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Unfortunately, many
people new to this field are missing the boat, having been
dissuaded from this logical choice by numismatic coin marketers,
who thrive when new and relatively unsophisticated buyers come
into the market for bullion. Such newbies are always ripe for
being talked out of their instinctive first choice and sold
instead the “magic beans” which are numismatic coins.
The quest for gold during periods of uncertainty is natural. Who
doesn’t want gold when the stock market, banks, and even the
world fiat currencies themselves seem so vulnerable? For
thousands of years, whenever what passes for money becomes
debased by government fiat, then the actual money of value -
gold and silver - go into deep hiding. The more the currency is
degraded, the more people will pay for the protection afforded
by direct ownership of precious metals. In fact, the price of
these metals, expressed in fiat currency, is a direct measure of
the market’s faith in that currency.
Take gold, for instance. As recently as the year 2001, gold
traded as low as $256, and faith in the dollar was high. In
March of 2008, gold traded at four times that rate when it went
over the $1,000 mark for the first time. Obviously, the
perception of the value of a dollar underwent a dramatic
recalculation in the eyes of the world gold market.
And that quadrupling of the gold price occurred before our
Recent Economic Unpleasantness, an event that has caused a lot
of people with money to reassess exactly what they should be
doing to protect their assets. Since September 2008, demand for
physical precious metals, in the US and Europe particularly, has
increased some eight- fold.
In Europe, where gold has been a part of the monetary culture
for hundreds of years, one simply walks into one of the larger
banks to purchase gold bullion bars and coins. Today’s citizen
of Europe wanting to trade out of Euro, pounds, or Swiss Francs,
can acquire gold, easily and routinely, often by dealing with
the same bank that his or her grandparents did.
Unfortunately, in the US we do not have the convenience of such
an established and trustworthy retail structure for purchasing
gold. Therefore Americans are more or less on their own when
they’re looking for the shiny yellow stuff at a decent price.
Some may be lucky enough to find a well-stocked local coin and
bullion store, but outside of the largest cities, most often
what is found are mom-and- pop shops of limited inventory and
inconsistent pricing.
So, while searching for gold bullion, through the Internet, or
print ads bearing enticing come-ons and toll-free numbers, the
average gold- seeker in the USA will immediately encounter
salespeople who have their own agenda – that is, selling you the
high-priced collectors’ items known as numismatic coins.
But why, you might ask? I’m not a numismatist - I only heard the
word for the first time last week, and I can’t even pronounce it
correctly. Why is it that every big gold dealer whose number I
dial, wants to make me into a coin collector?
Why numismatic coins? For the same reason that early 20th
century bank-robber Willie Sutton gave when asked the question,
Why do you rob banks? “Because that’s where the money is.”
The money we’re talking about here, of course, is yours. You and
countless other Americans with a budget to spend on precious
metals, have been and will continue to be showered with
‘opportunities’ to purchase these antique collectors items at
markups anywhere from 30% to 200% or even much more over their
actual precious metal value.
To these marketing firms, you are the perfect target for the
numismatic hustle. You have expressed an interest in gold, which
means you have money. You are probably concerned with privacy
and secrecy about buying gold, so you are likely to react
favorably to a sales pitch that stresses those points. You are
probably not completely conversant with laws concerning private
ownership of precious metals, so a few hints or suggestions from
a salesperson may be all that you’re ever going to learn before
parting with your cash for something made out of gold or silver.
And you probably assume that coin purveyors, like stockbrokers,
registered financial advisors, and bank officers, are subject to
ethical and transactional regulations that ensure that you as an
investors will be treated ethically and truthfully.
So when someone from a national firm in the precious metals
field tells you something, you assume that he or she is has an
obligation to tell you the truth. Unfortunately, sometimes what
you get is a half-truth, and all too often, not even that much.
The real truth: Many firms posing as bullion dealers are
actually fronts for numismatic sales marketing teams, and a
danger to your wallet. Their sales weapon is fear: fear of
confiscation, taxation, registration, and reporting of your
activities to federal agencies. Inevitably, whenever
high-pressure sales tactics are used, truth get thrown out the
window!
Next week we will publish an article listing some of the more
egregious baloney and tall tales put out by those who market
‘collector coins’ to people who contacted them simply to buy
gold bullion.
Coming May 11: Oh, the Whoppers You Will Hear!
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