About six years ago for some reason I started buying gold and silver coins. Part of the reason was it was a way to diversify my investments, but I guess there are other stupid reasons like thinking the government will collapse, making it a hobby, and liking shiny metal. I knew it was never going to be a good investment, so I never bought a huge amount in terms of the percentage of my investments, though that percentage went up to a higher point than I would have initially liked. The worst investment is silver where you get eaten up by premiums for coins, often $2-$7 per ounce when an ounce is only maybe $16. That could be a 20% premium. And that premium is hard to ever get back since most coins sell back close to the spot price. Gold coins might have a premium of $20-$40 over spot, but the spot is $1400, so the premium is more like 3%. But gold is expensive, whereas you can buy some nice silver coins for $100 and get free shipping.
Before I started buying there was a big surge in prices as exchange traded funds were set up that would invest in physical gold. This made getting into and out of gold much easier with lower premiums and expenses than ever before. I think a lot of people started making those ETF’s part of their portfolios and as the price skyrocketed and you saw “We buy gold” signs everywhere you looked, more people paid attention and bought more and more before it crashed. I love a crash, so that is when I stepped in. But it hadn’t bottomed out yet, dropping a couple of hundred dollars more per ounce. So I bought a little more at the lower prices. And kept buying stupid silver.
So easy to buy, but so hard to sell
With the silver coins, you almost have to sell on eBay and get very uneven prices at auction plus high fees from eBay and PayPal, plus pay shipping, but that can beat selling it back to the online companies that sell the coins for high premiums over spot price and give you barely over the spot price when you try to sell. For instance, I bought some 5-ounce silver America the Beautiful quarters (the size of coasters) for around $100, but some are supposedly worth $150 now, but the online companies still only offer $100 buybacks. Maybe I could sell it on eBay for $140 and pay $10 to eBay, 3% to PayPal, and maybe $5 for shipping to actually get $117 (still better than $100). You are better off buying silver bars where the premiums are lower and then you are making more of a play on the price of silver rather than combining that with a play on rarity and desirability of the different coins (not all America the Beautiful coins have gone up in market price the same amount). With its lower premiums, gold (coins, though you can buy bars too) works more like buying silver bars. You still get nothing of your premium when you sell it back, but it isn’t that much.
In the last year gold has gone from about $1200 per ounce to over $1500 per ounce and I knew I should take advantage and get rid of some gold. Silver has been as low as $14.60 in the last year and is now over $18. Of course, if you bought a silver coin with a $3 premium when silver was $14.60, you paid $17.60, so you barely make anything selling it for the $18 spot price. So I still can’t sell my coins and make anything, but I had a few 10 ounce silver bars I could sell and make money.
I called Provident Metals because they will buy smaller amounts and post their buy prices on their website. I have bought a lot from them. I think a lot of other people had the same idea because I called at 11:30 and, after being put on hold, opted for them to call me back without losing my place in line, and got a call about 4 hours later. I wound up selling them 2 gold coins, 1 platinum coin, and 40 ounces of silver bars. The platinum coin was an Australian coin depicting a platypus. I paid about a $60 per coin premium for platinum, and got almost none of that premium back, though other Australian platinum coins offered premiums of more like $30. So they low-balled the platypus. I can sell more silver later in the year maybe if prices stay high when I have more time to try eBay or selling on collector forums, but 40 ounces makes a dent.
It also weighs about three pounds. And Provident wants you to pack it in a box carefully, then pack that box in another box. You want to wrap each piece so there is no clinking when you shake the box, giving away the contents. It makes for a heavy box, even double boxed, but I thought I could say it was concrete samples if asked. Of course nobody asks, they just take the package. I could arrange my own shipping and insurance (the insurance on a $4,800 package gets expensive!) or pay Provident $21 for a UPS shipping label (another 0.5% loss) including insurance, so I did that. That worked out well because I could print out the label and then take the box to a UPS collection point (not just a UPS Store because of the value) after work, whereas the post office is only open during work hours. Provident makes you ship the box within 3 days or they can charge you a market loss fee if the price of metals goes down (you don’t get extra if the price goes up), but the guy I talked to said I could call and ask for more time if I needed it. I packed the box that night and dropped it off the next night, so they should be happy with the next day dropoff.
It was third day air, but arrived in two days and I received a notice from Provident (recently bought by another big online metal retailer, JM Bullion) that they had received the box. Assuming they can find all of the coins and bars in all of that packaging, they are supposed to deposit money in my bank account 3 days after they receive it. I read one story online where a guy shipped them an antique gold coin, but they didn’t like the condition it was in, so they didn’t pay him for it, and charged him $20 to ship it back to him. All of my stuff was in really good shape except I didn’t give them the original plastic capsule the platypus came in since they were pricing it like surplus anyway.
Meanwhile, if I had just bought stocks over the last few years like I usually do, the investment would be up 80% over the last four years and I could cash in mutual funds without any front or back end fee.
Yesterday I got an email saying they had approved my payment, but not how much. This morning my bank account showed the full amount as processing, so everything seems to have worked out fine. Meanwhile the prices have gone down a little, so maybe that was a good time to sell.
I told myself in January that if the price of gold went up to $1800 I would sell some more. It hit that last week, but I didn’t notice. Then it hit again today, so I called Provident (really JM Bullion at this point) and sold two of my remaining coins and paid for a shipping label again. Pretty quick phone call and I dropped the box off at a place within walking distance. On one coin I made about 30% and on the other (bought when prices were lower) I made 50%. Meanwhile the price of silver dropped, but has climbed up to about where it was in January, so it didn’t make sense to sell any of that. I don’t have much gold left, but still entirely too much silver. Maybe I could try eBay for the silver now that I have more free time.