« Pleasant surprise on the long drive home | Main | Happy 2011! »

29 December 2010


Mikey McD

Comical: "Inflation - excluding education, healthcare, food, fuel, and utilities – is low." George, you and I must live in a bubble where the cost of living IS going up...

Bumper sticker: Gas was $1.81 when Obama took office

Since inauguration day and since QE 1...2...:

Price of gas is up over 55% since inauguration day

Price of food: http://finance.yahoo.com/echarts?s=DBA+Interactive#chart1:symbol=dba;range=6m;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

price of healthcare: My premiums are up over 19% since Obamacare

Dixon Cruickshank

I have a pic of a sheeple, George I'll send it to you - cute little thing female too.

I'm trying to figure it out myself, gold is high but....

Dave C

Buying physical precious metals is much better than buying shares in the metals, even if the shares can be converted to a physical asset at a later date.

Any one buying physical bullion should be prepared to hold, hold, hold. Bullion brokers have a vigorish (The Vig, or brokers fee) in the 10% range over the spot price. Plus a few percent more for a certificated and serialized ingot. In California, if a single transaction purchase of bullion is under $1500, sales tax is applied. Thus, a 16oz. ingot of silver, using $30 spot per ounce, plus the vig, sales tax and a certificate will wind up costing in the $600 range. This puts the value of your ingot at around $37 per ounce. Put the ingot in your safe deposit box and forget about it for a few years.

Later, if you decide to unload the ingot at say $45 per ounce with a broker you'll get spot less a couple of percentage points. Additionally, the broker will give you a 1099. Thus, depending on your individual tax rate, you will pay a capital gain. However, nothing precludes the owner of the ingot to sell it to a private party and bypass the 1099 requirements.

Buying shares of bullion is riskier. The buyer has to insure he has a reputable broker. Insure the broker will actually purchase the bullion on the day they recieve your funds and not hold the funds for a few days hedging the price will go down. Expect to pay the brokers Vig of 10% up front, plus a monthly account maintenance fee. Later, if you want to convert your shares to physical bullion, you will pay a fee to have it cast in to ingots of your choice of weights, usually around 5%. Or, you can call your shares for cash at spot less a 4-6% transaction fee.

Stay away from buy as you go plans where you send a broker (say) $500 per month and the broker buys the bullion each month in your name. All you are doing is buying the average market whether it goes up or down.

Best bet: Buy physical bullion, put it away and forget about it until you need it.

I am not a bullion broker, I am an investor.

The comments to this entry are closed.