I’m always looking for ways to invest. Lately gold has gone up a lot from $300 per oz a few years ago when all the countries were selling off their gold reserves up to $400 per oz now. So I was wondering how you can buy gold even though I’m not really seriously considering it (Motley Fool points out that if you bought $1 of gold in 1802 that today it would be worth $0.98 adjusted for inflation (however with the US on the gold standard, the value didn’t change by much until the 1970’s when the US finally let the currency float; it’s probably not fair to compare stocks and gold prior to 1971; US bonds would be worth $304; regular bonds $952; and stocks $599,605) but I wanted to know how it would work.
It’s hard to just go out and buy gold without paying a big premium. A lot of places want a 10% premium and will charge premiums when you want to sell the gold too. I found a place called Bullion Direct that seemed to be pretty fair, it is a marketplace for buyers *and* sellers (most places just want to sell to you). It charges only 1% in transaction fees and ships to you for only $5.95 plus actual UPS rates so you can then bury it in your back yard (or they will store it for free). Here’s what I wrote to myself:
BullionDirect is kind of an Ebay of gold trading. They have a market of buyers and sellers of all metals broken down by metal, brand (e.g. American Eagle, Kruggerand), weight ($50-1 oz, $25-0.5 oz, $10-0.25 oz, $5-0.10 oz for American Eagles), and sometimes specific by year. They show you all the sell orders and all the buy orders in the queue (which isn’t much) with bids always below the asking prices. You can enter a bid or sell your gold. If you are buying at an asking price then the transaction is executed immediately. I think a lot of the buy and sell orders are placed by Nucleo itself, so I’m not sure how big their market is.
They charge 1% and store the gold for free. Or you can have it shipped for $5.95 plus UPS ground rates. They also have catalog sales where they will sell to you at current asking rates but then you must take delivery.
Pure gold coins: Canada Maple Leaf, Australian Kangaroo Nugget, Vienna Philharmoniker, Chinese Panda
22k gold coins (weigh more than 1 oz so they stil have 1 oz of gold; more durable than pure gold): Krugerrand, American Eagle, Britannia
It took ten years, but eventually I bought some gold.
In July 2015, Bullion Direct filed for bankruptcy. Many people bought gold from them and had it delivered, but some left it in storage with them. Those people’s gold disappeared in 2015. I really wish I had bought a bunch of gold when I first wrote this blog entry in 2004 while gold was $400 per ounce (it is $1200 now), but I’m glad I didn’t leave it with this company.