This is part 4 of Milly's "Precious Metals for Beginners" series. For other parts see:
Part 1:Why you NEED Precious Metals in your Portfolio
Part 2: Silver vs. Gold
Part 3: Coins? Bars? ETFs? What form of Precious Metals are right fo...
Where to buy Precious Metals
Once you know what you want, now it's time to go shopping in one of the following locations:
Pawn / Coin Shops
This one is, of course, the most fun. It's like a treasure hunt to drive between several shops looking for gold and silver. You also have the advantage of seeing what you buy, holding it in your hand, taking it home that same day, and looking at those shiny proof coins that you shouldn't buy.
Probably the best reason to go to a coin shop is you get to talk with people who have been watching the market and touching the coins for decades. Some of the things I'm sharing with you right now came from talking with these experienced businessmen.
The biggest problem is that you'll end up paying a lot more for these precious metals. Local shops have a hard time competing with online companies operating all over the nation and even internationally. Their expenses are much higher and so are their prices. Even if you find a good deal, all that driving also adds to the premiums.
Other problems include low volume and sometimes poor quality. These are odds and ends that have been sold by individuals. Some of them are found cleaning out their grandparent's house, some are reluctantly given by people scrapped for cash, and others are flip sold as spot prices increases. There isn't going to be several rolls of brilliant, uncirculated, matching, rounds. Many have been sitting in a drawer or played with for years.
Also, if you are buying by the ounce, make sure the scale reads in troy ounces. Troy ounces are slightly larger than regular ounces. Ridiculous, I know. If you are reading in standard ounces without converting, you won't go home with as much weight as you think you are getting.
One more thing to remember is don't buy anything you don't recognize. It is hard to know if something is solid or just plated. I have a 1 oz gold-plated copper Bitcoin round that I bought for under $2. It looks a lot like gold, weighs 1 Troy oz, but you would need to measure it and do some math to know it is too large to be solid gold.
This is where to get the bulk of your investment. It is cheap, in abundant supply, and they clearly state the actual silver weight (ASW) or gold weight in troy ounces to avoid confusion. Not all companies are created equal though. You will want to look up a list of reputable companies and work from there. Here are my recommendations and comments:
Silver Rounds: JM Bullion often has excellent specials and even some at spot price!The disadvantage of buying from any of these companies is you have a bit of a run around with payment and slow delivery. They will usually make you lock in the price with a credit card, but send a paper check in the mail. You have to wait for your check to get to them, for the check to clear, then for your order to get to you. It will take a couple weeks, but unless you plan on giving away or flip-selling the coins quickly, it really doesn't matter. Of course, you could just pay with credit card, but it will cost a much higher premium.
Junk Silver: APMEX is usually the cheapest
Silver Eagles: It used to be that BGASC was absolutely unbeatable in this category, especially when they have "any quantity" sales around holidays. Now, they no longer give free shipping so it depends on the order. Sometimes you get a better deal at SD Bullion, but their checkout process is annoying.
Gold Eagles: SD Bullion, usually has a price slightly lower than anyone's on everything, but with the shipping costs it isn't cheaper unless you are ordering several thousand dollars worth or you have a free shipping coupon. In the case of Gold Eagles, they are usually cheapest here, even with the shipping. SD Bullion is a pain because you have to set up an account to check out *grumpy face*. Read the Ebay section below for another great gold buying option.
Anything else: BGASC is usually the winner. You'll have to check on a piece by piece basis.
Note: If sales tax is added to your order, look up your state laws. There may be a threshold you can buy that eliminates sales tax on precious metals. In California buying from a California company (such as BGASC.com) you'll have to purchase at least $1,500 in precious metals (not gift boxes or other products) to avoid the investment-crushing taxes.
I actually really like Ebay for precious metals. It is faster than online stores, you don't have to send in a paper check, often competes in price when you shop with the wholesale dealers, and so far I haven't had to deal with the weird sales tax laws on precious metals.
One gem I've noticed is that APMEX actually lists some gold cheaper in their Ebay store. A few months ago, they were selling a 1 oz Gold Buffalo for $1,336.49 on Ebay, but at APMEX.com, it cost 1,359.49. Even SD Bullion was selling Gold Buffalos at $1,343.79 (plus $7.77 shipping). Before that, their special was on Gold Eagles. Since I am fairly confident it is actually APMEX (based on high reviews, US location, an old store, and enormous volume of sales), I don't have to worry that I'll get some weird fake in the mail. In this case, Ebay is, surprisingly, the way to go.
The thing to watch out for is Ebay is the perfect place for conning people. Check reviews, how long they've been selling, etc. Again, don't buy anything you don't recognize. Also, be very careful to read the description of what you are buying. Make sure your 1 oz coins aren't actually 1/2 oz coins with the same design, your 1 lb of junk silver doesn't have any war nickles or 40% silver coins, note any discrepancies between ounces and troy ounces, and that your rounds aren't just plated copper. Actually, two of the sample entries in my spreadsheet came from the same suspicious Ebay listing. They said 1 lb of 90% silver coins, but the coins they list don't add up to 1 lb! If they list two different things, check with both methods on my free junk silver spreadsheet to make sure they are consistent.
If you are tempted by some weird mixed lot, PLEASE PLEASE PLEASE use my calculator to know what you are actually getting. I've seen so many things that look like great deals, but when it adds up, it is $11 over spot per ounce of silver. People love to list in standard ounces (not Troy ounces), throw 35% silver War Nickles or 40% silver half-dollars in with 90% silver coins in a "Junk Silver by Weight" listing. Don't pay silver prices for copper or zinc!
When you are ready to buy, here are some calculators that can really help to compare apples and oranges so you can know if you are actually getting a good deal.
Junk Silver Calculator (Excel spreadsheet)
...and if you want one for jewelry or nuggets or a simplified one for non-mixed purity by the weight listings...
Gold/Silver Calculator (Excel spreadsheet)
Seriously, get the money you can't afford to lose out of the stock market, out of dollars, and into precious metals. Your grandchildren may thank you.
Good luck and enjoy your shiny wealth!
This is part 4 of Milly's "Precious Metals for Beginners" series. For part 1 see: Why you NEED Precious Metals in your Portfolio.
Disclaimer: I am not a licensed or certified financial coach, planner or adviser, just an enthusiast. Anything I recommend should be personally analyzed and discussed with your financial adviser.