Understanding The Price Of Gold And Silver And The Best Way To Buy Gold and Silver

Many investors these days are saying to themselves, “Should I buy gold” and “Should I buy silver”? They instinctively know that they should, but many don’t know the rules of the game. Some are being set up to fail without knowing anything about gold and silver coins, gold and silver prices, much less how to buy gold and silver.

Some brokers would have you believe that they are one of only a few sources to buy gold and silver bullion from. When you stop and look around, you will find that gold and silver can be bought from a practically endless number of places. However, they are not all good options so you need to know the pros & cons of the various options.

These days your main options for buying gold and silver are; local coin shops, online dealers, eBay, Craig’s List, pawn shops, coin shows, banks, etc. So, where’s the best place to buy from?

Here is a little-known, but very important secret that should help you make up your mind. When the brokers buy their inventory from giant wholesalers, most of the wholesalers offer “Volume Pricing”.

The little guys who don’t buy much, pay the highest prices. The big guys who buy a lot, pay the lowest prices. That makes sense, right?

So, if you buy from the little guys… like your local coin shops, etc… it’s pretty simple to figure out that you are going to pay more… because they have to pay more for their inventory to start with. So if you want to pay less, you should buy from the big guys, right? Well, maybe, but not so fast.

Most of the big guys also have big offices, big staffs, and big overheads. Many of them are also advertising on TV, radio, the internet, etc. 24/7. Some of them are spending millions and even tens of millions of dollars to do all of that advertising. Want to guess who pays for that advertising? That’s right grasshopper… you do!

The big guys have to build in these costs and charge large margins to be able to pay that huge advertising bill, not to mention the other cost and overhead of running their business. I know lots of people who would never even think of buying from anyone who advertises on TV because they know how much advertising costs… and they know those costs are passed along to their customers.

As far as eBay, Craig’s List, coin shows, and pawn shops go, you have to be careful here. Some of these are very small, one-time sellers with limited offerings. Yes, it’s possible to get some good deals here and there from time to time if you know what you are doing, know what to look for, and know how to negotiate.

Sometimes you can get good deals from unsophisticated sellers who don’t know the value of what they have, or from someone who is in a financial pinch. However, you can’t count on them for a consistent source of metals, or high-volume purchases of metals.

If you are looking to buy quite a bit of metal and/or if your time is valuable, it’s hardly worth the effort of plowing through all of the ads and running all over town to find a deal on a few coins here and there.

It mainly comes down to a matter of what your time is worth and your sophistication level. From time to time I get calls from people telling me about the amazing deal they got on this coin or that bar. They go into this long story of what they did and how they did it and all of the back and forth they did, driving all over town…and they managed to buy 5 coins at spot price. Whoopee.

Good for them. They saved $25 but probably spent way more than that on gas, not to mention the cost of their time. If you enjoy that type of thing, then there are certainly a lot worse things that you could do with your time. It’s just not for everybody.

Plus, if you order a few coins from a one-time guy on Craig’s List or eBay, or the guy at the coin show, and if you have a problem… good luck with that.

How about buying from banks or directly from the US Mint? Well, that’s certainly an option. It’s very safe. However, be prepared for major sticker shock! If getting the most for your money is important to you, then you should know that you are going to pay a very high premium price from these sellers.