What Some Bullion Dealers Aren’t Telling You
Austin Rare Coins & Bullion was one of the pioneers of online gold and silver bullion coin sales. In fact, when we first began selling gold and silver online there might have been two or three other major online companies that we competed with. Today though, it seems like there is a new gold and silver bullion company coming online on a weekly basis.
While many of these companies offer gold and silver bullion coins at low and competitive pricing, we have found that they are not telling you the whole story regarding gold and silver. In many cases the information that they promote is either intentionally misleading or the person giving that information is terribly uninformed.
Their Low Pricing Comes at the Expense of Knowledge and Insight
Many of these low cost online bullion dealers didn’t even exist when we started selling gold and silver 26 years ago. Because of this, their knowledge and insight into these markets is limited. Making investment decisions based on limited knowledge and insight can prove very costly in the long run. This is evident in their point and click Wal-Mart mentality in selling gold and silver. In fact, many of these companies would rather you never call them at all and almost none of them provide you with a personal specialist to oversee your account.
They expect their customers, many of them who are first time buyers of gold and silver, to be able to look at a website to point and click until they find what they THINK they might need. In many cases these buyers find that when it is time to sell, the products that they chose are in direct opposition to the goals that they set when they originally decided to make the purchase. In short, low-priced online bullion dealers expect their buyers to already be an expert in the intricacies of the gold and silver markets before they have even made their first purchase.
Furthermore, when it comes time to sell, their buy-back or bid pricing isn’t nearly attractive as what their sale prices seem to be. The truth is, generally speaking, a company that might be slightly more expensive when you purchase is likely going to be much more aggressive with bid pricing when you are ready to sell your gold & silver and will likely pay more. What many people later realize is that the percentage gained is the same regardless of the company that you choose.
Knowledge is King
Knowledge, insight and education are the most important attributes to have when making an important investment decision. At Austin Rare Coins & Bullion we believe an educated buyer to be the best buyer. Before the first penny is spent we want to make sure that we have a clear indication of your goals and objectives. Your personal gold and silver specialist will hand-tailor a plan that will help you reach those goals.
A Dirty Little Secret
While many buyers main concern is price, what they don’t realize is that when making a buying decision simply on the cost of a product, in many cases you are taking on counterparty risk that you are likely totally unaware of, especially when doing business with large internet bullion dealers. Just as farmers hedge their crops from natural disaster and weather, large bullion dealers must hedge their inventory against downward price fluctuations in the gold and silver that they hold.
These hedges are usually placed through a broker and then cleared through a clearing house like MF Global, a large firm headed by Jon Corzine that went bankrupt in 2011. In the process, over $1 billion in assets of their client’s SEGREGATED accounts – regulators have said that the funds were simply “vaporized.” Furthermore, when bullion dealers hedge their inventory, their trades are executed on the COMEX exchange, a trading bourse that openly admits to leveraging their gold and silver trading to over 100 times the amount of actual physical metal they have on hand to deliver.
Many investors speculate that at some point COMEX will not be able to deliver the metal that they have promised. If such an event were to happen, those who hold paper contracts, including large bullion dealers, will be locked out of the market and will not be able to access their accounts. This is not the case with Austin Rare Coins and Bullion.
Fact Check: While the online bullion dealer that you may choose to do business with might be a fine and well operated company, what they aren’t telling you is that they have large short positions in gold and silver to protect them from downside risks. While this business practice seems logical, those that send money to such an operation have opened themselves up to counterparty risks in the paper gold and silver markets. Your money could be seized and your order may not be delivered even though it was no fault of the online bullion company at all. This is the essence of counterparty risk and low priced bullion dealers, who all hedge their inventory in paper gold and silver markets, are wrought with it.
Ironically, the same bullion companies that warn you of an impending crash in the paper gold and silver markets are simultaneously heavily vested in the same markets. Austin Rare Coins and Bullion holds no hedges whatsoever, bringing you an extra level of security and added protection from counterparty risks.
Their Claims Regarding Private and Non-Reportable Gold Aren’t True
Most people who enter into the gold and silver markets do so because of the privacy and protection that gold and silver provide that is not available in other asset classes like stocks and bonds. Buying gold does not require a social security number or even a driver’s license number; it can be kept totally private. However, when it becomes time to sell, certain types of gold must be reported by the dealer who bought it from you. If you read the literature from many online bullion companies though, they would have you believe that ALL gold sales are mandatorily reported by the company to which it was sold. This fact is simply not true. Fortunately, just saying something isn’t true doesn’t make it so.
Fact Check: In 1974, when gold and silver investments were again legalized after the gold confiscation of 1933, the Industry Council for Tangible Assets, a trade group for the precious metals industry and the IRS, held numerous meetings. These meeting were held to decide which gold, silver, platinum, and palladium transactions were reportable by the dealer to the Federal Government. This list of private and non-private items has not been changed since it was written.
However, if you rely on the bad advice of many online gold and silver bullion dealers who scoff at the notion that Private and Non-Reportable Gold offers you better protections than other Gold and Silver products, you will be terribly upset when it becomes time to sell. Because of their lack of knowledge or outright lies, it is likely that you will have made the wrong decisions when buying and then be forced upon sale of said products to surrender your social security number and other identifying documents so that the company can send the Federal Government a 1099 on your behalf.
The truth is that there are some items that offer far better privacy protections than others, but if you believe the information put out by many of these companies, you would never know about them. Should privacy be a concern to you, our Austin Rare Coins & Bullion gold and silver specialist can help you devise a portfolio that requires no reporting from a company standpoint when you become ready to sell. This of course does not mean the IRS doesn’t want to know about any profits; it means that we aren’t required to tell them for you.
Their Claims Regarding Numismatic Coins Aren’t True
Many long term gold, silver, and rare coin dealers, us included, tout the advantages of holding a well-diversified portfolio that includes Numismatic Coins that work hand in hand with your bullion holdings. Rare numismatic coins offer advantages that bullion simply can’t offer – they give you greater protection from government confiscation or intervention, they are completely private and over time, depending on the products purchased and current market conditions, generally produce returns in excess of bullion.
However, according to these low-priced online bullion houses, buying numismatic coins does not give you protection from confiscation and should only be bought by experts. In fact, one dealer openly promotes the idea of putting all of your eggs in one basket (bullion only) and watching that basket VERY carefully. We believe this advice to be misguided and just plain wrong. Perhaps they simply don’t know the laws or are woefully ignorant to the protections and benefits one gets by diversifying their gold and silver holdings into numismatic coins.
Fact Check: In spite of what many gold, silver, and rare coin online companies would like to have you believe, there are statutes that protect numismatic coins from government intervention. Their argument is based on the Gold Confiscation Act of 1933 when “rare and unusual” coins were exempt from confiscation. They would have you believe that the term rare and unusual only applies to extremely rare coins whose price is hundreds of times their actual physical metal content – another falsehood.
The truth is that after the Gold Confiscation Act of 1933, there were many gold, silver, and rare coin collectors and enthusiasts that wanted to continue their hobbies and investments but were afraid to do so because of the laws against hoarding gold. These enthusiasts lobbied the government to clarify the term “rare and unusual” and in 1954 were successful in changing section 54.25 of title 31 of the code of Federal Regulations so that it clearly states that: “(b) gold coin made prior to April 5th, 1933, is considered to be of recognized special value to collectors of rare and unusual coin.” And “(c) gold coin made subsequent to April 5, 1933 is presumed not to be of recognized special value to collectors of rare and unusual coins.” Later statutes were added that designated all foreign gold coins minted before 1959 to be rare and unusual as well, but these online bullion dealers don’t want you to know that either.
So there it is in plain English, in statute, and by law – all gold coins dated 1933 and before are considered rare and unusual and therefore would give you much better confiscation protections than owning only bullion. If you listened to 85% of online bullion dealers though, they would have you believe that this simple fact isn’t true.
Your Job as an Investor
Sadly most online gold & silver bullion houses expect you to already be an expert and are either misguided or are outright lying to you regarding the information that they promote. Austin Rare Coins and Bullion would like for you to have all the facts before you invest a single penny. Your job as a consumer and investor isn’t to be an expert in the field that you are investing in. Your job is to find an expert and a company that you can trust, a company like Austin Rare Coins and Bullion. We are a firm with an impeccable reputation and no outstanding complaints with the Better Business Bureau in 30+ Years of doing business.
While a new online bullion company seems to open almost daily, Austin Rare Coins and Bullion has been around since 1989. We have years of experience in the gold, silver, and rare coin business and can provide you information and advice that can prove priceless when trying to maneuver your way around the intricacies of the gold and silver markets.
Put this vast knowledge base and experience to work for you – it’s free! CALL TODAY TO LEARN MORE – 1-800-928-6468
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