Probably the best thing about this market system is that it’s actually very easy to buy bullion and build up your supply, so long as you can afford it. This, of course, is a great idea, but you do need to be mindful of a few possible pitfalls. Here are some easy to follow rules that can guide you.
Golden Rule #1: Buy Most Bullion From the US Mint
While it is true that all forms of bullion are great investment options, it’s suggested that you focus on American coins from the US mint. This is especially true when you begin, and for the first while you should avoid privately minted or foreign mint bullion, as well as any bullion bars. There are several very good reasons to follow this rule.
First, the government guarantees bullion coins minted by the US mint. This guarantee covers the purity, quality, and weight of all American bullion coins. This means it is easier to buy bullion coins with confidence, and are actually getting exactly what you paid for. A good place to start is by including American Eagles in your collection.
Another very good reason to buy American coin bullion is it is easier to obtain, and you have a choice of who to get it from. This means it is also easier to trade and sell, as it is a lot more popular than other bullion or even bars.
Golden Rule #2: Do Not Invest in Old Circulated Coins.
It doesn’t really matter if you are considering plain silver coins or those double eagles coins struck early in the 20th century. The fact is, these coins are highly sought after by collectors, thus the competition is higher and so is the price.
On the flip side, the modern bullion rounds do not have value to collectors (yet). This means that their cost and value is solely based on their metal content and is not increased by their age. In the end, you simply get more for your dollar this way.
Golden Rule #3: Avoid Internet Auction Sites
Unfortunately, every new buyer will probably go through a phase in which they are a bit too trusting and too eager to invest as little as they can. When you start out it may seem that sites like eBay have many good deals on bullion. While some of these “deals” may be legit, it takes a real pro to sniff them out from the rest of the junk.
Unscrupulous sellers are likely to word a deal to make a piece of dross sound amazing. Also, there may simply be sellers on these sites who don’t know any more than you do and have no idea what they are really selling you.
For example, your Humble Writer almost fell for one such deal early on. The title stated that a one ounce silver bar was 100 mils 999 silver. It even stated this on the bar. Of course, this was priced well below market value and this writer was very excited!
The only problem was that the “100 mils 999 silver” turned out to be electroplating, and a mil is actually a measurement in thickness, not purity. In the end, the stated price was actually much higher than the market value of this bullion… since the market value was close to zero.
99% of the gold listings are even worse than the silver. They are either being sold by newbies who don’t know any better, or by sellers who just want to take the money and run while they can. This is why we recommend to only buy from reputable dealers both online and off.
And you can buy bullion with confidence – as long as you avoid the pitfalls and traps most new gold investors make. You can find out how by subscribing to our free newsletter, the Gold Minute, and you’ll receive my practical, real-world guide to investing in gold.
Jeff Grant is the creator of AmericanBullion.org. He is definitely NOT a traditional “gold bug,” is the opposite of a “gloom and doomer.” Instead he is a realist who believes there are times when protecting yourself financially and changing your investment strategy are vital — times like now.