Buying gold

[Alan Shearer]

guys, i just found this site & a great one it is.

im interested in buying gold. not now but if we have some deflation and it drops a little lower. i have some questions though if u dont mind:

1. how do we fare in OZ considering i feel in 2009 the US$ will drop severely pushing our dollar higher. does gold become a bad investment for us in this case?

2. would gold stocks such as NCM or LGL do just as well as buying physical gold? having shares would provide more liquidity vs gold bullion or coins.

3. does anyone feel that if we have continued deflation we might see gold at half the price it is now?

4. has anyone purchased from the perth mint? are there prices fluctuation for the gold coins as the POG fluctuates? has anyone noticed?

thanks!

AS

 

[sinner]

guys, i just found this site & a great one it is.

im interested in buying gold. not now but if we have some deflation and it drops a little lower. i have some questions though if u dont mind:

1. how do we fare in OZ considering i feel in 2009 the US$ will drop severely pushing our dollar higher. does gold become a bad investment for us in this case?

2. would gold stocks such as NCM or LGL do just as well as buying physical gold? having shares would provide more liquidity vs gold bullion or coins.

3. does anyone feel that if we have continued deflation we might see gold at half the price it is now?

4. has anyone purchased from the perth mint? are there prices fluctuation for the gold coins as the POG fluctuates? has anyone noticed?

thanks!

AS

There is no shortage of goldbugs screaming hyperinflation, manipulation, etc etc. But even the respectable deflationists are liking gold. Take a look at the Mike Shedlock article "I Like Gold Here" and his most recent article on Gold vs Dr Feteke.

http://globaleconomicanalysis.blogspot.com/2008/11/i-like-gold-here.html

Mish is far from a gold bug hyperinflationist conspiracy type, his word is as good as a bar of gold imho.

In terms of AUD pushing up against USD, this is possibility I guess, just make sure if you are invested in a miner they have a relatively low cost of production. As an example, I notice IGR are aiming at $700+/oz compared to say, $400+ for Hill End Gold.

Realistically you can look at the ASX:GOLD chart to see that if **** hits the fan and the USD/US-T-bill bubble pops then gold will be reaching new all time highs regardless of currency conversion (as the inital "all time high" spike preceded our currency drop).

As for NCM/LGL/whatever, it's a tossup on your part between perceived issues with debt/production/institutional involvement (I hear LGL is often the plaything of big instos when they want to earn some day-trading cash) versus market sentiment which will often flood into NCM and LGL irrespective of their real life position i.e. if you are running to gold, why run into the arms of a indebted company like NCM or one that will be using credit to finance expansion like LGL?

Essentially you will need to decide whether you want to trade fundamental issues like debt, production, sovereign risk, etc (as goldbugs generally do) or on sentiment (as everyone else seems to).

re purchasing from PMG, GOOD LUCK MATE! : from my understanding there is a several month order backlog with ZAUWBA redemptions for physical being caught in the contract clause "cash in hand or physical at our pleasure" (sic).

Good luck.

 

[hotbmw]

As for NCM/LGL/whatever, it's a tossup on your part between perceived issues with debt/production/institutional involvement (I hear LGL is often the plaything of big instos when they want to earn some day-trading cash) versus market sentiment which will often flood into NCM and LGL irrespective of their real life position i.e. if you are running to gold, why run into the arms of a indebted company like NCM or one that will be using credit to finance expansion like LGL?

Essentially you will need to decide whether you want to trade fundamental issues like debt, production, sovereign risk, etc (as goldbugs generally do) or on sentiment (as everyone else seems to).

re purchasing from PMG, GOOD LUCK MATE! : from my understanding there is a several month order backlog with ZAUWBA redemptions for physical being caught in the contract clause "cash in hand or physical at our pleasure" (sic).

Good luck.

so what do you feel is the best way to trade gold? good points about fundamental issues in shares but you also said physical gold sales is backlogged several months.

how would u buy gold then?

 

[sinner]

Who knows?

If we are talking financial apocalypse scenario then holding GOLD or ZAUWBA will be useless as the government will probably confiscate or force default on it.

There are similar (but 3rd party) services like www.goldmoney.org which seems to have Mike Shedlocks personal endorsement, but he is obviously not forseeing any such apocalypse scenario so not too worried about the company defaulting and taking your bullion. If you share this view, (i.e. after gold as the next profit maker rather than something more fundamental) then it's obviously fine and you could hold 100 unit lots of ZAUWBA safely as they are government backed and still provide some guarantee of redemption.

For the apocalypse scenario, the only answer is physical gold, where the only answer to your question is GET IT WHERE YOU CAN. I don't mean to be hysterical, but the fact remains for small holding buyers the premium is at a minimum of 10-15% over spot not to mention delays if you can get it at all. No government can confiscate your physical, or force the company holding it to default, or attach any other such liability to it. If you are worried about this scenario then one can only assume 10-15% premium is the least of your concerns. Large buyers seem to be having no problems, the shortages in physical being restricted to small coins/bars rather than the 500/1000g bars which seem easily available.

Regardless, the best approach will probably be to diversify. It is relatively inexpensive to move a small portion of your total capital into physical (say 10-20%) even at these high premiums which should insulate you fully if the apocalypse comes (as the POG would most likely skyrocket past everything else which would be dropping). I mean, if you have $10,000 and spend $2000 on physical, if things get really bad that $2000 will = $10,000 while the rest of your holdings plummet to $0.

This is a worst case scenario that I think it would be wise to recognise, none of us really want. If it comes down to this, your gold holdings won't protect against rioting and looting! In which case, gold and a shotgun might be a better trading pair

Personally, I have been accumulating bag silver and gold sovereigns and 1 oz bars as close to spot as I can (there is usually a small premium baked into sovereigns). By bag silver I mean: Pre 1946, all pre-decimal Aussie coins were 0.925 grade silver. Same applies for pre 1920 UK pre-decimal coins. These can be picked up at spot or less if you are lucky. Ignore those being sold by coin collectors for their collection value!

To give you an idea $250 used to be the standard asking price for a gold sov at any coin shop. You will notice that 5 * 250 = 1250 (approx 5 sovs for 1 troz gold) which just so happens to be the current spot of gold, so if you were buying apocalypse sovs last year you only just broke even now thanks to USD pumelling AUD lower, and it's worse now, the cheapest I managed to get is $265, not really willing to go above $280 and thats high!

Small holders willing to pay the premium can go to ebay there are some decent dealers (if you ignore the premium). If you are unwilling to pay the premium then you probably don't recognise gold in that fundamental way and may as well hold ZAUWBA to redeem when you can.

I made my play in mid November and haven't made any purchases since then, long EWH and FXI on international markets (13% total) long ASX RMS and RMSOC (15%) and again a similar percentile of total holdings in physical gold (I do not include bag silver in my holdings, only a speculative apocalypse play) and the rest in cash.

Hope to diversify cash into a few diff currencies soon and may enter long position on one of NEM, NCM, LGL or AGG (purely sentiment play) on the next downleg.

Deflationist contrarian strategy:
Buy USD and JPY on market weakness (i.e. high AUD)
Sell forex profits to accumulate gold on market strength (i.e. lower gold)

Inflationist contrarian strategy:
Sell everything but land you own 100%, buy gold, silver, a gun, 50 cans of spam and pray for the best.

 

[projack]

About 4 years ago I had a disagreement with my friend on gold vs. stock. He stayed with stock I went to PM.
My investment more than doubled he lost half of it.
Time to time we exchange emails on the subject here are the last few.


Sent: Tuesday, 22 January 2008 9:39 PM
Hi Bob
I think I was right.
Since I last seen you stocks lost 20%, Gold gained about the same. This is 50%
different on a stock portfolio person who is converted into gold 3-4 month ago.
100 less 20% =80 vs. 100 plus 20%= 120
80 vs.120
Thanks haven I did not sell gold to buy stocks.

Hope you are well. Peter


Date: Friday, January 25, 2008, 9:38 AM

The game's not over until the fat lady sings.

Regards Robert


Sent: Wednesday, 8 October 2008 5:56 AM

Hi Bob
Looks like the fat lady started to sing.
Regards Peter


Sent: Wednesday, 8 October 2008 5:56 AM
Hi Peter,

Not only that but the s*** has hit the fan and everyone is getting splattered.

It's a crazy time, for example a couple of months ago $A1.00 would buy $US0.98, now the rate is $US0.72. That's just bloody stupid but it's supposedly a reflection of the fall in commodity prices combined with a scramble for $US because the banks are hoarding cash.

Basically the Aussie economy is in reasonable shape so I believe the stock market has been oversold. The only real threat to our economy is a rapid downturn in house prices rather than the gradual decline that's been the trend recently.

Regards Bob

 

[Ageo]

As i have said before if you want pure gold (stamped 24ct but not hallmarked from the mint) then i can grab as much as you like for only 10% above the spot. I have bought many ounces in the last couple of months for myself and others.

I think perth and that were asking around over 30% for immediate delivery? otherwise your on the waiting list.

If you want to ensure its purity any jeweller (proper jeweller not shop front) can tell you something thats 24ct.

 

[hotbmw]

where r u getting it from Ageo?

 

[Ageo]

where r u getting it from Ageo?

I have a refiner who deals only with jewellers which i get some from, plus
I purchase alot of scrap gold and have it refined so i can afford to do it at better prices than the current ones on offer. 30% above the spot is around 1700+ p/o which is very high indeed.

 

[sinner]

Hi Ageo,

I really appreciate the generous offer you have provided members here and have written in my notebook.

Luckily like I said I made my play in mid Nov and happy with my current levels of everything. But I will probably send you a message after my currency diversification project is complete!

projack, it is worth considering that gold miners are not just being hurt by the financial deleveraging currently taking place but also they are at a cyclical low! I think your friend will do fine for himself if he can hold out just a bit longer.

This article is a bit dated now (last week) but I base my "advice" (PLEASE DO NOT TAKE ANYTHING I SAY AS FINANCIAL ADVICE) on some of its info

http://www.gold-eagle.com/editorials_08/chan121308.html

I will only post one chart and one tidbit and leave the rest as an exercise to those interested.



As you can see GDX raised a buy signal, actually a bit before GLD and SLV raised theres. There is also the rather interesting tidbit that bearish divergences (i.e. bear buy signals rather than bull buy signals) are occuring on the indicators for GLD and SLV while the GDX has just exited its bearish position.

Good luck.

EDIT: Kicking myself that I sold IGR at a very small loss, considering their performance as of late. I wouldn't have held onto them anyway but would have preferred to sell them today than at 0.130 when I bought at 0.135! Ah well.

 

[disarray]

the australian bullion company has plenty of physical gold on hand, although there is a 3 month wait on delivery of physical silver. they are in pitt st. sydney. it is annoying having to run to several different bank branches to get your money out because they won't let you take out more than $5000 - $10000 a day - definately a red flag to the paranoid.

price list here

 

[electronicmaster]

the australian bullion company has plenty of physical gold on hand, although there is a 3 month wait on delivery of physical silver. they are in pitt st. sydney. it is annoying having to run to several different bank branches to get your money out because they won't let you take out more than $5000 - $10000 a day - definately a red flag to the paranoid.

price list here

Wow, they sell really big bars of Silver. 30Kg bars???. wow

 

[arco]

Interesting................

http://news.silverseek.com/GoldIsMoney/1206572052.php

 

[Glen48]

You are better with small lots than a 10KG bar ,you need to pay the security guards to walk you to and from the shed to Hacksaw of a piece, to buy a few cans of Spam and 12G rounds.
Some Pawn Brokers deal in Spot Gold. About $18 a Gram.

 

[electronicmaster]

Interesting................

http://news.silverseek.com/GoldIsMoney/1206572052.php

Oh Jason Hommel?


Forget about that guy. He is not a reliable source.

That news article makes him look like he is causing trouble or has a chip on his shoulder.

 

[electronicmaster]

You are better with small lots than a 10KG bar ,you need to pay the security guards to walk you to and from the shed to Hacksaw of a piece, to buy a few cans of Spam and 12G rounds.
Some Pawn Brokers deal in Spot Gold. About $18 a Gram.

Yes I agree. I have 20 ounce, 100 ounce and 1kg bars. I'm soon to buy gold and silver mine shares.

 

[slim pickins]

you can buy pretty much an unlimited anount of gold bullion over the countrer in switzerland or austria at any bank that sells it. thats the safest bet.

just bring a bag a cash with you and walk out with gold.

the problem is the price. its like buying currency... eveyone has a diffrent price and by the time you find spot price the spot price has changed.

if you are buying physical gold at 20% above spot price you are a sucker. and its not an investmet. when you come to sell it who will you sell it to 20% above the spot price to recoup your expenses and makea profit. a jewler or mint will buy it off you only at spot price. a jewler below that. you will need to open a jewlery story to sell your gold.

so if you make a profit, you will erode those profits by 20%. thats a bad investment in my books.

if someone is selling you gold, at or below the spot price. ask why? and find out the golds purity. anythign below 99.99% is not pure gold and could explain why it is below the spot price. i dont see people sellign shares below the market price... why sell gold.

and how would you know what purity the gold is anyway. thats another thing to consider.

never buy "gold dust" or any gold from anywhere in africa. especially nigeria!!!

i would buy gold in one of only 2 ways.

1) walk up to a bank in switzerald with a $700,000 AUD in cash or more, and say.. whats the best price you can get me for this much gold. compoare that to the current spot price. walk away if its over 2% of spot.

2) buy gold or gold futures on the chicago mercantile exchange.

 

[Ageo]

if you are buying physical gold at 20% above spot price you are a sucker.

For the average investor how else can you buy pure stamped gold? have you even bought gold? how do refiners make money? its called the spread and 30%+ is very common in todays market so obviously you have no idea when buying in australia.

if someone is selling you gold, at or below the spot price. ask why? and find out the golds purity. anythign below 99.99% is not pure gold and could explain why it is below the spot price. i dont see people sellign shares below the market price... why sell gold.

99.99%? and how do you tell its that purity? if you understand refining/purities etc.. you will almost find that hardly anyone even the best of refiners can produce 9999 purity. Usually 9996 is the best they can achieve.

1) walk up to a bank in switzerald with a $700,000 AUD in cash or more, and say.. whats the best price you can get me for this much gold. compoare that to the current spot price. walk away if its over 2% of spot.

2) buy gold or gold futures on the chicago mercantile exchange.

If thats the 2 best ideas on how to purchase gold perhaps shoveling dirt for a living would serve you better???? i can buy gold here much cheaper then i can anywhere else in the world.

Remember when people buy physical gold its usually for long term (5-10+yrs) so 20%+ on the spread wont hurt them much if the time frame is for that long.

2nd: Futures is only good for short term as your leveraged (unless you go the ETF route).

Nothing wrong with hedging yourself for the next 20yrs and paying a little premium to make sure you get the right goods.

 

[slim pickins]

For the average investor how else can you buy pure stamped gold? have you even bought gold? how do refiners make money? its called the spread and 30%+ is very common in todays market so obviously you have no idea when buying in australia.

99.99%? and how do you tell its that purity? if you understand refining/purities etc.. you will almost find that hardly anyone even the best of refiners can produce 9999 purity. Usually 9996 is the best they can achieve.

If thats the 2 best ideas on how to purchase gold perhaps shoveling dirt for a living would serve you better???? i can buy gold here much cheaper then i can anywhere else in the world.

Remember when people buy physical gold its usually for long term (5-10+yrs) so 20%+ on the spread wont hurt them much if the time frame is for that long.

2nd: Futures is only good for short term as your leveraged (unless you go the ETF route).

Nothing wrong with hedging yourself for the next 20yrs and paying a little premium to make sure you get the right goods.

well no, i have never actually bougth gold in my life. i actually fould some gold once worth about $200. the closest i came was in 1999 when it was about 200USD and ounce. but i didnt.

now you say how can an average investor actaully buy pure stamped gold?
my answer is, that anyone buying pure stamped gold is not an investor. they are buying a luxury item for their own amusement similar to diamonds.

you are not an investor because you are buying gold 20% - 30% above the spot price and you can only ever sell it at spot price. please enlighten me.... what mint or jewler will buy your "investment" at 20% above spot price.... they will say... you wanna sell your gold... well the spot price is this... and you will say.... oh... btu cant you buy it at 20% above the market rate.... and they'll think you are crazy

so lets say you double your money 15 eyars after buying gold. then you pay capital gains tax and then you lose 30% because you bought 30% above spot plus cost of storage over 15 years.... surely you will not keep it under your matress. so there goes 60% of your profit in "transaction costs".

so if you want to be an investor you have to play with the big boys and egt in there with some real money and negotiate the price. otherwise. what is the purpose of a spot price if you will never get it. might as well go to a jeweler and buy a really big gold armband. ignore the spot price and buy willy nilly, who knwos it might even increase in value because of its uniqueness.

if you are interested in the spot price. go for one of my methods. in the mercantile excahnge buy a gold contract and wait for phyiscial delivery. cost you about 80k AUD and you get 3 one kilo gold bars delivered to you. certified by a reputable mint.

wait until gold increases in value then be prepared to sell it to someone for a 10% under spot price. becasue after all everyone buyign gold will tell you... oh, we already have our own suppliers, oh we are flooded with gold sorry cant give you more. .... oh, we only buy from certified mints. before long you will be sending nigerian type junk emails saying......

"hi my name is paul, i am from australia...... i am lookign to sell some gold. i use the "swiss-prosess", did you knwo australia produces many tonnes of gold per year. if you contact me... we can meet at my office to oficially test the gold. then you can wire funds to me and i will give you physical delivery of gold"

and someone willl read your email giggle and think you are nuts.

so having failed to sell your gold at spot price you will grow more despearate. and consider openign your own jewelry shop or even your own mercantile exchange jsut to sell your gold. whilst the whole time schlepping your bags of gold around. eventually you might entertain the idea of wearing your ornomantal investment. you will turn up to dinner parties with 3 kilos of gold hanging from you hands and neck. people wil complement you on your gold in your presence but secretly they will worry about you and eventually the dinner party invitaitons will dry up. you will be alone in your house laughing madly surrounded by your gold. and will realise you ahev become a prisoner of your investment.

you will see it has dragged you under, you will run out and sell it for any price... any price at all just to be rid of that devil.

invest in phyiscal gold at your own risk.

 

[cuttlefish]

99.99%? and how do you tell its that purity? if you understand refining/purities etc.. you will almost find that hardly anyone even the best of refiners can produce 9999 purity. Usually 9996 is the best they can achieve.

Ageo - 99.99% seems to be the standard purity for mint produced bars - are you saying bars stamped 99.99% by the mint aren't actually 99.99 pure?

(I've got Perth Mint bars that I bought from AGR Matthey earlier this year - they are stamped 9999. The price at that time was a relatively small percentage above spot - I'm pretty sure 1oz bars were only about $20 or $30 over spot which was near the AUD $900 mark at the time I purchased from memory).

I'm assuming gold bars bought from the Australian Bullion Company would be the same purity and with a similar relatively small premium over spot. (anyone bought any bars from ABC recently?).

 

[grace]

well no, i have never actually bougth gold in my life. i actually fould some gold once worth about $200. the closest i came was in 1999 when it was about 200USD and ounce. but i didnt.

so having failed to sell your gold at spot price you will grow more despearate. and consider openign your own jewelry shop or even your own mercantile exchange jsut to sell your gold. whilst the whole time schlepping your bags of gold around. eventually you might entertain the idea of wearing your ornomantal investment. you will turn up to dinner parties with 3 kilos of gold hanging from you hands and neck. people wil complement you on your gold in your presence but secretly they will worry about you and eventually the dinner party invitaitons will dry up. you will be alone in your house laughing madly surrounded by your gold. and will realise you ahev become a prisoner of your investment.

you will see it has dragged you under, you will run out and sell it for any price... any price at all just to be rid of that devil.

invest in phyiscal gold at your own risk.

You made me laugh and laugh and laugh!
There are a few threads around the place on this subject. One could do a search and find quite a bit of information.