s2kdriver80

I'm new at this so forgive the ignorance. Anyone here have experience in purchasing and owning physical gold? Not looking for numismatics, just simple bullion coins to preserve purchasing power. Just a few questions...


1. Where are good places to buy physical gold? I've been considering Euro Pacific Precious Metals (www.europacmetals.com). From what I know of Peter Schiff, he seems to be honorable and respectable. Don't know about his rates but I would feel confident about the quality of the merchandise.

2. Are there any other hassles after I purchase physical gold? Like would I need to report "income" on how much the value of gold rises relative to USD? Wouldn't make sense as it's USD that's losing value, not that the gold is gaining.

3. In case the economy tanks and I need to get the heck out of Dodge before airports are shut down... would I have issues carrying gold coins on an airplane? Customs require you declare them if the monetary value exceeds $10k. BUT, are they referring to the intrinsic value (currently $1760/oz) or the face value (I think just $50 on a 1oz American gold coin)? I would think the face value because A)that is fixed and not open for interpretation and does not change value by the second, and B)as legal tender, I can only purchase $50 worth of goods if I tried to use it at any store, I can't head into Best Buy and walk out with $1760 worth of goods.

4. Continuation of #3, other than the hassle of having to handle more pieces of gold, are there disadvantages to purchasing in 1/4 or 1/2 oz increments? At airport security, those clowns probably could not tell the difference between a normal nickel/copper coin and a Canadian Maple 1/4 oz gold coin. A full oz coin would stand out more, to security and the line of people standing behind me.

5. Does it matter what gold coin I buy (Canadian Maple Leaf, American Eagle, Australian Kangaroo, etc)? Is it just a matter of personal sentiment and preference?

Any other relevant tips and suggestions are welcome, thanks.

sevenrd

1. Local coin shop. My local one charges a small premium over spot price for PM bullion. Immediate delivery is a plus. Walk in with FRNs, walk out with PMs.

2. Check your state laws. Pay cash. You should be fine buying or selling without having to report gains or losses...for now...

3. An ounce of gold is really small. Plus, our chairsatan-in-chief Ben Bernanke explicitly stated that gold is NOT money, so no need to worry, as long as it's bullion:

http://www.youtube.com/watch?v=2Dj9v...e_gdata_player

4. See above. A 1 oz. bullion of gold is little more than the size of postage stamp.

5. Buy bullion, rather than coins.

s2kdriver80

Thanks for your reply.

1. Couldn't find a local one, maybe I'm just not trying hard enough. I'm considering Blanchard www.blanchardonline.com they seem to have been around awhile and is a large and reputable dealer.

5. I'm looking into bullion coins (e.g., American Eagle, Canadian Maple Leaf, etc). I'm assuming when you said coins in that context, you mean numismatic, not looking for those. Not looking to collect, just trying to hedge against upcoming massive inflation and preserve purchasing power.

magician

If you sell gold for a gain you have to report it on your federal income tax return, and, probably, most state income tax returns; the gain is taxable.

sevenrd

Thanks for the correction, magician. I was a bit heated when I replied. Great confirmation that if you're buying or selling any assets, confirm it with your accountant rather than an internet forum. My apologies to the OP.

I prefer bullion because it's not pegged to a currency. It's PM in its purest form. A $50 gold eagle is indeed currency, and must be claimed as such. A bar of bullion is simply the metal itself, with no monetary value attached to it.

I have PMs for the same reasons the OP was inquiring about; to hedge against inflation and to preserve purchasing power. In simpler terms, to protect myself against a reckless federal reserve's continuing destruction of the dollar. Confirmed yet again with the decision for ZIRP for another two years.

s2kdriver80

Thanks guys.

From my research, it looks like the American Eagle, Canadian Maple Leaf, etc are bullion coins. They do have face values. And yet they have intrinsic values as well. For example, the American Eagle 1 ounce is worth whatever the spot price is at any moment. However, it also serves as legal tender but only with a face value of $50. It looks like these bullion coins are just like bullion bars, except it has the flexibility of acting as legal tender as well (though you'd be nuts to use it as $50).

magician

This came up in another thread a few months ago. (I was trying to find it but the search function gives me nothing.) One of the members here had a link to the Internal Revenue Code section that addresses precious metals specifically.

sevenrd

OP, yes. Those coins have both (historically) intrinsic and (current) extrinsic value, but are not as pure as bullion. For example, a 1 oz. gold eagle is about .916 pure gold, whereas a 1 oz bar of bullion from credit suisse is .999 pure. And I see no need or reason to have some arbitrary fiat denomination stamped on a lesser piece of gold. It kind of goes against the whole reason for owning PMs. Just take that into consideration when comparing the premium asked over spot. You'll probably get the better deal buying the non-denominational bullion...in addition to getting purer PMs.

s2kdriver80

Crap I already got them. I thought it was the other way around actually, that the stamped face value was the historical value (it was worth $50 at one time, but you can still use it today as $50 as legal tender) and that the actual content in gold is the current market intrinsic value. And also, unless I was collecting these coins for posterity (I'm just doing it for inflation protection), does it still matter that it isn't .9999 pure? The volume of the entire coin might be a tad larger (than a coin or bullion with purer content), but the actual content of the gold is the same, hence the intrinsic value is the same, whether it is 1 oz American Eagle or 1 oz Canadian Maple Leaf (btw, the Canadian ML coin is .9999 pure I think - which also can be a con since 24kt lends to easier scuffing and scratching). And you're right, it looks like the bars are a bit cheaper.

sevenrd

I wouldn't worry about it. The gold coins are still a great way to hedge against inflation. The differrence is, in essence, minimal.