If you’ve never purchased gold before, your first purchase can be nerve racking. How do you know which dealers you can trust, and when is the best time to buy? This post provides advice about how to buy gold online from my experience as a gold enthusiast.
What to Buy: Gold Coins or Gold Bars
Where to Buy Gold
When to Buy Gold
What to Buy: Gold Coins or Gold Bars
The format of gold you decide to buy can depend on your reasons for buying gold. If you’re more of a collector, you might prefer to buy gold coins. I advise avoiding numismatic coins, however, because the price of a numismatic coin is highly prohibitive, and you really need to be an expert collector to know what you’re doing when it comes to numismatic coins. If you’re new to precious metals, you can identify a numismatic coin by comparing it to the prices on my Gold Coin Prices table. If the price is far greater than similar coins you find there, it’s probably numismatic or a scam.
If you want to maximize wealth preservation, you probably want gold bars because they have lower premiums. In fact, the bigger the gold bar, the lower the premium.
Where to Buy Gold
Deciding where to buy physical gold coins and gold bars (gold bullion) is an important decision. After deciding what you want to buy, go to my Gold Coin Prices table or Gold Bullion Prices table, find the item you want to buy, and click the arrow at the top of the column to sort by price. Then, check the gold dealer ratings–indicated by the stars under each dealer’s name–to determine which dealer has the best combination of low prices and a good reputation. You should consider other criteria such as:
The gold dealer’s location.
How long the gold dealer has been in business.
The gold dealer’s payment methods, return policy, and buy-back policy.
Reduced pricing for different payment methods. Note that you can find some of this information on my dealer review pages.
If you’re new to precious metals, you might have read about paper gold and wondered what it is. Paper gold is not physical gold. Paper gold is a piece of paper, or digits on a computer, acting as a substitute for physical gold. Paper gold is usually traded in exchange-traded funds (ETFs) or futures markets. In a futures market, speculators bet on the direction of the gold price. They do not produce gold or use it. They cannot deliver gold to a buyer, nor do they take delivery of the gold. They merely try to profit from a change in the gold price. This mechanism can provide price stability for producers and buyers, but the problem is that there is more paper gold than physical gold in existence. In fact, it is believed for every ounce of physical gold, there are 200 ounces of paper gold. What happens if consumers try to take delivery on more gold than there is in paper existence? Pop goes the weasel!
The Money as Debt video series by Paul Grignon explains how the banking system works in simple terms. He covers a brief history of money and shows how the current fractional-reserve banking system is just a new twist on one of the oldest tricks in the book.
There is a lot of buzz about the gold standard in the news these days. Neocons, wanting to grab Libertarian votes, like to talk about the gold standard. Financial outlets like Bloomberg and other MSM are talking about the gold standard too. Although this is a small step in the right direction, a “gold standard” is actually a rigged standard.
When people hear the phrase, gold standard, they imagine a system where the dollar is backed by gold. Unfortunately, this is only partially true. When the government speaks of a gold standard, they are referring to a system where the government ties the dollar to gold and (this is the bad part) specifies the price of gold. It’s all about control. You can guarantee any future attempts to create a gold standard will be rigged against us.
To be fair, a gold standard is better than pure fiat currency. It does keep government spending in check better than fiat, which the government can borrow from the Fed at will at your expense. In a free society, however, people would be free to use whatever medium they choose as money. I would choose gold and silver.
Here’s a great chart from the Cato Institute, which depicts 56 cases of hyperinflation in modern times. Hungary wins the prize for having the highest monthly inflation rate of 4.19 X 1016% -that’s 41,900,000,000,000,000% or 41.9 QUADRILLION PERCENT.
I think one of the more interesting points in the table is the time required for prices to double. Can you imagine the price of food doubling ever day? How about every 15 hours?
Many people who don’t understand the concept of sound money say you can’t eat gold. In fact, in just about every discussion on the internet concerning monetary collapse, there is always at least one troll saying you can’t eat gold. Guess what: you can’t eat paper money, stocks, or ETFs either. But I bet if you live in Zimbabwe, you can get a lot of eggs for a silver coin. And the next week, you can buy the same amount of eggs for a silver coin. However, if you’re using Zimbabwe dollars, you might need an extra wheelbarrow of paper dollars to buy the same amount of eggs you purchased the week before.
Thank goodness the central bank of Zimbabwe printed one-hundred trillion dollar bills, so Zimbabweans no longer have to carry their money in barrels, like the Germans did in 1923.
On the other hand, the Germans could use their worthless, paper money to keep the kids entertained…
…or heat their homes.
Note, by the way, that when speaking of the German case of hyperinflation between June 1921 and January 1924, Germany is often referred to as the Weimar Republic. To clarify: The Weimar Republic was not some obscure neighbor or German annex; the Weimar Republic was in fact Germany. The Weimar Republic is simply a name historians use to indicate a point in time (in 1919) when Germany changed its form of government.
Here’s a fantastic video series about a secret message Stanley Kubrick has hidden in the movie, The Shining. Not only does the creator of these videos make keen observations about the movie; he also presents great historical information about the decay of the US monetary system from the gold standard to the worthless fiat it is today. Enjoy!
The US dollar is the reserve currency of the world. A reserve currency is a currency that is held in significant quantities by many governments as part of their foreign-exchange reserves. A side-effect of being the world’s reserve currency is that whenever a country purchases a commodity, they do so using dollars. So when France imports oil, they do so using dollars; they have to buy dollars in order to buy oil. In a sense, the dollar is the US’s largest export and is one reason the US hasn’t collapsed already. The dollar’s days as the reserve currency are numbered, however, as this chart shows:
Most gold that is traded on the market isn’t actually gold; it’s paper or digits on a computer. In the same way your bank does not actually hold your savings in cash in a vault, gold brokers do not actually own all the gold that they trade. In fact, for every ounce of physical gold, there are at least 200 “paper” ounces.
Besides the obvious moral implications of trading something that doesn’t exist, this causes other problems. For example, it allows the true price of gold to be manipulated more easily. Also, what happens if, for any number of reasons, too many people want to take possession their physical gold? Recently when MF Global went bankrupt, Gerald Celente, and countless others lost over $1.6 billion when 33,000 client accounts simply “vaporized”. So let that be a lesson for you: if it’s not in your hand, you don’t own it.
To devalue a currency, like the dollar, means that the value of the currency decreases. In the case of the dollar, we call this dollar devaluation. The value of a currency is also referred to as purchasing power. The more a currency is devalued, the less you can buy with it because the purchasing power decreases.
How much has the dollar devalued since 1913
The graph below shows the purchasing power of the US dollar since 1913. 1913 is when the Federal Reserve, which is actually a privately-owned central bank, took over the US banking system. As you can see, it’s been pretty much downhill since the Fed took over. In fact, the dollar has lost over 96% of its value. That means today’s dollar would be worth less than 4 cents back in 1913. How much longer will the dollar maintain its reserve-currency status at this rate?
How does the Federal Reserve devalue the dollar? By printing more money. Printing more money causes monetary inflation. That means there are more dollars in circulation, but just because there is more paper money floating around, that doesn’t mean value has been created. All you really get is price inflation. Here’s an extreme example: Let’s say the Federal Reserve just gave everyone in America $1 million. Wouldn’t that be great if everyone in America became a millionaire overnight? Unfortunately, nothing would change, except prices would increase. Think about it. How much would you have to pay the plumber to come to your house, if he’s already a millionaire?
Unlike paper money dollars, which can be printed out of thin air, gold does not lose value. In fact, gold doesn’t really go up or down. When gold goes up, it really means the dollar is going down and when gold goes down, it’s actually the dollar getting stronger (increasing its purchasing power). So by keeping a portion of your savings in gold, you offset the losses of your dollar being devalued by the Federal Reserve and reckless government spending. When you buy gold, silver or other commodities that resist inflation, it’s called a hedge against inflation.
When the government creates inflation statistics, they use all kinds of trickery such as substitution and hedonics to massage the numbers to make themselves look good. Sometimes they even change the rules openly, but there are always people who keep track of the real inflation numbers.
If inflation was measured the same way that it was in 1980, the rate of annual consumer inflation in the United States would be well over 10 percent. In other words, if you have federal reserve notes (aka dollars) in a savings account earning a whopping 0.05% interest, you’re actually losing over 10% of your savings every year!