Before investing in mining shares and utilizing the leverage for paper profits, I believe it is essential to have physical gold and silver in your possession. I then occasionally use the paper profits that I accrue to add to my physical stockpile, essentially for free. I think it is important to buy bullion and not numismatic coins with ridiculous mark ups. I want the most precious metal for my money, not a collector coin with a pretty picture on the front. I like a good mix of gold and silver bullion coins, ranging from American Eagles to generic rounds. Lastly, I think it is critical to store the coins on your property, either via a safe bolted/cemented to the foundation of your home or very well hidden in multiple locations around your home. Tell one person who you trust the location and then keep quiet about it.

You can purchase bullion from your local coin shop or from a number or reputable online dealers such as APMEX, Monex or Tulving (note recent delivery issues with Tulving). However, I personally use and highly recommend a family-owned and operated company out of Colorado called Cornerstone Bullion. They are one of the nation’s fastest growing bullion dealers and have an “A” rating from the Better Business Bureau. In my experience, Cornerstore often has better supply and lower premiums than many of the largest bullion dealers.

For example, at the current moment my local coins shop and large online retailer Tulving are both out of Silver Eagles, while APMEX is selling them for $4 or more over spot price. However, Cornerstone has supply for just $3.45 over spot. They also carry Canadian Maple Leafs and generic rounds for much lower premiums than anywhere else I’ve found. This adds up to hundreds or even thousands in savings. Plus, Cornerstone offers excellent customer service and you can buy from them without paying taxes on your purchase. If you mention that Jason Hamlin or Gold Stock Bull referred you, they will throw in a free silver coin with your purchase (of varying weight depending on your purchase size). You can call 1-800-558-4671 or call the President, Chad Roach, directly with any of your questions at 303-956-3455.

Bullionvault LogoIf you want to diversify the location of your bullion and have a 3rd party store it for you, I recommend BullionVault. BullionVault allows you to buy, sell and store gold at some of the lowest costs available. Your gold is stored with VIA MAT, which is privately owned, based in Switzerland and insulated from the risks of the banking industry. VIA MAT International is part of Mat Securitas Express AG, which is one of Europe’s largest and oldest armored transport and storage companies. With VIA MAT you can choose to have your gold held in Zurich, London or New York.

gold_bar_on_white_smallOne of BullionVault’s major advantages is that they offer one of the lowest-cost methods of ownership. This is possible because your gold is stored in large (400 oz) “good delivery” bars, the same bars held and traded by the largest bullion dealers, bullion banks and government agencies. Storage in these larger bars allows for lower costs of ownership, yet you don’t need to come up with $400,000 to buy one. You can buy just a small portion of one of these bars, down to just one gram of gold ($30).

The gold is your outright property, as delivery has been taken and it is stored for you physically with the third party (VIA MAT). Every day BullionVault publishes the complete register of all its gold owners on the Internet – with each owner listed under a public nickname known only to themselves. This register reconciles exactly to the official bar list published with it. The bar list is produced by the vault operator, independently of BullionVault.

Buying and selling is settled instantaneously and you can withdraw your money and have it sent straight back to your original funding bank account. This set up makes BullionVault ideal for those wanting to hold gold and gain the benefit of its price appreciation with a low cost of ownership. BullionVault is also ideal for active traders, as it allows you to choose to behave like a market professional and quote prices. This allows the true trader a potential negative cost per trade, through the opportunity to earn the spread.

Fees: The dealing spread is around 0.5% and you pay a commission ranging from 0.02% to 0.8%, dependent on the quantity purchased. Storage charges are down to wholesale rates of 0.12% annually ($4 per month minimum) with insurance included. That’s less than a tenth of the storage fees charged by retail banks, and less than one-third the annual fees charged by typical exchange-traded gold funds (ETFs). BullionVault customers also save money because they deal directly with each other, willing seller to willing buyer, by using the BullionVault order board, which is open 24 hours/7days week. Today, gold was being offered at 0.5% over spot, + 0.8% commission on the first $30,000 purchased, which allows you to buy gold at just 1.3% over spot price! Buy more and the premium goes down. BullionVault has over 40,000 users and more than $220 million in holdings. The sign up process is quick, easy and not overly intrusive.

Avoid Fool’s Gold!
ETFs, pool accounts, futures contracts and leveraged accounts are not real gold. They are just paper promises often with no gold or silver behind them. If you are going to use futures contracts to buy gold, make sure to demand delivery right away, rather than waiting and hoping the gold will still be available when you need it. Many have been forecasting a default on the COMEX and you need only do a google search to learn more about this possibility. I suspect we will soon see if the Comex depositories, the ETF custodians, and the LBMA, hold all the gold and silver they pretend.

You should also avoid collector coins such as those sold in late-night infomercials. They have ridiculous premiums that are often several times above the metal content in the coin. You can usually get 50% or more gold buying non-collector coins such as Gold Eagles, Krugerrands, Canadian Maple Leafs, etc. If a crisis unravels, how much of the metal you own will be infinitely more important than having your favorite animal, actor or football team engraved on the coin.