choosing a gold firm · 2015-02-28 · bullion coins and bars and bullion-related historic gold...
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Choosing a Gold FirmRight turns and wrong turns on the road to gold ownership
by Michael J. KosaresThe ABCs of Gold Investing - How to Protect and Build Your Wealth With Gold
2BONUS ADVISORY
What you need to know before you buy your first ounce of gold
Copyright 2015 by Michael J. Kosares. All rights reserved. No part of this
publication may be reproduced, stored in a retrieval system, or transmitted
in any form or by any means, electronic, mechanical, photocopied,
recorded, or otherwise, without the prior written permission of the author.
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How to choose the right gold firm
Some might consider the precautionary checklist offered below a matter of
common sense, but in our experience it is surprising how many prospective
gold owners simply dive-in without much in the way of a consumer inquiry.
Your choice of a gold firm can mean the difference between success and
failure as a gold owner.
Choose the right firm and it will help stay
the course on protecting your assets from
economic uncertainties. Choose the wrong
firm and you can be easily diverted from
true gold ownership through a maze of re-
lated but speculative and/or derivative in-
vestments.
High-end numismatics, leveraged precious metals accounts, graded (slabbed)
contemporary bullion coins, off-brand bullion bars and jewelry items, gold
stocks, precious metals futures contracts or options, and exchange traded
funds (to name a few of the wrong turns often taken by first-time investors)
– all have a gold component as part of their profile, but are no substitute
for physical coins and bullion which you own outright.
Only gold coins and bullion meet the four basic criteria for safe-haven status
– liquidity, portability, tradeability, and "appreciability" in direct correlation
to the international spot gold price. Inherently there is nothing wrong with
owning any of the other investment vehicles just listed as along as you are
mentally and financially prepared to shoulder the risks. If you are interested
in owning the precious metals for asset preservation purposes, it follows
you would be best served by a firm specializing in coins and bullion for de-
livery.
The following are basic guidelines for choosing a gold firm. Apply the fol-
lowing tests to your choice of a gold firm and we are confident you will get
off to a strong start. We are confident too that USAGOLD will grade at or
near the top of your list.
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Experience
Choose a gold firm that has a solid track record. Ten years in business is
good; fifteen years or more is even better. As gold continues its secular bull
market, opportunists are sure to enter the market, resulting in numerous
start-up gold firms that often close their doors as quickly as they were
opened. Firms fifteen years old or more have seen both good times and bad
in the gold market. As such, they have demonstrated a commitment to the
industry that carries a great deal of value to you as an investor. Such
longevity shows not only a commitment to the principles of gold ownership
itself, but is also indicative of the sustainability of a particular organization
- an important indicator when it comes to the ethics of an organization's
sales practices, the accuracy of its advice, and it's ability to honor its com-
mitments.
USAGOLD
Gold coins & bullion since 1973
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Information Services
Choose a firm with a commitment to keeping you informed – one that of-
fers information-based services suitable for our information-based age. Dur-
ing your time as a gold owner, much is likely to change in the economic and
political landscape. You will want to stay informed, and the mainstream press
does not always report prominently on the trends likely to affect your port-
folio or emphasize the articles of interest to you as a gold owner. The better
gold firms usually offer services like newsletters and information-based web-
sites. When interviewing a potential supplier, probe their knowledge and
understanding of the economic processes at work in the gold market. A
broker who is knowledgeable, professional and engaged in your interests
will be a far greater asset to you in the long run than one who performs es-
sentially a clerking function.
The USAGOLD.com website
Online since 1996
Our commitment to information services is almost as old as the
firm itself. Starting decades ago with our monthly hard-copy
newsletter, News & Views, and continuing today with our widely
acclaimed website, we have dedicated ourselves to providing
first-class information services designed to meet our clients'
needs. The USAGOLD website today hosts almost 1.5 million
visits per month – a guiding light and practical resource to its
users.
- Key web pages -
Daily Gold Market Report
Live Gold Prices - online & mobile
USAGOLD Blog - Today’s news & opinion
Charts & Stats
How-to pages / Client services
And much more. . . .
We cordially invite you to visit.
www.usagold.com
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Culture
Choose a firm willing to spend time with you and answer your questions.
The firm that is abrupt at the outset is likely to give you short shrift if you
have a question or concern that needs to be addressed in the future. Be wary
of companies that use aggressive sales tactics. Seek out and develop a rela-
tionship with firms that handle your inquiry in a friendly, professional man-
ner.
Also choose a firm with a large and satisfied client base. You will benefit
from the experience it has gained working with a variety of situations. A
firm that knows its business can help you choose the right portfolio mix to
address your specific goals, circumstances and concerns. Understand the
difference between the "client-oriented" and "customer-oriented" gold
firms. The latter generally compete on the basis of price with little or no at-
tention paid to your particular portfolio needs.
USAGOLD
A boutique firm with a large clientele
USAGOLD is unique among national gold firms in one
important respect. By design, we are a boutique firm with
a small but highly regarded staff of experienced and knowl-
edgeable client advisors. We have little interest in expensive
national media campaigns, a large and unwieldy overhead
and the aggressive sales tactics which usually accompany
that business model. Instead, we have gone about the busi-
ness of building our clientele, which now numbers in the
thousands, through the USAGOLD website and by referral
from our existing clientele.
Our commitment to the gold business spans nearly 40 years
and, during that time, we have built and maintained a rep-
utation for friendly, client-oriented service and consistent,
level-headed guidance – qualities that will benefit you as a
gold owner now and in the future.
Brokerage Services
USAGOLD carries the range of precious metals
bullion coins and bars and bullion-related historic gold
coins that track the gold bullion price. Our unambiguous
purpose is to accomodate investors wishing to own pre-
cious metals for asset preservation purposes.
Our brokerage staff is highly educated, competent and
fully attuned to the merits of gold ownership. In addition,
each staff representative brings significant, practical mar-
ket experience to the table.
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Business model
Choose a firm with a high degree of professionalism and commitment to
the gold business. The level of expertise in the gold market varies from firm
to firm as does their general interest in the economy and financial markets.
Although there are many outlets for gold, there are relatively few companies
with staffs capable of providing reliable direction to the first-time investor.
Not every gold firm, for example, has asset preservation as its top priority.
Some tout leveraged accounts or high-end numismatics neither of which
blend well with the safe-haven aspirations of most gold owners. Then there
is always the firm that totally disregards the individualized needs of the in-
quiring client and concentrates instead on its own agenda.
Before you even contact a gold firm, it would serve your best interest to as-
certain the real nature of its business. You can learn much by browsing a
company's website -- something even the smallest firms offer these days. If
its product line, services (and, most importantly, its focus) seem a good
match, a follow-up call is in order. If not, keep searching. The initial spade
work will end up saving you considerable time, effort and money over the
long run.
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Credentials
Choose a firm with strong credentials and a solid history. A firm that has
proven itself to be trustworthy can help you avoid some of the problems,
pitfalls and wrong turns often encountered on the road to gold ownership.
One reliable source for investigating a business' standing is a Better Business
Bureau (BBB) profile – something any reputable gold firm should have. (If
they are not members, that is a red flag in itself.) There you will find basic
information – the company's BBB rating along with a record of complaints
and how they were handled. A history of dissatisfaction, particularly if there
has been a large number of complaints, can be a warning sign even if the
complaints were settled satisfactorily.
USAGOLD
An admirable track record for over forty years
USAGOLD enjoys an A+ rating with the Better Business
Bureau, and has been granted the right to display the Re-
liability Program logo. It has not had a single complaint
lodged against it for over over a decade, and has consis-
tently been awarded the annual Gold Star certificate which
goes to firms that have no complaints over the previous
three-year period. In addition, the firm is a member of the
Industry Council for Tangible Assets since 1985. Michael
J. Kosares, the firm's owners is a life member of the Amer-
ican Numismatic Association, having joined the organiza-
tion in 1975.
Competitive pricing on all items, all the time
USAGOLD prices all gold coins and bullion products
competitively all the time. You won’t be disappointed with
our pricing. In fact, as proof of our standing, we are one
of the few firms that publishes its gold bullion coin pric-
ing on the web – both daily closing prices and the prices
in real time as they change with the spot price.
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Pricing
A well-positioned firm with strong industry connections can assure you that
the prices you pay are in line with market expectations. When you compare
prices, make sure that you are comparing apples to apples. Ask for quotes
as a percentage over the gold price. With prices moving by the second, price
comparisons cannot be done effectively any other way.
Referrals
If you know of a friend or family member who has a good experience with
a gold firm and feels comfortable referring it, that might be the best indica-
tor of all and a valuable resource for you as a beginning gold investor.
A highly recommended gold firm
Testimonials and notes of appreciation are a regular
occurrence at USAGOLD. Should you decide to choose
us as your gold firm, you will experience first hand why
we are one of the most highly referred gold firms in the
industry.
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Getting started
You cannot approach gold like you do other investments. Timing is not the
primary issue. The real question is whether or not you already own gold. If
you don’t, but you think you should, the best time to get started is now.
After all, what you really want to avoid is competing in an emergency situ-
ation with thousands of other investors just as eager to own gold as you
might be under the circumstances. Remember: You can never be too early,
but you can ultimately be too late. If your goal is to protect your wealth in
a time of economic uncertainty, make sure you avoid the wrong turns that
can divert you from true gold ownership.
What USAGOLD does not offer:
• Leveraged (margin) precious metals accounts
• High-end numismatics
• Graded (slabbed) contemporary bullion coins
• Off-brand gold bullion bars
• Gold stocks
• Precious metals futures and options
• Exchange-traded funds
What USAGOLD does offer:
• Gold coins and bullion for delivery
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2What you need to know
before you buy your first ounce of gold?
Questions & Answers with Michael J. Kosares
Question. What kind of gold should I buy?
Answer. We probably get that question more than any other -- pretty much
on a daily basis. The answer, however, is not as straightforward as you might
think. What you buy depends upon your goals. We usually answer the "What
should I buy?" question with one of our own: "Why are you interested in
buying gold?" If your goal is simply to hedge financial uncertainty and/or
capitalize on price movement, then contemporary bullion coins will serve
your purposes. Those concerned with the possibility of capital controls and
a gold seizure, or call-in, often include historic pre-1933 gold coins in their
planning. Both the contemporary bullion coins and historic gold coins carry
modest premiums over their gold melt value, track the gold price, and enjoy
strong liquidity internationally.
Q. When should I buy?
A. The short answer is 'When you need it.' Gold, first and foremost, is
wealth insurance. You cannot approach it the way you approach stock or
real estate investments. Timing is not the real issue. The first question you
need to ask yourself is whether or not you believe you need to own gold. If
you answer that question in the affirmative, there is no point in delaying
your actual purchase, or waiting for a more favorable price which may or
may not appear. Cost averaging can be a good strategy. The real goal is to
diversify so that your overall wealth is not compromised by economic dan-
gers and uncertainties like the kind generated by the 2008 financial crisis, or
those now unfolding in Europe and Japan.
Q. Why not wait for the necessity to arise, then buy gold?
A. Over the past few years, as concern about a financial and economic break-
down spread, there were periods of gold coin bottlenecks and actual short-
ages. In 2008-2009 at the height of the financial crisis, demand was so great
that the national mints could not keep up with it. The flow of historic gold
coins from Europe was also insufficient to meet accelerating demand both
there and in the United States. Premiums shot-up on all gold coins and a
scramble developed for what was available. There is an old saying that the
best time to buy gold is when everything is quiet. I would underline that
sentiment.
Q. Can you give us a profile of the typical gold investor?
A. Gold owners are a group of people I have come to know very well in my
40+ years in the business. Contrary to the less than flattering picture some-
times painted by the mainstream press, the people we have helped become
gold owners are among those we rely upon most in our daily lives -- our
physicians and dentists, nurses and teachers, plumbers, carpenters and build-
ing contractors, business owners, attorneys, engineers and university pro-
fessors (to name a few.) In other words, gold ownership is pretty much a
Main Street endeavor. A recent Gallup poll found that 34% of American
investors rated gold the best investment "regardless of gender, age, income
or party ID. . ." In that survey, gold was rated higher than stocks, bonds,
real estate and bank savings.
Q. What about high net worth investors?
A. Traditionally, wealthy, aristocratic European
and Asian families have kept a strong percent-
age of their assets in gold as a protective factor.
The long term economic picture for the
United States has changed enormously over
the past several years. As a result, that same
philosophy has taken hold here particularly
among those interested in preserving their
wealth both for themselves and for their fam-
ilies from one generation to the next. In recent
years, we have helped a good many family
trusts diversify with gold coins and bullion at
the advice of their portfolio managers.
Q. You frequently mention gold as insurance. What do you mean by
that?
A. Gold's baseline, essential quality is its role as the only primary asset that
is not someone else's liability. That separates gold from the majority of cap-
ital assets which in fact do rely on another's ability to pay, like bonds and
bank savings, or the performance of the management, or some other de-
limiting factor, as is the case with stocks. The first chapter of The ABCs of
Gold Investing ends with this: "No matter what happens in this country, with
the dollar, with the stock and bond markets, the gold owner will find a friend
in the yellow metal -- something to rely upon when the chips are down. In
gold, investors will find a vehicle to protect their wealth. Gold is bedrock."
Q. What percentage of my assets should I invest in gold?
A. Once again the answer is not cut and dry, but a general rule of thumb is
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“[G]old ownership is
pretty much a Main
Street endeavor. A
recent Gallup poll
found that 34% of
American investors
rated gold the best in-
vestment "regardless
of gender, age, income
or party ID. . ."
10% to 30%. How high you go between 10% and 30% depends upon how
concerned you are about the current economic, financial and political situ-
ation. Recently, CNBC television commentator Jim Cramer strongly advo-
cated a 20% gold diversification.
Q. In your book, you state: "Who you do business with is one of themost important aspects of gold investing." Why is that?
A. A solid, professional gold firm can go a long way in helping the investor
shortcut the learning curve. A good gold firm can help you avoid some the
problems and pitfalls encountered along the way, and provide some direc-
tion. It can help you in the beginning and through the course of your gold
ownership both in making additions to your portfolio and liquidations.
Q. How can the average investor distinguish
between the good gold firms and the bad?
A. First, and most important: Check the Better
Business Bureau's profile on a company before
you do business with it. Check not only its rating
but the number of complaints lodged against it
and how those complaints were handled. A con-
sistent record of complaints can be a warning
sign even if the company has managed to keep
an A+ rating. This is a simple and straightfor-
ward step every first-time investor should take,
but it is amazing how many ignore it. Second,
choose a gold firm that has a solid track record.
Ten years in business is good; fifteen years or
more is even better. Third, choose a firm with a
commitment to keeping you informed, i.e., one
that is interested in answering your questions
now and keeping you informed in the future. If
a sales person gives you short shrift or hits you with a heavy sales pitch take
it as a warning.
(Reader note: USAGOLD has been awarded the Better Business Bureau's
Gold Star Certificate, its highest accolade. In addition, the firm has been
rated A+ by the BBB with zero consumer complaints. The firm has been a
member since 1986 and accredited since 1991 when the BBB began its ac-
creditation service. To see USAGOLD's full BBB report, please visit this
link.)
Q. Can you briefly describe what you believe to be the biggest mistake
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"A consistent record
of complaints can be a
warning sign even if
the company has man-
aged to keep an A+
rating at the Better
Business Bureau.
This is a simple and
straightforward step
every first-time in-
vestor should take, but
it is amazing how
many ignore it."
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investors make when starting out as gold owners?
A. The biggest trap investors fall into is buying a gold investment that bears
little or no relationship to his or her objectives. Take safe-haven investors
for example. That group makes up 90% of our clientele, and probably a
good 75% of the current physical gold market. Most often the safe-haven
investor simply wants to add gold coins to his or her portfolio mix, but too
often this same investor ends up instead with a leveraged (financed) gold
position, or a handful of exotic rare coins, or a position in an ETF that
amounts to little more than a bet on the gold price. These have little to do
with safe-haven investing, and most investors would be well served to avoid
them.
Q. What about the high profile gold companies that advertise on talkradio and cable television?
A. The same vetting rules outlined earlier apply. Check them out. Too often
investors make the mistake of believing that the gold firm that sponsors
their favorite political commentator is also the best place to make their gold
purchases. National media campaigns are expensive and those costs are usu-
ally covered in the prices paid by investors for their gold coins. In some in-
stances that mark-up can be twice the gold value. Take care that you are not
paying too much for your gold and that you are buying the gold items best
suited to meeting your goals.
Q. What is your view of gold stocks?
A. Many of our clients own gold stocks and we believe they have a place in
the portfolio. However, it should be emphasized that gold stocks are not a
substitute for real gold ownership, that is, in its physical form as coins and
bars. Instead, stocks should be viewed as an addition to the portfolio after
one has truly diversified with gold coins and bullion. Gold stocks can actually
act opposite the intent of the investor, as some justifiably disgruntled mine
company shareholders learned in the recent past when their stocks failed to
perform as the price rose. There is no such ambiguity involved in actual
ownership of gold coins and bullion. When gold rises, they rise with it.
Q. What about gold futures contracts?
A. Futures contracts are generally considered one of the most speculative
arenas in the investment marketplace. The investor's exposure to the market
is leveraged and the moves both up and down are greatly exaggerated. Some-
thing like 9 out of 10 investors who enter the futures market come away
losers. For someone looking to hedge his or her portfolio against economic
and financial risk, this is a poor substitute for owning the metal itself.
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Q. What about ETFs?
A. Since, for one reason or another, it is dif-
ficult to take delivery from any of the ETFs,
they are generally viewed as a price bet and
not actual ownership of the metal. Most
gold investors want possession of their gold
because they are buying as a hedge against
an economic, financial or pollical disaster.
When disaster strikes, it does not do you
much good to have your gold stored in
some distant facility by a third party. For this
reason, over the past couple of years the
trend even with hedge fund operators has
been away from the ETFs. In 2011, ETF
sales plummeted while purchases of physical
coins and bullion for delivery skyrocketed.
Q. Please summarize. What is the best
approach for the safe-haven investor?
A. If you want to protect yourself against inflation, deflation, stock market
weakness and potential currency problems -- in other words, if you want to
hedge financial uncertainties, there is only one portfolio item that will serve
you in all seasons and under most circumstances -- gold coins and bullion.
Make sure you do your homework on the company with which you choose
to do business, and make sure that the gold ownership vehicle you choose
truly reflects your goals and aspirations.
_____________________________________
Michael Kosares has nearly 40 years experience in the gold
business and is the founder of USAGOLD. He is the author
of The ABCs of Gold Investing: How to Protect and Build Your
Wealth With Gold as well as numerous magazine and internet
articles. He is frequently interviewed in the financial press. He is well-known
for his ongoing commentary on the gold market and its economic, political
and financial underpinnings
“If you want to protect
yourself against infla-
tion, deflation, stock
market weakness and
potential currency prob-
lems -- in other words, if
you want to hedge finan-
cial uncertainties, there
is only one portfolio item
that will serve you in all
seasons and under most
circumstances -- gold
coins and bullion.”
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Legal Disclaimer
This booklet is distributed with the understanding that the author and US-
AGOLD-Centennial Precious Metals, Inc. are not engaged in rendering legal,
accounting or other professional services. If legal advice or other expert assis-
tance is required, the services of a competent professional person should be
sought. This booklet does not guarantee that pre-1933 gold coins would be ex-
empted from a confiscation should it occur, nor is it meant to offer a formal
legal opinion on the subject.
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USAGOLDGold coins & bullion since 1973
Order Desk
1-800-869-5115Extension #100
______
We cordially invite you to visit our website.
www.usagold.com
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