How to Vet Gold IRA and Gold Investment Companies
If you are trusting your hard earned investment or retirement funds with a bullion dealer, you want to make sure that firm is a trusted and reliable source. Gold investment companies should provide a physical office address (no PO box), email contact and phone number with office hours.
Questions to Consider Before Opening a Gold IRA:
- How long have the gold investment companies been in business?
- What is the gold investment company’s track record?
- Are there independent ratings/complaints?
- Are there alerts from consumer or government regulatory agencies about the firm?
- Are they based in a country that allows for legal action if necessary?
- Is withdrawal or sale easy?
5 Tips to Ensure a Your Gold IRA is a Smart Move:
- Avoid penalties and fees by not breaking IRS guidelines
- Do not purchase gold with less than 99.5% purity
- Hold your Gold IRA to maturity
- Make sure coins are minted at an authorized facility
- Use a custodian and storage facility you can trust
Fees for Buying and Selling Precious Metals:
As with any financial product purchase, you should know about any commissions, transaction fees or purchase premiums involved. These fees will vary from firm to firm and if are not stated on their website, you may have to ask their representative.
For the most part, lower premiums will be charged on larger bars compared to coins. Similarly, fees for selling your precious metals holdings would be lower compared to coins, etc.
There can be other costs when buying precious metals from gold investment companies, including ongoing management, storage, delivery, insurance, administration fees and even currency exchange. These fees vary from product and dealer and are often figured as a percentage of your precious metals account holdings.
Consult with your tax adviser, but any gains from your Gold IRAs could be taxed with capital gains or income tax like your other investments.
Storage fees differ from Gold Investment companies as well and are based on the products you invest in. Vault or segregated storage will be more expensive and a preferred method by serious investors. Costs for pool allocated precious metals will be lower.
Some Internet Investment Gold companies are regulated but many are not and, in particular, are not regulated as investment services. This is often the case in new markets and means that investors need to take extra care in deciding which providers to use.
In many jurisdictions, customers of regulated investment services are protected by investor compensation schemes in case the investment firm fails to return the investor’s assets.10 Claims typically would arise if there is fraud or other administrative malpractice or when an investment firm is unable to fulfill its obligations as a result of operational errors.
However, even unregulated Internet Gold Investment companies may conform to voluntary standards, industry codes or sound practices. Gold providers that adhere to regulatory or voluntary
standards can provide additional safety in terms of both corporate governance and internal controls. Banks and payment service providers, for example, tend to implement ‘the four-eyes principal’ for activities that are considered sensitive. This means two people have to approve an action before it is taken, which can decrease the risk of operational errors or fraud.
Are the expenses other than that?
Ongoing fees are common with Internet Investment Gold products, comparable to management fees for investment funds. These fees, which are often charged every month, usually cover the costs of storage, insurance, and administration. They are usually computed as a percentage of the value of your gold holdings.
Storage costs vary depending on the product you choose. Pool-allocated gold products, in which bars or coins are assigned to a group of investors, typically have the lowest storage costs. Because they require more space and effort, segregated storage or safety deposit boxes in professional vaults are more expensive. Nonetheless, many investors favor this type of storage.
Other fees may apply to Internet Investment Gold products. Physical delivery is usually charged by providers, and currency exchange may also be charged.
Gains from Internet Investment Gold products are generally taxed in the same way that other investments are, so they may be subject to capital gains tax or income tax, for example.
Significantly, investment gold is exempt from VAT in many jurisdictions, with some exceptions. Before engaging in any transactions, you should check local taxation laws and consult with your tax advisor.
Gold is a one-of-a-kind investment asset, and Internet Investment Gold allows you to take advantage of many of its special features. However, Internet Investment Gold provides opportunities as well as risks, like any investment. As such, if any guaranteed or excessive returns or risks-free capital preservation are pledged, you should seek impartial information on the potential performance and be skeptical. You should also make sure that this investment type, amount and gold investment companies are appropriate for your specific goals and risk tolerance.
How to Buy Gold and Silver
Silver coins, junk silver coins etc. is an excellent, low budget way to own these precious metals. By taking delivery on your gold and silver, you have several advantages.
• There is never any question how much actual silver or gold you own.
• You have complete control of the metals and can sell any amount at any time you want.
• It is one of the least inexpensive ways to own these precious metals.
If you take possession of your gold and silver, you should keep the metals in a safety deposit box at a bank or invest in a good home safe, or both.
Storing of Precious Metals at Home – Dangerous!
If you would rather store your precious metals (with a company that offers that service), look into bonded and insured silver and gold vaulting options.
But be very careful! Make sure you have a rock-solid company to store your gold and silver. There are unscrupulous storage companies where people have lost a great deal of their holdings.
Before considering this option, please read the following article about the bankruptcy of MF Global and how they confiscated their customers’ precious metals.
Trustee to Seize and Liquidate Even the Stored Customer Gold and Silver Bullion From MF Global
Numismatics – How to buy gold and silver
A numismatic coin is a collector coin that has a value in significant excess of the base metal. When you purchase these metals, you must pay:
• The cost of the silver.
• The dealer’s premium.
• The cost of the numismatics premium.
These costs can be very high. Think 30-50% or more. Some dealers can be unscrupulous and charge much more of a premium than the coins are worth.
When you decide to sell your numismatic coins, you are at the mercy of the current desirability of the coins. You might make a profit, but you might not.
Think of it this way. If the economy takes a dramatic downturn, people will need money to pay for basic food and rent. Many people will sell their numismatics (at whatever price they can get) to pay their bills.
Selling for a loss places a sizeable downward pressure on prices. The numismatic premium may drop dramatically and be near the price of the bullion gold or silver.
Consequently, you will get more bang for your buck purchasing gold and silver bullion rather than purchasing numismatics.
Unless you are an expert at numismatics, there are significant pitfalls to purchasing silver and gold this way. Not Recommended.
Gold and Silver ETFs
When you invest in Exchange Traded Funds (ETFs), you do not own the silver. Fund managers contract with a custodian to hold your silver in a vault. Custodians are usually large international banks serving many different customers.
The precious metals are usually not moved around during buying and selling. The title to the gold and silver bars is transferred from sellers to buyers by book entries on massive computers.
There is a belief among some metal experts that silver and gold ETFs may hold less than the amount of precious metals they are supposed to own. If we have severe economic problems, there may be a cause for significant concern. Although there are concerns for the long term, relatively short term ETFs are one way to consider making money in silver and gold.
Silver and gold stocks
Owning silver and gold stocks in mining companies is a common way people invest in silver and gold. You have moved up the supply chain significantly and are now in the stock market.
If you study stocks carefully and feel comfortable investing, this is another option. However, if you invest in wealth preservation for challenging economic times, this is probably not a good strategy.
More ways on How to Buy Gold and Silver
The more exotic ways of buying silver and gold are:
• Leverage accounts, futures and options – Leverage accounts, futures and options are financially risky for most investors and even for the most experienced ones. Leveraging is not recommended unless you are very knowledgeable in this area.
• Pools and Certificates – Purchasing pools and certificates make you a creditor of the bullion bank storing your precious metals. Your gold and silver are held in unallocated storage, which means that your metals are commingled with everyone else’s metals. When you buy these pools and certificates, the bank becomes the legal owner of the precious metals.
If the bank gets into financial trouble, it could sell your precious metals to stop a run on the bank. Because there isn’t deposit insurance on precious metals, they aren’t covered in case of a band loss. Deposit insurance is only suitable for currency. Not Recommended – Very risky!
Where to Buy Gold and Silver There are two primary places where to buy gold and silver. You can purchase from coin dealers or online. This page addresses both. Silver and Gold Coin Dealers Coin dealers are excellent places for purchasing and selling gold and silver. There are usually several coin shops in every major city. Before determining which coin shop (or coin shops) to purchase or sell gold and silver, consider the following.
The coin shop should be in business for at least 7-10 years. Longer is better—especially in these volatile economic times. •
Do comparison shopping when selling gold and silver. Go to several coin shops and ask what they sell gold and silver (and buyback) for. In other words, ask how much you will pay over the spot price. In that way, you can determine where you will get more bang for your buck.
Stay away from numismatic coins. A numismatic coin is a collector coin that has a value in significant excess of the base metal. You will pay a high premium that you may never get back. • Find a coin shop that deals in decent quantities of gold and silver. It’s good to have a selection to choose from.
Know your State Sales Tax for Gold and Silver Different states have different sales taxes. Sales tax are an extra cost on precious metals.
Buying small silver quantities online may not make much sense (unless you want to establish a relationship with a company that offers unique information reserved for their customers). Buying online will require that you pay for shipping, handling and insurance. For relatively small quantities, this can be a significant part of the purchase price. Also, online prices may be higher for gold or silver than from local coin shops.
For large quantities, it might make sense to purchase online. The more significant the amount of your purchase, the smaller the shipping, handling and insurance charges (as a percentage of your order) will be. Also, online companies usually have much more inventory than local coin shops.
As with coin shops, make sure any online company you work with has been in business for several years and has a stellar reputation. Having multiple places where you purchase gold and silver makes sense. It is always good to keep your options open. Someday when you want to sell your precious metals, it is good to have established relationships where you will get fair prices.