How to Buy Gold:
A Lesson on Who Should Buy Gold,
and What Gold Coins to Buy

How to Buy Gold: Who should buy gold and what percentage should you buy? Not everybody is in the financial place to buy gold. If you are living from paycheck to paycheck, then gold is not for you. If you have some discretionary money that is not earmarked for anything, then you should consider buying some gold and silver. If you are retired and you have wealth that you want to protect, you should buy gold.

What percentage should you put into gold? Generally, portfolio managers for years have recommended between 10% and 20% of your total net worth into the precious metals. Why those percentages? To illustrate, let’s look at a likely scenario. Suppose that your net worth, with your house, your property, and your investments is $250,000. If you had 20% of your net worth in gold you would have about $50,000 in gold. At today’s spot gold price of $650, with that $50,000 you could buy about 70 ounces of slightly circulated, $20 Liberties.

In the event that our dollar fails, gold will go out of sight. We could expect gold, as gold analysts are now saying, to get between $3,000 and $10,000 an ounce. Using the low figure of $3,000 an ounce for gold, times 70 ounces, equals $210,000. That’s how gold protects all of your net worth, because it will multiply in value to cover all your dollar-denominated losses when our currency collapses.

So, if you are retired and have substantial wealth, the percentage you hold in gold should be higher. I like to put it this way: Don’t have anything in financial institutions that you can’t afford to lose, and if you lose it, it shouldn’t hurt you. Or another way to say: Whatever you don’t want to lose, put it into gold. And, another general recommendation is that, of the precious metals that you have in your possession, 90% should be in gold because that is your core of wealth, your compact store of value. And 10% should be in silver for barter. They each have their own purpose: gold is for wealth preservation and silver is for barter.

A little lesson on how to buy gold

Also considered bullion are any foreign gold coins that have been legal tender in their respective countries, like the British Sovereign, the Swiss Franc, the French Franc, the Finish Markkaas, the German Marc, etc. These coins, regardless of their age or condition, are also considered bullion in the eyes of our government. Why? There are 49 countries around the world that allow their citizens to hold their own countries’ numismatic gold and silver coins without fear of confiscation, if they are in good enough condition to be considered a collector item. It is a way to preserve the country’s history in coin form. But they do not exempt another countries’ old gold or silver coins, just their own. And America is no different. In this country, we only exempt old American gold and old American silver, not foreign gold and silver.

Bullion: is for speculators, people who buy it cheaply, and when the price of gold goes up, they quickly sell it and make money. My clients are not speculators. For how to buy gold, they are interested strictly in wealth preservation. The worst part about bullion, however, is that it is confiscatible. The government can take it any time they want, and they will pay you $50 an ounce in paper money for every ounce they take from you. That is not the kind of risk I want to put my clients into, and that is not the kind of risk my clients want to take.

That is why I recommend the lightly circulated numismatic gold coins. Now, these are the old $20 Liberties, $20 St. Gaudens, $10 Liberties, $5 Liberties, coins that were legal tender in our country from 1850 to 1933. And if they are in good enough condition to be considered a collector item, then they are considered numismatic gold, non-reportable, and non-confiscatible.

Now, within the numismatic arena, there are two specific areas. One area I do not recommend and the other I do recommend. As I have already mentioned, I do not recommend the real rare, high Mint State (MS) numismatic gold coins. These high MS coins are for collectors only, not for people looking for wealth preservation. The difference in the price of a slightly circulated old gold coin and an MS65 to MS67 is between six and 25 times. So why would anybody want one of those coins? They are a huge rip-off. And remember, the only thing rarer than a rare coin is a buyer for a rare coin.

The area I do recommend for how to buy gold is the numismatic gold coins in the lightly circulated grades, the Very Fine (VF), the Extra Fine (XF), and the Almost Uncirculated (AU). These coins have slight wear, but to the untrained eye they don’t appear to have any wear at all. They are in beautiful condition. But because they have slight wear, the premium is more moderate than the high MS coins. And there is no reason to pay even a dollar more premium than you have to acquire numismatic gold coins.

The high MS coins and the lightly circulated numismatic gold coins are both considered collector items and are non-confiscatible, so why throw your money away on premium if you don’t have to?

Finally, as a last consideration on how to buy gold coins before you purchase, it is extremely important to ask the company about their delivery policies, and specifically how long it will take to obtain your coins. If they say it will be more than two weeks, look for another dealer.

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