From: n9020351@henson.cc.wwu.edu (James Douglas Del-Vecchio)
Newsgroups: misc.invest
Subject: Re: Buying Precious Metals
Date: 6 Jan 93 11:12:34 GMT
Article-I.D.: henson.1993Jan6.111234.24832
Organization: Western Washington University

sjackson@medicus.com (Steve Jackson) writes:


>1.  How much of a commision (if that's the right word) do your local coin
>    shops charge for buying and selling small quantities of coins?  (I
>    assume they do charge one.)
	
	Enough that you can't make money buying and selling every
day, but that you can if you buy it and hold on for a while.  I
think the deal is that they sell for spot, and buy for 100-x% of 
spot.   The total spread is maybe ~4%, but my memory is cloudy on
this.

>2.  Any places that sell coins at a lower rate of commision?

	Just shop around.  It tends to be a very low profit margin
type of business, unless perhaps there is only one shop in town and
there are no other towns nearby or something.   Prices are kind of
standard.

>3.  When you buy a coin, how is the price determined?  Yesterday's closing
>    price in the newspaper?  Up-to-the-minute market quotes?  The price they
>    paid/pay when they took/take delivery?

	Up to the second.  For gold or silver bullion you pay a figure
related to the spot price, and for a "name brand" coin like below 
there is a small premium.

>4.  Except for numismatic reasons, why would you buy an Eagle, Maple Leaf,
>    Panda, Krugerrand, etc?  Gold content/purity differs, the Krug's from
>    `evil' SA, the Panda's from `evil' China; anything else?  Are some
>    easier to buy or sell?

	Nah, not much.  Recognition insures you can get rid of it quickly,
but just about any shop will recognize the coins above.   I bought a bunch
of kruggerands some time ago at ~$400-440, when gold was much higher than
it is now, and when I needed the money I had to sell them for ~$360-390.
I bought krands because they looked pretty, and I knew the premium would
come back to me at resale.  It works out about the same.  I think in the
1980s the krand premium was lower because S-African products weren't "hip",
so it was a great time to buy.   I would have bought them anyway as I
like the looks: they are the best looking type of gold coin in town, imo.

>5.  Is there much of a market for Platinum and Palladium coins?  What are
>    the characteristics of those markets (price-wise)?

	???   They are more expensive and rare, and I imagine you would 
have a harder time getting rid of them or would have to pay a higher spread
to the broker.
	
>6.  Why would you buy precious metals?  For each reason, what size of coin
>    would you buy?  I can think of the following reasons:
>        Numismatic - depends.
>        Attempt to make money (including inflation hedge) - buy large coins
>                (to reduce costs), of whatever metal you think will
>                perform best.
>        Diversification - large coins.
>        Gifts - small coins (unless you're generous), of whatever metal and
>                country the recipient would like.
>        Survivalist - small coins (hard to buy a loaf of bread with 1 oz gold),
>                of traditional metals (gold, silver, maybe platinum).


	For investing buy the one oz sizes, the smaller sizes have a bigger
premium over spot and a bigger spread for the broker.   I had some of every
size just to have them, but the 1 oz sizes are best.  This is gold.

	A survivalist would be better buying bullets than bullion, as ammo 
would be a more likely and practical medium of exchange than metals in a 
anarchy situation.  The "nice pretty shiny" value of gold and silver is a 
more common motivator for the average buyer.

	Silver coins are cheap, and there is no reason to go less than
one oz.  There are a zillion generic pure silver coins, with the type
of coin being of no importance except to the whim of the buyer: some
are pretty, some are not.  They are all worth exactly the same, one oz
of silver, which was ~$4 last time it was relevent to me.

	Non bullion coins, ie formerly real money, have value that 
stems from the rarity, but this is more complicated and requires 
some homework on the part of the collector.    If you are halfway
paying attention you will have something that you can turn into money
in a pinch, but don't expect any windfall profits, or even to come out
ahead vs an interest bearing account in a bank.   
	I bought what looked
interesting and seemed to be a good deal, and dumped it all when
circumstances changed my priorities.   A more serious collector/investor
could do better in the long term, but I see this as more of a hobby than
anything other than a marginal type of investment.   

Re: Why Gold, why K-rands? 
	They are pretty, and I figured I couldn't loose money on them.
This is sound thinking if you know you will be able to hold on to them
until market conditions suit you, but if you need cash then you have to
take what the market offers.  Gold has gone down quite a bit in the last
decade, and I can't say where it will go in the future, but I imagine it
will be relatively stable in the long run.

>        You like precious metals - ?
>    Does this make sense?  Any other reasons?

	Nice pretty shiny toys.  You can take your coins out and play
with them, klink them together, organize them in piles by date and type,
roll in them, etc.  Try this with stocks.  It's no fun.

Jim Del Vecchio
Newsgroups: misc.invest