto -- you're in luck! You can just walk into the Scotia plaza (head branch) near the King subway station. On the ground floor, near foreign exchange, there's a precious metals desk. Here you can buy/sell metals and they'll bring it from the vaults and you'll have it in a few minutes. If possible pay USD (I just pay cash) otherwise you're paying foreign exchange fees on CAD. You'll need to bring some ID and the bank will report the transaction to the CRA, so make sure you keep the documentation for your calculations of adjusted cost base.

Others criticize Scotia for the precious metal fees, but it's actually quite cheap if you walk into Scotia plaza and buy in person. I'll give an example from my recent purchase of 1 oz gold. The spot market price was $1255 USD and I paid net $1284.93 USD after all fees which is 2.4% premium to spot. I've always been able to buy it from Scotia at between 2% and 3% above spot, for 1 oz gold bar which is ULTRA CHEAP.

Personally I like the gold bars (also called wafers for small units) because the premiums are so low, they are very liquid (tradeable anywhere). I'm not a fan of gold coins because the premiums (fees) are much higher and they're also quite delicate and can be easily damaged. Also, you may have heard rumours of tungsten-filled fake gold bars on the market. If it's real, this would affect larger bars and certainly nothing as thin as a 1 oz bar so I never worry about fakes when buying at Scotia.

Gosh, I wish I still lived in Toronto so I could go buy some gold right now.

A friend of mine also bought from Royal Bank, which also seemed to have good pricing. Again I'll repeat my advice to buy from one of the banks.


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## Synergy (Mar 18, 2013)

I'd hold off on the purchase, you may be able to get a better price over the next 4-6 months.


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## fatcat (Nov 11, 2009)

james4beach said:


> Personally I also hold the stock-traded CEF.A which holds 50/50 gold and silver bullion. Central Fund of Canada is a domestic company and their metal is stored in the vaults of CIBC at several locations.


amazing ... given that your paranoia meter is always set to HIGH, you actually let _someone else_ hold your physical ... amazing james ... most people with any kind of assets already need to own a safe deposit box anyway so assigning that holding cost to physical i think is bogus


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## james4beach (Nov 15, 2012)

Yes I do have reservations about letting CEF hold my physical. Like anything, one weighs the pros and cons, considers the risks.

_(EDIT: following is retracted)_ fatcat it's funny to me that you keep saying that I'm paranoid, when you're the one posting xenophobic comments about dangerous muslims and bad non-christian people coming to cause us harm. Sounds to me like you're the paranoid one. _(EDIT: I retract those comments, fatcat has NOT been saying that)_

My fears aren't called paranoia, because they've all been proved true: the banks were revealed to be insolvent, financial companies are constantly revealed to be frauds, and the government has been shown to be lying, manipulating public opinion, and spying on its own citizens.


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## james4beach (Nov 15, 2012)

Synergy said:


> I'd hold off on the purchase, you may be able to get a better price over the next 4-6 months.


What you're describing is just a speculation on asset prices -- who knows where the price will go. Kind of funny to me that when the business world talks about stocks, "it's always time to buy". But when it's gold or commodites, hmm, well they're probably going to drop more, they're risky, etc. Funny duplicity that really shows the pervasive bias towards always buying stocks. In the bigger picture, buying on the low side or out-of-favour assets is a good move.

To put it another way: mainstream thinking is that you should buy stocks even though they're at all time highs today. Yet apparently it's a bad idea to buy gold which is now -36% below its peak. I think that's really silly. My thinking: if you're accumulating assets long term, it's good to buy them on the "low" side as opposed to at all time highs! Nobody gets rich buying assets at record-breaking highs.



fatcat said:


> most people with any kind of assets already need to own a safe deposit box anyway so assigning that holding cost to physical i think is bogus


I agree with you there. You already have a safe deposit box, so there's really no (new) storage cost. Just buy physical from a reputable dealer and put it in the safe -- it's that easy.


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## fatcat (Nov 11, 2009)

james4beach said:


> fatcat it's funny to me that you keep saying that I'm paranoid, when you're the one posting xenophobic comments about dangerous muslims and bad non-christian people coming to cause us harm. Sounds to me like you're the paranoid one.


do me the courtesy ... PLEASE ... of pointing out any comments i have made that are anti-muslim or anti-religious ... as a bonus, also point out my xenophobic comments ... because _you are just making that shite up_ ...


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## Synergy (Mar 18, 2013)

james4beach said:


> My thinking: if you're accumulating assets long term, it's good to buy them on the "low" side as opposed to at all time highs!  Nobody gets rich buying assets at record-breaking highs.


And this isn't speculating? You're assuming that if you buy low that the price will eventually go higher! This may or may not happen in your lifetime. The price might just as well keep going lower.


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## james4beach (Nov 15, 2012)

Synergy said:


> And this isn't speculating? You're assuming that if you buy low that the price will eventually go higher! This may or may not happen in your lifetime. The price might just as well keep going lower.


The same can be said of stocks. I just don't think you can apply one ideology towards stocks (always buy) and a conflicting one to commodities.


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## james4beach (Nov 15, 2012)

fatcat said:


> do me the courtesy ... PLEASE ... of pointing out any comments i have made that are anti-muslim or anti-religious ... as a bonus, also point out my xenophobic comments ... because _you are just making that shite up_ ...


An apology is in order here. *fatcat: I truly apologize, in fact you were not posting comments like those.* What I wrote was due to an inaccurate memory of who posted what, combined with my overly hurried -- and incomplete -- reading of this post from you:

2014-09-23, 11:51 AM, fatcat: "i for one am fed up with doing the muslim's dirty work"

For some reason this stuck in my brain as "I am fed up with the muslim's dirty work" which let me repeat now, is NOT what you said (one word was missing in my memory of it). In fact, your comments were very much aligned with my own on this topic:

- you were critical of the pounding of the war drums (as I am)
- you said we should be suspicious of media messages (as I am)
- you implied, I think, that someone has interests in the middle east, and we end up assisting misc bad groups by going to war

So please accept my apology and I retract what I said about anti-muslim or xenophobic comments from you.


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## fatcat (Nov 11, 2009)

james4beach said:


> An apology is in order here. *fatcat: I truly apologize, in fact you were not posting comments like those.* What I wrote was due to an inaccurate memory of who posted what, combined with my overly hurried -- and incomplete -- reading of this post from you:
> 
> 2014-09-23, 11:51 AM, fatcat: "i for one am fed up with doing the muslim's dirty work"
> 
> ...


thank you james, i appreciate that ...


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## Ice Cream (Apr 22, 2013)

I have another question regarding the purchase of precious metals.

Is it recorded somewhere when one buys, or sells them?

Also has anyone bought from CIBC? Their advertised prices seem a bit high.

Thanks


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## birdman (Feb 12, 2013)

I have bought at J&M and Kitco and was not impressed with Kitco's product. There are also other and presumably reputable dealers out there. I checked out BNS website and see they offer a 8 g bar for 376.00 which equates to 47. per g. I compared this to some of J&M's products which are as follows:
1 g 61.81
2 g 159.87 (80. per g)
20 g 898.00 (45. per g)
100 g 4,454. (45. per g)
1 oz Cdn Mape Leaf $1413. (31.1035 g) or $45.50 per g
The point I am trying to make is to be sure how much per gram you are paying. Also, I prefer the Cdn uncirculated 1 oz coins at .9999 pure which come from the mint. You pay a small premium for these.
There is obviously a record of when and where you buy them and sometimes these include a booking order, invoice, receipt, shipping documents, etc but thats all I know of. Be sure to check my calculations.


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## fatcat (Nov 11, 2009)

frase said:


> I have bought at J&M and Kitco and was not impressed with Kitco's product. There are also other and presumably reputable dealers out there. I checked out BNS website and see they offer a 8 g bar for 376.00 which equates to 47. per g. I compared this to some of J&M's products which are as follows:
> 1 g 61.81
> 2 g 159.87 (80. per g)
> 20 g 898.00 (45. per g)
> ...


i see you are in bc, try http://www.bordergold.com/
they are down near the border in white rock i think

but of course they deliver .. their prices are just a tad higher (atcually, they are selling maples for $1412 right now) but the service is reliable .. they have a long track record


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## pnky (Jul 16, 2012)

Thank you all, for your comments.

I am a bit surprised, I was expecting some strong views **against** holding physical metal...I was under the impression that ETFs (like SIVR perhaps) might be the forum's choice. Thanks again.


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## dime (Jun 20, 2013)

Ice Cream said:


> I have another question regarding the purchase of precious metals.
> Is it recorded somewhere when one buys, or sells them?
> Also has anyone bought from CIBC? Their advertised prices seem a bit high.
> Thanks


Some places like scotia mocatta's e store have a "know your customer" policy where you need to verify your identity. 
Other places not so much in my experience, at least for buying. I'm pretty sure many places take your drivers licence for selling because they are concerned in case the goods are stolen and the police come asking questions.


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## the-royal-mail (Dec 11, 2009)

While I know everyone has different reasons for wanting physical metals, what I often find lacking in these types of threads is the discussion about how to SELL such metals. How easy is it for those who do not live in downtown Toronto? What are the costs associated with selling? What is the difference between what a person pays for a metal, vs what they can expect when they go to sell? Are you basically in the jeweler's scrap market?

So, anyone with those sorts of details who would care to post?


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## HaroldCrump (Jun 10, 2009)

the-royal-mail said:


> While I know everyone has different reasons for wanting physical metals, what I often find lacking in these types of threads is the discussion about how to SELL such metals. How easy is it for those who do not live in downtown Toronto? What are the costs associated with selling? What is the difference between what a person pays for a metal, vs what they can expect when they go to sell? Are you basically in the jeweler's scrap market?
> 
> So, anyone with those sorts of details who would care to post?


Most reputable dealers like Scotia Mocatta and Border Gold will buy back the gold from you.
Non bank dealers will also buy back pure gold that they may not have sold you, but at a slightly lower price perhaps.
If you have pure gold (i.e. 24 ct. 4 9s), your best bet is to sell it back to a reputable dealer, not a scrap jewelry shop.

Those corner store "We Buy Your Gold" type merchants will always give you a bad deal.

Keep in mind that any profit from buying & selling gold is subject to capital gains tax to be reported to CRA.
In fact, Scotia Mocatta will not buy back your gold without proof of your SIN number.


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## fatcat (Nov 11, 2009)

the-royal-mail said:


> While I know everyone has different reasons for wanting physical metals, what I often find lacking in these types of threads is the discussion about how to SELL such metals. How easy is it for those who do not live in downtown Toronto? What are the costs associated with selling? What is the difference between what a person pays for a metal, vs what they can expect when they go to sell? Are you basically in the jeweler's scrap market?
> 
> So, anyone with those sorts of details who would care to post?


if you buy physical and need to turn around and sell it quickly, barring some major market upturn, you will likely take a loss

this is the major downside to holding physical metals (which is why they really should be designated to be held for a decade or more)

your local coin shop is the best place especially if they know you

they make their living on the spread, you can usually deal in cash both ways, they look at the material in your presence, affirm its authenticity and then pay you on the spot

there are places you can send your metals that will buy and i believe are reliable and honest but i wouldn't use them 

also, places like bullionstackers.com are very good (actually, the best) but you need to build up a reputation for buying and selling

i agree with harold, always avoid the "we buy gold" people


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## james4beach (Nov 15, 2012)

Yes of course you can sell gold back to a bank or other dealer. I don't know much about coins, but when it comes to gold bars it's pretty simple: bars made by refiners on LBMA's Good Delivery List are considered liquid and are recognized by dealers around the world. Only buy bars that are on the Good Delivery List.

Royal Canadian Mint, Johnson Matthey (JM), Valcambi are all on the list and these are the common bars I've seen traded in Canada. There are many other equally valid ones of course; see the list. Generally speaking you want (a) a bar from the Good Delivery List, (b) in good shape, and (c) ideally an assay certificate or other paperwork that supports your purchase. The paperwork you receive from the large banks will confirm that you bought the bar from them, and that goes a long way for supporting evidence that it's a good quality bar.

Due to the spreads, yes you should be planning on holding your precious metals for many years. But you know, in the big picture, gold & silver are more liquid than even stocks. Why? Recognized bars and coins can be traded in ANY country. And on long time horizons, gold/silver will always be tradeable whereas stocks tend to vaporize over time. Have you ever discovered stock certificates in a grandparent's attic? Good luck cashing in your RCA or Adelphia stock; they're worthless.

Gold has a longevity that really appeals to me. When my grandchildren or great grandchildren find gold in the attic, _it will be worth something_. It's value that can't be disappeared by crooked accountants and fraudulent CEOs. You can't say the same for stocks and bonds. If someone finds my gold in 1,000 years, it will still be worth something.


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## james4beach (Nov 15, 2012)

To answer the question about costs to sell, just look at bordergold to see the buy/sell spread.

If you're selling back to where you bought it from, or you have paperwork that shows it's from a reputable source then it may be that simple -- the spread is your only cost. However if the dealer has doubt as to its quality then they will offer you less money, or require an assay -- which is a verification process that runs around $100, I think.

This is why you have to make sure it's a Good Delivery List bar, and buy from a reputable source. Keep the paperwork.


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## fatcat (Nov 11, 2009)

james4beach said:


> Yes of course you can sell gold back to a bank or other dealer. I don't know much about coins, but when it comes to gold bars it's pretty simple: bars made by refiners on LBMA's Good Delivery List are considered liquid and are recognized by dealers around the world. Only buy bars that are on the Good Delivery List.
> 
> Royal Canadian Mint, Johnson Matthey (JM), Valcambi are all on the list and these are the common bars I've seen traded in Canada. There are many other equally valid ones of course; see the list. Generally speaking you want (a) a bar from the Good Delivery List, (b) in good shape, and (c) ideally an assay certificate or other paperwork that supports your purchase. The paperwork you receive from the large banks will confirm that you bought the bar from them, and that goes a long way for supporting evidence that it's a good quality bar.
> 
> ...


james, you won't be surprised to find out that i find your post to be shot through with some very irrational fantasies

first, the purpose of investing is to have money to live on in your old age, or spend to live the good life or leave to people you care about ... most people don't abandon their certificates (which most of us don't even have of course any more) in their attics

the purpose is not to love gold for its beauty or longevity, you buy gold as an asset, it may well be recognized in various countries but you damn sure aren't going to wander around the world carrying your gold in your pockets ... it is not in any way a liquid asset in that sense ... it's a very cumbersome asset which is one of the reasons bitcoin was invented (using a "mining" model like gold) ... watch any old western and check out all the robbers stopping stagecoaches and taking the gold

finally, i could dig up hundreds of stocks over various time periods that have outperformed gold dramatically, spectacularly far from "vaporizing" over time stocks represents companies whose goods and services we will always want and or need, in that sense they are much more predictable and useful than gold will ever be


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## Rusty O'Toole (Feb 1, 2012)

I bought gold from my local Royal Bank branch. They told me they would buy it back at any time without an assay but this only applied to brands of gold bars or coins they sold.


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## fatcat (Nov 11, 2009)

Rusty O'Toole said:


> I bought gold from my local Royal Bank branch. They told me they would buy it back at any time without an assay but this only applied to brands of gold bars or coins they sold.


i think the royal canadian mint's sealed, tamper-proof 1-oz serial-numbered gold bar is pretty much accepted on the spot by anyone in the world ... i have never heard about any serious attempts to counterfeit it

but i would not want to be crossing borders and going down sidestreets at night with a pocketful of these lovely bars ... physical gold has lots of drawbacks


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## Rusty O'Toole (Feb 1, 2012)

My point was, you can buy from the Royal Bank branch near you anywhere in Canada, and sell your gold back at the same place any time you please.

At least, they made me this offer.


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