[previous] - - [1] - [2] - [3] - [4] - [5] - 6
Why Gold Should Be Avoided As An Investment Tool
Part 6 of 6
by James Nelson, originally published June 2007
Addendum:
How Can the Average American Own Gold?
Gold is relatively easy to own. The simplest method, if you have a brokerage account, is the "streetTRACKS Gold Trust ETF." It's New York Stock Exchange (NYSE) symbol is GLD. Simply purchase shares of GLD and the value of those shares will track the price of gold exactly. The biggest advantage of the Gold Trust ETF is that since you don't physically own the gold, there are no storage fees.
Some argue that the whole point of owning gold is to have a hedge against complete economic breakdown. If Wall Street and the banking system collapse, it might be impossible to get to the assets set aside in the Gold Trust ETF. Those that hold to this view prefer holding physical gold (gold coins and ingots). Coins are typically 1 oz. in weight while ingots are typically 5 or 10 oz. Coins are readily available from reputable coin dealers, and ingots are generally available from online dealers, although it makes no sense to purchase anything except coins if you plan on keeping them yourself. If you purchase ingots, its best that they never leave a certified vault (as with BullionVault.com, below), because if ingots are ever removed from the vault, the gold has to assayed for purity (that is, melted and tested) before it can enter the official gold market again. Because of the work involved you lose a lot of money to expenses. Gold coins have a buy price and a sell price. You purchase coins at a discount to the current price of gold. (This is the buy/sell price, similar to what you find with the price of stocks.) Different dealers offer different discounts, so purchasing gold coins can be daunting to the inexperienced. For those who are interested, but a bit overwhelmed, there is a list of very reputable dealers listed below.
One method of investing in Gold is to use your IRA. Gold and silver coins minted in the United States (Gold and Silver Eagles) are recognized IRA investment instruments. Talk to your tax professional for guidance on how to do this.
For those that prefer owning actual, physical gold but don't want want it physically in your possession for security reasons, I believe the best alternative is an account with bullionvault.com. Run by renowned gold trader Paul Tustain, it offers, for the first time, a way that average individuals can own gold. BullionVault.com is located in London and they work with Brinks Security who manages three of the largest private gold depository vaults in the world in New York, London, and Zurich. The big advantage for Americans is that the account is held in London and the gold, if you so choose, can be held in Zurich. This creates a great deal of privacy and safety if the U.S. government and its financial infrastructure should ever fall apart. The other big advantage of BullionVault.com is that small investors are welcome.
If you're possibly interested in a BullionVault account, please click on the link below. If you do choose to open an account, by following the link, I'll get credit for a referral and a bit of cash in my account. Thanks.
Working with BullionVault.com is completely safe. Because the Brits and Swiss have higher standards of accountability in the banking than their American counterparts, it is actually safer to bank in England than in the U.S. (in my opinion). But the American financial industry remains amazingly arrogant about the assumed superiority of the American system. I have an account with BullionVault.com and in order to fund it, it was necessary to wire money from my bank to BullionVault.com's bank, which is Lloyds Bank in London. (This is the same group that insures everything from super tankers to skyscrapers to the fingers of famous violinists worldwide.) I have an account with Wells Fargo, and since they are one of the nation's largest banks that does a great deal of overseas and international business, I decided to wire the money through them. I assumed they were used to things like this.
The first banker I saw was shocked by my desire to send money oversees and called for a bank officer to talk some sense into my head. After a whispered discussion between the two I was escorted into the bank officer's office. "Are you sure you want to do this? Do you know anything about this bank? It might be a shell corporation running a scam." (!?!?!?) It's Lloyds of London for pete's sake. I wanted to say, "Listen here you arrogant twit, I would trust Lloyds with my money far more than Wells Fargo, which has derivatives related to the subprime market coming out of its wazoo!!" But I didn't, I simply pointed out that Lloyds is older and has higher financial standards than Wells Fargo. She finally agreed and wired the money.
There is another, somewhat obscure option. Some people with long memories and a distrust of the U.S. government argue that the only safe way to keep gold is in the form of collectibles. For many years it was illegal for Americans to hold gold up until the 70s, when this law was changed. Those concerned with this past precedent warn that those who hold regular gold coins (whether American, Canadian, South African, etc.) are in danger of having them confiscated by the government because the sales of all gold and silver currency have to be recorded and reported to the government. It is not my purpose to debate the merits and problems of such a view. I will only say that if this is a concern of yours, one solution is to hold collectibles (that is old coins) which are not considered currency by U.S. law and are therefore not subject to the reporting requirements of holding recently minted coins.
Purchasing collectible coins is a very daunting task for those who have not done it. I do not own any gold coins, so I'm out of my
expertise here, but renowned investment and collectible guru, Steve Sjuggerud recommends the following dealers:
Burt Blumert
Camino Coin
P.O. Box 4292
Burlingame, CA 94011
Phone: 800-348-8001 or 650-348-3000
Fax: 650-401-5530
E-mail: burtblumert@comcast.net
Van Simmons
David Hall Rare Coins
P.O. Box 6220 Newport Beach, CA 92658
Phone: 800-759-7575 or 949-567-1325
E-mail: info@davidhall.com
Dana Samuelson and his team
American Gold Exchange
P.O. Box 9426
Austin, TX 78766-9426
Phone: 800-613-9323
E-mail: dana@amergold.com
Rich Checkan or Glen Kirsch
Asset Strategies International, Inc.
1700 Rockville Pike, Suite 400
Rockville, MD 20852
Phone: 800-831-0007 or 301-881-8600
Fax: 301-881-1936
E-mail: rcheckan@assetstrategies.com
And finally, don't take my word for it. The best book on gold is The Power of Gold: The History of an Obsession by Peter Bernstein. The World Gold Council is also an excellent source of information. They can be found at www.gold.org.
Copyright © 2007 James E. Nelson (Just Another Jim). All Rights Reserved.
You are free to distribute as long as attribution and web address is included.
Site support by C T E K