this article might be controversial

MoneyLA

kitco posted this article about mistakes in investing in gold. the article did not originate with kitco.

some of these points make sense to me.

I am very curious about your reaction to the comment about American Gold Eagles.

Also the comment about gold mining stocks is one that I support.

there is one more point that I'd like to mention that is not in this article -- and that is, don't price average down.

anyway, read the article and I am interested in your comments.

SportsModerator

Liquidity and market acceptance.

AGEs have home turf advantage.

"Overpaying on Premiums — Depending on the minter, gold prices may vary quite a bit. Gold purity plays a major role; look to buy only purity, not the brand name."

Uh huh. See above statement. Will my friend Roadrunner pay me exactly the same amount on the spot and without question for a bar marked "Mendelson's Mint .999 Fine", or a Credit Suisse .999 Bar?
Call whatever premium assigned an insurance policy for said liquidity and market acceptance.

goingbroke

Buying American Gold Eagles —Avoid American Gold Eagle coins! They are minted from 91.67% gold and, thus, vastly inferior to those minted from 9999 fine gold. Find a better bullion coin like the Canadian Gold Maple Leaf or South African Kruggerrand. I dont agree with this statement at all! A gold eagle has 1 full ounce of fine gold in it just like the rest of the gold sold. How can they be "vastly inferior"??. They make it sound like you are getting less gold for your money I cant see how this could be true!.

jmski52

What a dumb article.

Weiss

Oh it's better than it sounds. You can find the link to the original article at the top. Here's the complete scoop on AGEs according to Gold World. Not the sentence omitted from the linked article:

8.) Buying American Gold Eagles — I feel the need to point out the American Gold Eagle specifically when mentioning gold coins. Avoid this one! American Gold Eagle coins, first of all, are minted from 91.67% gold and are, therefore, vastly inferior to those minted from .9999 fine gold. But this does not stop their minters from applying high premiums. You end up spending more money on less gold. Furthermore, as US legal tender, the American Eagle actually leaves you exposed to inflation — which you're trying to avoid by buying gold in the first place. Find a better bullion coin like the Canadian Gold Maple Leaf or South African Kuggarand.


Wow. I just submitted a rebuttal. I suggest you all do the same.

PerryHall

I don't find the need to rebut an article written by a totally clueless idiot.

Weiss

Fair enough. But you can rate the article by clicking on the stars at the bottom...
rate the article

PerryHall

Thanks. I rated him.

roadrunner

The author is one of the very few gold enthusiasts, if not only the one I've read that dismisses gold stocks. If you leverage, that's the way to do it. There are some very fine miners out there with steady production. China wants to buy them lock stock and barrel. So does everyone else who is shopping for commodities. If you want to reduce your exposure than by one of the many decent gold funds that spread you out across dozens of different miners. While leverage won't be as good as GDX/HUI index, you will still get leverage (USERX, USAGC, TGLDX, GOLDX, SCGDX are but a few of them). Gold stocks tend to outperform bullion at the beginning and the ends of the cycle. If you sell into strength and buy on weakness, it seems to me you will do better than bullion. Now when the world is ready to crumble, then its time to pull back into 100% bullion and hope for the best.

The comments on numismatic gold coins are also lacking any insight. US slabbed generic gold in the 63-65 range has offered leverage over the bullion price if bought on deep dips. Those buying in January could have made 20-30% on many issues while gold went up 10% over approx 2 months. I don't see a ton of risk in owning a $10 Indian in MS63 for $1025. I bought a number of those in January at $1015. Like anything else, if you don't try to figure out how to participate in a market the right way, then you will probably get smoked by your dealer and/or broker.

roadrunner

jmski52

rr, do you see any benefit in obtaining the stock certificates for the gold miner stocks that you buy? Doesn't Sinclair make the case that certificates must be in-hand?

Norseman88

<< <i>The author is one of the very few gold enthusiasts, if not only the one I've read that dismisses gold stocks. If you leverage, that's the way to do it. There are some very fine miners out there with steady production. China wants to buy them lock stock and barrel. So does everyone else who is shopping for commodities. If you want to reduce your exposure than by one of the many decent gold funds that spread you out across dozens of different miners. While leverage won't be as good as GDX/HUI index, you will still get leverage (USERX, USAGC, TGLDX, GOLDX, SCGDX are but a few of them). Gold stocks tend to outperform bullion at the beginning and the ends of the cycle. If you sell into strength and buy on weakness, it seems to me you will do better than bullion. Now when the world is ready to crumble, then its time to pull back into 100% bullion and hope for the best.

The comments on numismatic gold coins are also lacking any insight. US slabbed generic gold in the 63-65 range has offered leverage over the bullion price if bought on deep dips. Those buying in January could have made 20-30% on many issues while gold went up 10% over approx 2 months. I don't see a ton of risk in owning a $10 Indian in MS63 for $1025. I bought a number of those in January at $1015. Like anything else, if you don't try to figure out how to participate in a market the right way, then you will probably get smoked by your dealer and/or broker.

roadrunner >>


It is true that at times you can buy $20 gold pieces at a discount, however now I wouldn't be a buyer after the run they've had. The same also applies to Quarter Eagles, Half eagles and Eagles. As for buying American eagles if you want to buy American gold coins what's wrong with buying Gold Buffalo's???

Konahead

<< <i>I don't find the need to rebut an article written by a totally clueless idiot. >>

ebaytrader

<< <i>8.) Buying American Gold Eagles — I feel the need to point out the American Gold Eagle specifically when mentioning gold coins. Avoid this one! American Gold Eagle coins, first of all, are minted from 91.67% gold and are, therefore, vastly inferior to those minted from .9999 fine gold. But this does not stop their minters from applying high premiums. You end up spending more money on less gold. Furthermore, as US legal tender, the American Eagle actually leaves you exposed to inflation — which you're trying to avoid by buying gold in the first place. Find a better bullion coin like the Canadian Gold Maple Leaf or South African Kuggarand. >>




Oh my!

PerryHall

<< <i>

<< <i>8.) Buying American Gold Eagles — I feel the need to point out the American Gold Eagle specifically when mentioning gold coins. Avoid this one! American Gold Eagle coins, first of all, are minted from 91.67% gold and are, therefore, vastly inferior to those minted from .9999 fine gold. But this does not stop their minters from applying high premiums. You end up spending more money on less gold. Furthermore, as US legal tender, the American Eagle actually leaves you exposed to inflation — which you're trying to avoid by buying gold in the first place. Find a better bullion coin like the Canadian Gold Maple Leaf or South African Kuggarand. >>




Oh my! >>



The AGE and the K-Rand are made to the same specs. In fact, the AGE was created to replace the K-Rand due to apartheid and the U.S. governments desire to boycott products from South Africa at the time.