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Advice on buying gold please
twodrhrdtp
Posts: 1,025
I have decided to buy gold for my sons college fund. He was born in 2005, so I figure I will start with 05 eagles. Any insight would be great as I have never dealt with gold before. Is proof or mint a better way to go would be a good starting question.
Thanks in advance and I will gladly accept any free samples
Thanks in advance and I will gladly accept any free samples
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529 Plans are a good idea.
Other standard comments/questions: How much physical gold are you planning to buy? Do you have a safe place to store it? Don't forget to include storage costs in your return estimate. Do you really want physical gold or would you be happy with a gold mutual fund or a gold ETF?
Now to your specific questions:
Gold Eagles are probably a good bet - they're US coins, so they might be easier to buy/sell than foreign coins (Maple Leaves, Kruggerrands, etc.)
If you buy uncirculated coins, you'll only pay a small premium to the spot price of gold and the price of your coins will vary directly with the price of gold. You'll pay a smaller premium to the spot price of gold if you buy the 1 oz. eagle than if you buy the smaller sizes. The more you buy at any one time, the smaller premium you'll pay. If you're buying just for the gold content, there's no need to buy Eagles graded/encapsulated by a grading service.
If you buy proof coins, you'll pay a significant premium to the spot price of gold and the price of your coins will vary directly with the demand for your proof coins by buyers (collectors, dealers, etc.) as well as the price of gold. So, if the price of gold goes up and the demand for proof Eagles goes up, then you benefit twice. However, if the price of gold goes down and the demand for proof Eagles goes down, then you get hammered twice. Also, if the price of gold goes up, but the demand for proof Eagles goes down (or vice versa), then you will benefit once and get hammered once - you'll have to hope that the benefit will be bigger than the hammering. Also, the demand for proof Eagles could vary by date - that is, the 2009 proof Eagles could be more in demand than the 2011 proof Eagles - just another variable to consider.
edited to add: If you decide to buy uncirculated gold Eagles, then you're really just buying gold. Don't worry about the date on the Eagle, just buy the cheapest on the market, which is usually the current year.
Check out the Southern Gold Society
(or, 17-minutes).
If you are going to sell into an up-market, when you are
happy with the return, then gold can work for your college
fund. Just putting gold in a box may or may not work. What
would you do, if gold was at $300.00 an ounce when you
needed to make tuition payments?
If GLD (ETF) is a qualified 529 item, you could trade such
an account and lock-in profits when you felt happy, and
stop most big losses as well.
1980 was the last year that I heard millions of novices
contemplating "gold as a college fund." You can look at
the charts and see how well those plans worked out.
<< <i>
If GLD (ETF) is a qualified 529 item, you could trade such
an account and lock-in profits when you felt happy, and
stop most big losses as well.
1980 was the last year that I heard millions of novices
contemplating "gold as a college fund." You can look at
the charts and see how well those plans worked out. >>
I'm in total agreement. Taking advantage of tax-advantaged investments for college
seems a much wiser direction. GLD and SLV would both be ETFs that could be added
to a long term portfolio.
If you want to buy a couple (or a few) gold pieces now to put away for the future, I
think that's awesome. I just believe that a more conservative approach, along with
diversification, is appropriate.
Check out my current listings: https://ebay.com/sch/khunt/m.html?_ipg=200&_sop=12&_rdc=1
I knew it would happen.
I have done extremely well over the last 3 years just collecting the key dates in the Eagle series. They have done a whole lot better than the gold price on its own .(also for my kids college fund).
Remember that eagles are classified as collectibles and that there is a high tax rate involved when you sell(same for ETFs)
A 529 plan plus whatever college plan your State has are worth looking into as well.
<< <i>DIVERSIFY,DIVERSIFY!!!
I have done extremely well over the last 3 years just collecting the key dates in the Eagle series. They have done a whole lot better than the gold price on its own .(also for my kids college fund).
Remember that eagles are classified as collectibles and that there is a high tax rate involved when you sell(same for ETFs)
A 529 plan plus whatever college plan your State has are worth looking into as well. >>
And all this time I thought you guys were just selling them for cash
<< <i>
<< <i>DIVERSIFY,DIVERSIFY!!!
I have done extremely well over the last 3 years just collecting the key dates in the Eagle series. They have done a whole lot better than the gold price on its own .(also for my kids college fund).
Remember that eagles are classified as collectibles and that there is a high tax rate involved when you sell(same for ETFs)
A 529 plan plus whatever college plan your State has are worth looking into as well. >>
And all this time I thought you guys were just selling them for cash
Just putting it out there that Uncle Sam is watching!!
<< <i>I guess I should of said that I am not putting all my eggs in one basket. He already has mutual funds and we purchased a rental property designated for his college .I am looking to diversify a little more, and also maybe jump start his interest in coin collecting. >>
You can have a lot of fun collecting PCGS/NGC/ANACS $20 Saints/Libs in Au to MS63. They range from $50 to $150 over spot depending on grades. With all the "so called" common dates in those series they are fun to get different dates and mm with no dups. You will soon find out the "so called" common dates aren't so common on some of these dates.
That said, pick a gold coin series and start adding to it. To get him interested, take him to the bank and get him a roll of nickels when he's about 8. Then buy him a book to put them in.
I knew it would happen.
<< <i>I guess I should of said that I am not putting all my eggs in one basket. He already has mutual funds and we purchased a rental property designated for his college .I am looking to diversify a little more, and also maybe jump start his interest in coin collecting. >>
Sounds like you are way ahead in this game...start collecting a gold series that you will enjoy and hopefully the rental property and mutual funds will take care of college and you can retire early
will your son need? I wouldn't overdress him and would limit my gold as an investment. But, at
least you are planning on him going to college! That he'll need for sure. Good luck in whatever you
decide!
Well, if you want to jump start his interest in coin collecting, why limit yourself to just one coin? Why not buy him an example of every different gold coin you can? Sovereigns, 20 Franc pieces (many different designs), modern world gold, etc. are, along with double eagles, eagles, half eagles, etc. are all available for reasonably small premiums to their bullion content.
Check out the Southern Gold Society
I think you should go with generic Liberty Eagles and Double Eagles which you can find for not much over spot...
<< <i>Sometimes you get too much information here.
I think you should go with generic Liberty Eagles and Double Eagles which you can find for not much over spot... >>
Gold, as many have pointed out doesn't get favorable tax treatment for college savings, so I think this is a poor choice. The one possible upside is that if a person wants to play fast and loose, gold can fly under the radar when it comes time to fill out financial aid forms. If the parents are of modest income, and/or have several kids in college at the same time, this might be enough to make a difference in terms of qualifying for aid. That again, is only if a person wants to play fast and loose with their ethics.
There are many other legitimate investment options where the government gives a big boost, if the funds are earmarked for college tuition.
This is the second thread on this board with a relatively new investor who knows very little about gold wanting to put significant money into gold. That is a bad sign for gold bulls. The forum ground hog is saying it could be a very cold spring for gold bulls.
Truth be told, I've made more money in the last 3 years buying and selling collectibles and coins, while my "diversified" stock portofolio has only mustered nominal gains. While I agree that the evidence over the long terms points strongly to the stock market, you should atleast dedicate 20% of your portfolio to commodities and/or real estate in order to balance things out.
Gold has never been worthless, yet many have lost everything betting on Wall Street's darlings. I'm not here saying that you shouldn't be in the market, because you should. Rather I encourage everyone to invest in your financial education (soliciting advice from this forum would certainly qualify) and make your own informed choices. For me true "diversity" looks like this:
20% Precious Metals
30% Real Estate
50% Stocks, Bonds, and Munies
Just my 2 cents...
(1) Mutual funds are heavily marketed as good investments over time by people who make money selling them and taking a percentage of the assets everyday. But are they good investments ? When these people say that their fund has averaged +10% a year does that mean your investment would have increased 10% a year compounded. No it doesn't for 2 main reasons. One is they assume a dollar has constant value which it clearly doesn't and if they took inflation into account it would be more like 7%. Second, the word average is misleading. Here is a simple example which is similar to the stock market. Your fund goes up 30% this year and down 10% next year. Average is +10% but if you increase $1 by 30% you have $1.30 then decrease that amount by 10% you now have $1.17. 10% compounded for 2 years is $1.21. Another important issue is that historical performance might not be a good indicator of future performance and I would argue it is highly likely it won't be. The bottom line is you can lose buying mutual funds and the probable returns are not worth the risk vs CDs or T-bills or TIPS which currently pay around 5%.
(2) When I buy gold I buy 1/2 oz. Eagles. You can buy them for 5 or 6 percent over spot gold and they have lower mintages. As a result some 1/2 oz. eagles like the 1991 sell at a big premium. If a person had bought two 1/2 oz. eagles every year since 1986 ( the 1st year they were minted ) and another had bought one 1 oz. each year the person with the 1/2 oz. would be way ahead. If no numismatic value accrues you have lost nothing. Remember that people tend to love gold when it is high and hate it when it is low. When gold was $275 I doubt if you would have considered buying gold for a college fund. Gold reflects the value of a nation's currency and the state of the world. One wise man said if gold prices go to the moon it would have been better to buy hills because that is where everyone will be headed.
Since when do gold American eagles not get favorable tax treatment?
<< <i>Since when do gold American eagles not get favorable tax treatment? >>
All collectibles, stamps, antiques,artwork, including bullion and eagles and also including the ETFs are subject to 28% Capital gains tax according to my very knowledgable CPA
Quite a few say that gold eagle sales are non-reportable. Did that policy change?
<< <i>An ounce of gold has always been able to buy a good/decent mens 3 piece suit. How many suits
will your son need? I wouldn't overdress him and would limit my gold as an investment. But, at
least you are planning on him going to college! That he'll need for sure. Good luck in whatever you
decide!
SAGE! An ounce of gold has bought a good suit of man's clothing for at least 1000 years. As far as education ??? College may be free if your child can qualify then IMHO.
Chance favors the prepared mind.
<< <i>I have decided to buy gold for my sons college fund. He was born in 2005, so I figure I will start with 05 eagles. Any insight would be great as I have never dealt with gold before. Is proof or mint a better way to go would be a good starting question.
Thanks in advance and I will gladly accept any free samples
If you teach him correctly, he'll be way ahead of them college boys in intelligence.
I'd suggest OLD gold. The increases from twenty years ago til now on bullion is not that good, but...
Take an OLD GOLD piece (St Gaudens, Liberty head, Capped bust, Indian) and check them out over the last twenty years.
My brother keeps saying he should buy gold. I offered him a few pieces over the past five years and he still hasn't done it. One $5 Indian I offered him for $275 I cannot touch for $400 today on the market. You might fair better with US MINT Gold commemoratives in uncirculated or proof. But always look for the best price on the highest grade for the lowest mintage coins and you should do fine.
Do the math before the science or your son will end up in psychology just to help you in later years
Joe
Practice makes perfect & nobody is perfect. So, practice being nobody.
<< <i>Quite a few say that gold eagle sales are non-reportable. Did that policy change? >>
Google capital tax gains american eagle
<< <i>
<< <i>Quite a few say that gold eagle sales are non-reportable. Did that policy change? >>
Google capital gains tax american eagle >>