Tips for buying gold, silver

Gold and silver is back in the news. Your dentist, barber, or co-worker might be talking about precious metals now when it was all sports talk before.

Ryan Denby, CEO of Austin Rare Coins and Bullion, Austin, Texas, said his company is seeing an influx of bullion inquiries.

“We had a large volume of calls and emails in the week to 10 days after Brexit,” Denby said. “Whenever you have an event shake the equity and stock markets, it increases interest in precious metals.”

Julian Jarvis, owner of Jarvis Rare Coins, Greencastle, Ind., said his wholesale bullion business has been adding new customers over the past two weeks.

“I’m having people finding me on the Internet and calling me up,” he said. “People are concerned about what’s going on in the world today.”

For beginning buyers, here are a few tips from Denby and Jarvis for entering the market:

Know who you’re dealing with

Jarvis said buyers will want to work with a bullion dealer they can trust.

“I’m sure there are more fly-by-night gold and silver places opening up recently,” Jarvis said. “More people are contacting me now after having been referred to me by other customers. Those customers know me as a respected dealer. People need to know who they are dealing with.”

Denby said it’s wise to look for a company that has a good reputation.

“Deal with a good, reputable company established with the Better Business Bureau and that has been around for a while,” he said. “Find a company you can create a relationship with. Work with a company where you can talk to an actual person like you would with a stockbroker. The company needs to know your short- and long-term goals for investing.”

He said to avoid companies that don’t allow possession of the bullion purchased.

“Don’t let anyone hold your stuff,” he said. “Take possession of it.”

Know what you’re buying

When ordering bullion, deal close to the source, Denby said.

“Buy from a company that buys direct from the Mint,” Denby said. “If you buy from a company that does business off the street, you risk buying something that is not genuine.

“We had a gentleman bring in a 100- ounce bar of silver he had purchased from somewhere else. When it was sent off to the refiner, they thought it looked odd. They conducted a test and found most of the silver had been drilled out and replaced with non-precious metals.”

Jarvis said testing bullion before purchasing is a smart decision.

“We had a guy recently come into the store with 18 to 20 ounces of silver,” Jarvis said. “We tested it and about two-thirds of it was plated fake silver. They failed all our tests.”

If you’re interested in smaller bullion rounds and bars, purchase a scale capable of measuring to the nearest hundredth gram. Larger bars may require larger scales and professional testing. Reputable dealers will have materials and methods for testing.

Do your research

Knowing the terminology used on the metals market before buying can help prevent costly mistakes.

For example, the difference between grains and grams. There are troy ounce bars and rounds on the market that state they contain “15 grains .999 fine silver.” In comparison, there are just over 15 grains in a gram and 31.103 grams in a troy ounce. Anyone buying a 15-grain bullion piece for the price of a troy ounce bar is making a huge mistake.

Another pitfall is buying what’s advertised as an “ounce of silver” that’s actually an avoirdupois ounce, amounting to 28.35 grams. Precious metals are weighed in troy ounces, weighing 31.103 grams each. The lost grams can add up depending on the metal and quantity involved.

Recent economic events are making gold and silver bullion an attractive option. Like many investments, going into precious metals with a trustworthy company by your side and knowledge about the market can help prevent costly risks.

More Collecting Resources
• Purchase your copy of The Essential Guide to Investing in Precious Metals today to get started on making all the right investing decisions.
• Download The Metal Mania Seminar with David Harper to learn more about the metals market.