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How to Buy Gold Coins At a Bargain Price

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"Adding to your coin holdings is a great way to profit from gold's rise. Still, given recent sharp volatility in the metals markets, it only makes sense to do a little 'bargain shopping'."

We told you how to buy gold coins as an investment back in June, and anyone who followed our guide to shopping the bullion-based gold coin market has netted a nice profit so far.

"Spot gold"—based on the London P.M. fix—has moved up 10% since then, from $1,515 an ounce to about $1,660 an ounce. The most popular government-minted bullion gold coins—the United States Gold Eagle and the Canadian Maple Leaf—have climbed 10.7% from a range of $1,560 to $1,610 to $1,746 to $1,763, depending on the source.

And I have some good news for those of you who have not yet bought gold coins—there's still time to profit.

A number of top analysts see gold testing the $2,000-an-ounce level by year-end and, according to a few, potentially reaching $5,000 an ounce longer term.

Adding to your coin holdings is a great way to profit from gold's rise. Still, given recent sharp volatility in the metals markets, it only makes sense to do a little "bargain shopping".

Due to the overwhelming reader response to our last look at gold-coin buying, we put together this guide so you can find the best deals in the bullion-based gold coin market.

How to Find a Gold Coin Bargain

Bargain shopping in the coin market isn't quite as easy as it is with stocks. That is, we don't know of any major coin dealers who will take "standing limit orders" to buy at a price below the current market. But it is possible to watch the spot gold markets and buy your coins at a discount on days when metals prices suffer large losses.

For example, the London P.M. fix for spot gold on Sept. 6 was $1,895 an ounce and the leading dealers were quoting one-ounce American Eagle gold coins at around $1,970 each. The next day, gold plunged $85 an ounce to $1,810, and the quote for American Eagle coins fell to just $1,882—a savings of around $88 per coin.

Gold coin bargain hunting is possible now that the major U.S. and international coin and bullion dealers have computerized quote systems that link their product prices to current market prices in commodity markets. Some adjust their prices for coins and bullion bars every few minutes, reflecting changing market quotes—unlike a few years ago when many dealers set coin prices just once a day (or even less often), based on the previous day's close. Just monitor the Kitco Inc. "Online Store" web site and watch gold coin prices fluctuate along with the spot gold price. Kitco adjusts prices within seconds of market changes, and continues to update prices for coins and bullion bars after U.S. markets close.

"As long as gold is trading anywhere in the world—in Asia, Europe, wherever—our product prices will be pegged to the markets, and our clients can buy or sell at near-market prices," a Kitco sales representative told me.

Making spot checks of the Web sites for coin dealers Blanchard and Company Inc. and Monex Precious Metals, I found a similar pattern of price updates.

When pricing coins, be aware that the market price for bullion coins and bars normally includes a 3% to 6% premium, which reflects the costs of refining and minting the metals, and also provides the dealers' profit. Less reputable dealers may charge significantly higher.

Price quotes are "locked in" as soon as your purchase order is secured. Don't forget, though, that shipping, handling and insurance fees are added on at the time of checkout.

Also, although sales may be secured via credit card, most dealers won't accept credit cards as payment for bullion bars or coins—and the ones that do will usually charge a fee to offset their costs.

Take these extra costs into account when figuring out your bargain-shopping budget.

The Best Sources for Gold Coin Buying

The most important thing to remember when buying gold coins is to always pick reputable, well-established firms with a proven record of dealing honestly and fairly with their clients.

Some dealers you may want to consider include:
  • Kitco Inc. - With offices in both New York and Montreal, Kitco offers fair premiums and its selection is usually quite good. Its "Bullion Alert Service" keeps clients informed about specific products, inventory availability and changing market prices—with messages sent directly to your computer or your smartphone. Kitco also offers so-called "Pool Accounts", in which your money is held along with other investors' in a gold-backed account, the value fluctuating with market prices until you decide you want to buy specific coins—if ever.

  • Blanchard and Company Inc. - This New Orleans-based dealer in bullion and coins has been in business since 1975, with a roster of more than 400,000 clients. Price quotes are market-linked and constantly updated from 8 a.m. to 5 p.m. Central Standard time. It also offers a "guaranteed buyback" program in which it promises to repurchase any item originally sold to you. The price will reflect the current market conditions at the time you sell.

  • Monex Precious Metals - Founded in 1967 as a rare coin dealer, this Newport Beach, CA, company is a leading dealer in all types of gold, silver and platinum coins and bullion bars, selling both individually and in bulk. It offers financing for precious-metals purchases, requiring as little as 20% down for purchases to get 5-to-1 leverage on your investment. The Monex site also features three-month, one-year, and five-year price charts for its products, as well as detailed, and quite informative, product descriptions and histories.

  • Asset Strategies International Inc. - Located in Rockville, MD, ASI offers gold-storage options outside U.S. borders, which appeals to many Americans concerned about the possibility of another government seizure of hard assets such as the one in 1933.

  • Camino Coins Inc. - Based in Burlingame, CA, Camino has been in business for more than a century, with a long history of expertise in the collectible-coin markets.

  • American Precious Metals Exchange - Based in Oklahoma City, OK, Apmex carries both modern-dated coins and a wide range of pre-1933 classic U.S. gold coins.

Just check out their web sites for details on account opening and specialized services.

For both investors and collectors, it's best to avoid purchasing from privately owned specialty mints such as the Franklin Mint and the Bradford Exchange. These operations produce commemorative and collectible coins as well as other items, most of which have high mark-ups and little after-market value. In many cases, the actual bullion content of the coins is also questionable.

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