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gold investments
John91C
Posts: 306 ✭✭✭
So this is a weird question but if you had $50,000 to invest just in gold for let's say a 2 year or less time period what would you invest in? I'm asking because my parents said they wanted to invest 50K in gold and asked my opinion. I told them either gold bars or eagles. Also where is a good online source to do this? I know APMEX sells them and they offer free shipping for 25K or more spent. Any help would be appreciated. They want to make a good quick investment.
John
John
0
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Decent 20 Saints close to melt might be a better deal and hold more value in the event Gold goes in the tank but will still appreciate in value if gold goe's up
Just MHO.
John
I don't think the word commodity is used correctly but I think you get the meaning
I'm certainly not a buyer of even better date GAE'S,pop's of those can change very quickly and not to forget that gold was 100.00 an oz higher not long ago !
Bars? You have to pay a storage fee. Besides, I wouldn't have possession of the actual metal itself.
I would put it into a couple of gold and/or precious metal mutual funds that have an excellent track record. In fact, that's what I'm doing right now for my IRA this year.
JMHO, of course. Good luck!
Vietnam Vet 1968-1969
Any of them you would recommend?
John
I have some money tied up in GAE, but that's because I enjoy the collecting aspects; I also sometimes put some into an ETF.
Ken
Putting it all in at once (or selling all at once) makes the emotional rollercoaster that much more difficult to ride. A person usually gets very attached to the price they bought (or sold) at. The market doesn't care.
It sounds like they are close to complete novices in terms of investing in gold. If that is the case, I hope that the $50,000 is a very small percentage of their net worth, or in my opinion, they are making an unwise decision.
Tulving often has among the lowest prices, though they do have high minimums.
<< <i>They want to make a good quick investment. >>
That is an oxymoron, especially for novices. Good luck, but they could be in for some difficult times. The average person loses when they try to time the precious metal markets. Some of them lose big time.
<< <i>I would never "invest" in Eagles, due to the large premium over spot. Too much catching up to do before you break even.
Bars? You have to pay a storage fee. Besides, I wouldn't have possession of the actual metal itself.
I would put it into a couple of gold and/or precious metal mutual funds that have an excellent track record. In fact, that's what I'm doing right now for my IRA this year.
JMHO, of course. Good luck! >>
We posted similar replies at about the same time...but your's arrived first.
John
<< <i>How would they go about getting into ETF's? Any good websites to use for investing in those? I have a Scottrade account and could easily set one up for my parents. My parents aren't the greatest at understanding this investing stuff. They just retired and have extra funds to invest.
John >>
They're bought like a stock...I use GLD.
Ken
<< <i>I like PCGS buffaloes. In bulk you should find them around 4% over spot. >>
This is the sort of thing to look for for a short term gold play. Anything with
a small premium and highly recognizable should suffice. If it might turn into
a longer term play then you might want to spend a little more for the chance
of getting a numismatic premium later.
in the vast minority.
roadrunner
CNI is the best/lowest price that I have seen.
I have bought and sold to them - without any hitches.
The question I would ask is: how much can they risk this $50K? If they have significant other holdings, and this is a small percentage of their savings, then OK.
Edited to add: I would do bullion coins: the eagle or buffalo. If it is gold they want to invest in, just do gold at as little over spot as possible.
This would've been a great investment when gold was down to $250-300 an ounce and they were shutting mines down (circa 1998-2001).
There are a lot better ways to use $50 grand now!
I could see gold going back to $700 in 2 years (conservative perhaps) but at $630 today you'd get 11% appreciation.
I think you can do (a lot) better elsewhere...
For a straight gold investment, I would pick a bullion coin which has the smallest buy/sell spread. Usually that would be 1 oz. Gold American Eagles.
I would also consider buying some gold coins directly from the Mint's website, but I would stay plugged into this board throughout the year in order to get an idea of which Mint products to buy.
I would not buy $20.00 Saint Gaudens coins, even at low premiums, but that's just me - some folks prefer them.
I knew it would happen.
I'd buy GLD like a stock and be done with it. Very small buy/sell spread, and low storage costs too!
Gold should make it back to over $700 this year, and potentially to over $800. Regardless of what year, it's headed to well over $1000-$1500 before the game is up. While this appreciation is not great, it will look much better when one considers the DOW and S&P would by 30% or more lower than todays' numbers. So in relative motion, gold going up and most stocks going down in the longer term, I like gold.
GLD I don't like because when things hit the fan, I don't trust anyone to be able to deliver on contracted gold. If you don't have physical possession you don't have gold, you own a paper promise.
If investors ignored stocks or assets that had doubled or tripled because they are now potentially overpriced, then Microsoft, Yahoo, Google and others would have been dropped early on as well.
There's more to the future than just how far an item has appreciated.
roadrunner
The odds of a GLD gold default within 2 years are pretty astromononically low. People putting gold in a 30 year retirement plan would be different.
way to go long-term. SLV is fun to trade, too. Both can be
done through your conventional online account.
Possession of small amounts of GAEs may have some advantages,
someday.
If potential gold investors do not have mortgage debt that can be
paid off with the cheap dollars that a huge gold run might deliver,
large investments in gold may only return modest rewards. Price
inflation at the grocery store could turn such investments into mere
storehouses of value, and NOT lottery-style wins.
50K in a stagnant - non-managed - gold pile is OK for wealthy folks,
who can tolerate the potential declines. Having some graded saints,
some graded GAEs, and actively trading the GLD and SLV ETFs is
probably better for folks who are not wealthy.
Also, there are tax-issues with the ETFs that may be less burdensome
with the physical coins.
<< <i>Also, there are tax-issues with the ETFs that may be less burdensome
with the physical coins. >>
Translation---you have to pay taxes on any profit with the ETF's while physical gold can be hidden from the government.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
physical gold can be hidden from the government."
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Between 1979 and 1999, hoarders of physical gold were mostly
upside-down in their positions. Those who were forced to dump
their stash at a loss were treated relatively favorably on the tax
side. Those who held out and sold into the 2006 upswings, are
now NOT being killed by short-term schedules; the tax bite is quite
reasonable.
ETF profits/losses are treated very unfavorably for tax purposes.
When used as intended, ETF' profits yield awful and instant tax
liability. Losses, on the other hand, are deductible on the same
time schedule as losses suffered on other securities; $3,000
per year, forever.
If/when metal prices tank, it is much easier for most folks to
resign themselves to sitting on 100 Krugs, than it will be to
wait 10-years for spikes to revive their ETFs. Holders of ETF
interests will dump vigorously and their losses will be of very
limited use on the tax front.
The notion that physical gold sales are "pure secrets," is often
not true. Large reputable buyers are required to meet strict
reporting regulations.
<< <i>I like PCGS buffaloes. In bulk you should find them around 4% over spot. >>
I agree,however i would only buy them raw in sheets of 50 and if you don't like the sheets you can put them in airtites for safe keeping, I also like 1/10th oz GAE's, I buy 10 sealed tubes every year.
"The silver is mine and the gold is mine,' declares the LORD GOD Almighty."
Bottom line for me is if they have cash than "a bird in the hand is better than 2 in the bush". Now if this is a 401k like myself that's different. Also $10 Libs or common $5 modern gold coins have a very low preminum so you could consider some of those coins too. If they are trying to diversify out of the stock market like I did buy the gold coins in whatever form you choose.
#2. Primarily b/c I'm a collector rather than invester.
#3. I'd buy 37 sets of these. The set divided is already trading at a premium to the four coin set. The half oz will, most likely, be a strong key.
-David
GLD or, if they are open to a silver investment, I prefer SLV.
I am assuming that this is strictly a portfolio hedge so the above investments seem to work well for this and are extremely liquid.
Jim
<< <i>How would they go about getting into ETF's? Any good websites to use for investing in those? I have a Scottrade account and could easily set one up for my parents. My parents aren't the greatest at understanding this investing stuff. They just retired and have extra funds to invest.
John >>
Again, this sounds bad, double bad, if they are novices at investing. Yes, you can buy GLD or any other ETF with Scottrade or any other broker. The advantages of ETFs are typically lower transaction costs, easier exit, no insurance or safe deposit costs. Physical possession is more of a hedge of things going really, really bad.
Again, it sounds like your folks have little idea about what they are doing. People like that tend to lose when trying to time the market, and a two year holding period falls under that shadow. However, when someone gets it into their head to do a certain thing they often have to do it, no matter how unwise the decision, no matter how much money they are about to lose. Again, I would break up any buys into at least two chunks, the more the better. Averaging in, works out much better for the novices, than putting it in all in at once.
It sounds like they heard some ad on the radio or TV, so some hypester newsletter, and now have it in their heads to buy gold, for the first time at retirement age, without ever having a brokerage account, or knowing much about investments. Again, this sounds like a bad scenario. Best of luck to you.
John
<< <i> This would've been a great investment when gold was down to $250-300 an ounce and they were shutting mines down (circa 1998-2001).
I think you can do (a lot) better elsewhere... >>
Amen to that. Why does it seem that people always want to invest in something AFTER prices have already gone way up?
The whole key to investing is to buy low and sell high. Not buy high and hope it goes higher.
Try to think creatively and find something that is low. For example, if you could convert that $50,000 into Chinese currency, which is artificially kept low by its government, I think you might have a chance of making a killing if the exchange rate is ever allowed to float freely or is adjusted to accomodate trade realities. Just a thought.
<< <i>thanks for all the great info guys. I know my parents are weary of stocks and they weren't smart in investing a few years back. They are just looking into make some additional money when it comes to gold. I think buying gold bars may be the way to go. The AGE's have too much overhead and with bars they can get close to spot and sell close to spot. I know when they sell, depending on who they sell to, if they sell under 25-32 oz a day then it's not reportable. I think with AGE's it doesn't matter how many oz you sell in a day it's still not reportable. What is a reasonable price for AGE's, or I should ask how much more should they pay over spot...$16-20 over spot?
John >>
Why gold bars? Virtually no one in this thread mentioned them. Eagles have only maybe a 1% wider spread and no assay problems. I believe you do have to report AGE sales, if you sell more than $10,000 worth in a one week period. Again, I strongly suggest spreading out the buys so there is not so much emotion attached to the buy in price. Even at the 20 ounce minimum at Tulving, with $50k they can break up the buy into three or four batches and average out their costs.
Again, check the various sites, call after the market close to get their weekend quote, and that will give you an excellent idea of how much over spot, and how much spread is involved when the time comes to sell.
I have no idea why they want to jump in now, and you have not mentioned any reasoning. However, it usually is bad sign for any market when novices want to buy. Novices often buy at or near the top of any given market, especially if a market has had a good run up. This applies to virtually everything, real estate, stocks, and precious metals. Maybe your folks will beat the odds, but understand that the house makes good money taking the other side of the trade, selling to newbies near the top and then buying from them near the bottom. The average novice makes bad timing decisions.
<< <i> I don't trust anyone to be able to deliver on contracted gold. If you don't have physical possession you don't have gold, you own a paper promise. >>
Well Said ! If I may add on that quote "you own a worthless paper promise"
Freak
under 25-32 oz a day then it's not reportable. I think with AGE's it
doesn't matter how many oz you sell in a day it's still not reportable."
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ALL totally incorrect, and dangerous advice to give/take.
The Code requires that commercial buyers receive a completed 1099-B
from sellers. The form is kept at the buyers' places of business; special
"reporting and notification requirements" also exist and vary in relation
to dollar volume sales and "circumstances." 1099-Bs are usually not
required to be filed with the Service, unless (a) certain limits are reached
($2,999.99 and $9,999.00, for example); (b) other suspicious "circumstances"
are noted by the buyer; "smurfing," for example. (Smurfing is the practice
of selling small amounts repeatedly in a short period of time, in an attempt
to defeat reporting/filing requirements.)
Buyers on Service "watch lists" are often required to file 1099-Bs on ALL
transactions in excess of $2,999.99. These buyers have been "targetted"
as past rule-breakers, and sellers NEVER know who they are.
Also, gold bars are the absolute worst way to own gold. Whether large
or small, known or unknown maker, the bars are hard to sell and may
require assay charges to be paid upon sale.
John
John
Of course there are all the same risks, but this is where I would go.
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NOT Correct.
In this discussion:
SELLER = Your Parents
BUYER = Commercial Buyer
A 1099B form is filled out by the commercial BUYER of the items sold
(by you parents) to that buyer.
/////////////////////////////////////
"If they use a personal check or Cashier's check over 10K
it is not considered reportable, per IRS standards."
//////////////////////////////////
NOT correct.
The mere making of the cashiers' check generates either
a retained Service form or a filed form.
(While $2,999.00 is the Service flag for the form, ANY
amount considered "unusual" is recorded (usually not
filed). Smurfed checks and $9,999.00+ are ALL filed
daily by the banks with the Service.
Post 911 "security" measures have changed many/ALL of the
old schemes.
Better talk to your own CPA before you go down the wrong
path.
engelhard or other top tier companies? "
//////////////////////////////////////
If the buyer wants to cover himself (or to rip you off) he will
charge an assay fee of $35.00 to $65.00 on 1-oz bars,
and $200.00+/- on 10-oz bars.
The premium on GAEs is NOT a rip-off.
Cash includes the coins and currency of the United States and a foreign country.
Cash may also include cashier’s checks, bank drafts, traveler’s checks, and money orders with a face value of $10,000 or less, if the business receives the instrument in:
A designated reporting transaction, as defined below, or
Any transaction in which the business knows the customer is trying to avoid reporting of the transaction on Form 8300.
Example: Tom Greenwood purchases lumber and hardware from XYZ Lumber for a total of $12,000. He pays with a cashier’s check having a face value of $12,000. The cashier’s check is not treated as cash because its face value is more than $10,000. The business does not need to file Form 8300.
A designated reporting transaction is the retail sale of any of the following:
A consumer durable, such as an automobile, boat, or property other than land or buildings that:
Is suitable for personal use.
Can reasonably be expected to last at least one year under ordinary use
Has sales price of more than $10,000.
Can be seen or touched (tangible property).
A collectible (a work of art, rug, antique, metal, gem, stamp, or coin).
Travel or entertainment, if the total sales price of all items sold for the same trip or entertainment event in one transaction or related transactions is more than $10,000. The total sales price of all items sold for a trip or entertainment event, includes the sales price of items such as airfare, hotel rooms and admission tickets.Text
I don't think modern AGE's are considered collectible coins.
John
John
Also according to the IRS website:
Sales of precious metals. A sale of a precious metal (gold, silver, platinum, or palladium) in any form that may be used to satisfy a Commodity Futures Trading Commission (CFTC)-approved regulated futures contract (RFC) if the quantity, by weight or by number of items, is less than the minimum required to satisfy a CFTC-approved RFC. A sale of a precious metal in any form that cannot be used to satisfy a CFTC-approved RFC is not reportable.
For example, Form 1099-B is not required to be filed for the sale of a single gold coin in the form and quality deliverable in satisfaction of a CFTC-approved contract because all CFTC contracts for gold coins currently call for delivery of at least 25 coins.
Sales of precious metals for a single customer during a 24-hour period must be aggregated and treated as a single sale to determine if this exception applies. This exception does not apply if the broker knows or has reason to know that a customer, either alone or with a related person, is engaging in sales to avoid information reporting.
John
....................................................................
24-hours is now - depending on the compliant/non-compliant reporting history
of the commercial buyer - expanded to six-months or longer. The seller NEVER
knows if the buyer has been told by the Service to "report everything."
No reputable commercial buyer is going to risk "getting into trouble" with the Service.
They record/retain (file if required) all the info they need to cover themselves. If they
tell you otherwise, the are either crooks or are lying to put you at ease.
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"I don't think modern AGE's are considered collectible coins."
..............................................................
For some tax purposes, they are not. For recording/reporting purposes
they might as well be. Trying to parse the words in the Code is risky
business. The main thing to KNOW is that any reputable buyer of your
quantity-metals is going to record everything.
Hit and run sales at coin shows are an abused "loophole," but even
those can pose serious risks to serial scofflaws. Coin shows - large
and small - are crawling with Service agents.