Get Out & Vote / Gold Advice Anyone?

Posted by urbandigs

Tue Nov 4th, 2008 01:26 PM

A: Lines were crazy long this am, so I will try in an hour or so to go back and vote. Hopefully everyone is finding time to make it to vote today as well! In meantime, I want to ask readers for some help. I am in no way a gold bug, I'm not obsessed with it, and I don't revolve my life around it! But I do have a collector mentality (baseball cards / garbage pail kids / memorabilia have always interested me), and I do like gold on deleveraging dips considering the printing that is going on globally to combat this severe crisis. So, I did something nutty and bought my first piece of physical gold last week. Here is my experience, which I have little of, and hopefully someone out there can teach me more.

First off, I went to a few coin shops to check out buying American Eagle gold coins. I could not find any! From what I was told, these circulated gold coins are in huge demand and orders take time for delivery. When I went to FH Coin on Lexington Ave, I was told, "If I had any Eagles in, the line would be out the door within 24 hours to buy them...I expect an order to come in about 3 weeks from now". Of course this could have been BS! He did have Canadian Maple Leaf 1/oz gold coins that I could have bought for $815/each, some $65 over spot at the time. I didn't buy any.

GoldBarHundredGram.gifHonestly, I just wanted to mess around with like $2,500 and buy either Eagles or a gold bar. The more I researched the more I found out that the commissions to buy coins are much higher than the commissions to buy bars. So, I went downtown to a gold bullion dealer on Broad Street, named Manfra, Tordella & Brooks, Inc.. I didn't know anything about these guys except from what I see on the internet, but they were listed with the Better Business Bureau with no complaints filed and a satisfactory BBB rating, so I guess that's something.

As I walked into the lobby entrance, I had to take an elevator down to the basement; shady! But I guess it has to be downstairs where products are safely held in vaults. When I exited the elevator, there was a glass encased window between me and the bullion desk; kind of like at a a bank! Discussions of 1000/oz orders could be heard in the background making my intentions feel minuscule! Oh well, I'm just nibbling here as I am holding a bunch of gold etf's, physical is a whole new world to me! I figure if I can buy 2-3K worth each year and put it away, it can be a nice way to preserve some wealth if things get hairy. Of course if it does get hairy, I got way worse problems to worry about! I digress.

As I asked a million questions, the guy behind the desk started to give up and didn't have time to talk. Spot gold was at $744/oz, and he had only 2 gold bars left at the site. Both were 100g bars or 3.2125 ounces of 999.9% pure gold. The manufacturer was PAMP in Switzerland.

He would ONLY SELL ME ONE at the current spot price, and told me that if I wanted to buy more I would have to wire money into an account with them, lock in the spot price when I wanted to place the order, and wait 2-4 weeks for physical delivery. Ummmm, yea, not too enticing as I have no desire to buy lots of physical gold here.

I did buy the 100g PAMP Swiss Bar for $2,425, in cash as that was the only way they would do it, which came out to about $754 an ounce or about $10 over spot at the time of the deal. The rush I used to get as a kid when going to baseball card shows and buying a boxed set or a big name rookie card, returned! It lasted about 3 minutes. Since I already decided to buy something, I thought it was a way better a deal than paying more commission for Canadian Maple Leaf coins.

I don't know much about buying physical gold other than that there is not much of it around these days for us to buy at retailers, and that commissions are added and spreads wide between bid/ask. One thing I did make sure of is that the dealer would buy back the gold from me; which is a policy of this 57 year old dealer. The gold I bought is very similar to the picture above, its in my desk at home, with its assayer certificate (that I was told means nothing), and is kind of cool to look at!

I feel like a kid again. Anyway, just wanted to share my little gold buying experience with you and hopefully I don't come out as a super crackhead for doing so. If gold were to selloff more, I would get more interested in buying some more physical bars where commissions over spot are minimal; and just sock away. Of course, this is money I deem as unneeded and I would never put more than 5% or 7% of my total worth into physical gold.

Would love to hear from anyone out there who collects gold, about their experiences, what they learned, if I was ripped off at the time of the deal, where they do their deals, opinions on physical gold, etc..This is not meant as a prediction piece for gold! It is just to educate myself from readers who may have more experience in this sort of thing.

Thanks for any feedback.