Channel surfing today. I’m on-call for work. I’m kinda tied to the house to respond to pages as needed. So I surfed the satellite a bunch.
I ran across a program selling gold coins. The “UNITED STATES GOLD VAULT” infomercial show. The show is a paid advertisement for the US Rare Coin & Bullion Reserve, Inc. No, they are not affiliated with the US Government Mint at all. I have to admit that they do a great job of scaring you into buying gold. They present several possible factors that could influence the cost of gold, but to be honest the cost of gold is tied closely to the cost of oil. These guys are selling fear!
There were a few things about the infomercial that just didn’t sit well. You never heard how much the coins weighed. They never mentioned who guaranteed the gold content. You never heard the gold content discussed. And they never mention the coins are “graded”. I saw their number on the screen .. 1-800-251-3190 … and yes I called. I was very leery and my gut was screaming “DON’T BUY FROM THEM!” And I confirmed that feeling with my phone call. Here’s why; They are selling graded coins. The coins they are showing are the 1/4 ounce “Collector’s Constitutional” coin. It’s not “real” US money. Yeah it says “Five Dollars” on it, and yes it was minted by the US Mint at West Point, yeah it was “authorized by congress”, but there are coins minted all over the world that have dollar values marked on them.
My call was greeted by someone who was obviously busy chewing something. (Not a good sign!) Charles (my operator who was standing by) told me that his company was asking $400 for a 1/4 ounce coin that’s been “graded to be a 69 or 70”. For those who don’t know a coin that is graded 69 or 70 is the best possible grade. Charles then told me there was a slight problem, the coins they showed on the screen were already sold out (I was only 10 minutes into the infomercial and they sold out? Another bad sign!) due to demand. He then told me he had another coin that was guaranteed to be graded a 70 that was the same size and weight. I asked who the grading service was and the “operator” Charles could not tell me. I asked the gold content of this new coin and Charles could not tell me. Charles then told me that by buying 5 coins with him today that in 3 years with the cost of gold going up I could sell 3 of the coins and get my investment back! I asked if his company would guarantee that and he said “No, as with any investment you do run the risk of losing money and that my company could not really predict the cost of gold in the future.” I then asked why he would tell someone they could double their money in the near future … I got this as an answer “So tell me Lerxst, (yes I said my name was Lerxst) should I put you down for 5 coins today?” I was polite and told him that the prices his company were charging were way too much for what they were selling and that I appreciated his time and hung up.
It boils down to this, essentially you are paying $1600 per ounce plus shipping!!! Now if you are a coin collector and you can afford $1600 an ounce it might be a deal. But to be honest, you are better off going to kitco.com or bulliondirect.com. They do sell graded coins, but if the reason you are buying gold is to “protect or invest” your money, you are better off buying coins that have not been graded. Seriously! for the $1600 you would have spent on the one ounce of gold from the infomercial you could have picked up two and one-quater ounces of gold from one of the sites listed above. Friday gold closed at $660 an ounce. Two ounces would be $1320 and another 1/4 ounce would be less than $300 so .. for less than the $1600 you could have more than doubled your investment. Granted, numismatics are a great investment medium, however, if you are hedging bets that things will go bad and you are trying to protect your wealth, graded coins are not the best bet. You are paying a premium on the gold.
The catch is this .. in a time of crisis you will have to find someone willing to pay the “inflated” or increased price to get your money back. In a time of crisis I don’t think it matters if the coin is graded or not. you will get the same price per ounce. Why not buy as much as you could afford?