On the way home from our cruise we spent a few hours in the Delta Sky Club (first in New York, then Detroit). They both had Fox News playing in the background. I wasn't really listening to it (I was getting caught up on email after being gone 2 weeks), but I did notice one thing: they have a TON of commercials for gold and silver investing.
After a while I started keeping track of the advertisements, wondering what the difference would be from one company to the next. Service? Shipping? Something else? I thought that pricing would be the same (after all, isn't the price of gold/silver a well-known commodity price?) Boy, was I mistaken.
When I got home and settled I decided to do an experiment. I went to each site advertised and compared the price of one basic, generic, and well-known item just to see the difference between the companies. On February 12 at 4 pm I visited each of the sites below. The 1 ounce silver price at that point was $31.12. Here's what each company had listed as the cost of a 1 ounce Silver American Eagle coin:
- Merit Gold: $33.70
- Rosland Capital: $34.14
- Lear Capital: $34.70
- Goldline: No price listed. In their FAQs, here's what they said about showing a price (why they couldn't): Goldline has a spread or price difference between our selling price, called the "ask", and our buy-back price, called the "bid". That spread varies depending on coin or bar you acquire. Spreads on 1 oz bullion coins, 90% silver dimes and quarters, and one ounce and larger bullion bars are 13%. All other coins have a spread of 28%. There is also a 1% liquidation fee when you sell your coins back to Goldline. You should read our risk disclosure booklet, Coin Facts for Investors and Collectors to Consider, and our Account Agreement, which describe the various spreads and will tell you how the spread works.
- Buy Gold and Silver Safely: This one wasn't on Fox, but has been a site I've discussed here before (I had some excerpts from their book). They didn't give a price but simply listed the following: $32.70 bid, 33.71 ask. They claim to offer costs "1% over wholesale cost". Not sure what that means though.
So is anyone else confused/surprised or is it just me? I'm surprised that there isn't one standard price. I guess these coins are just like mutual funds -- you can get some with higher expenses and some with lower expenses -- even though you're getting basically the same thing.
I was also surprised at the spread. If I was buying one coin, then I can live with paying almost $4 over spot price. But if I was investing $100k that would add up to a large amount of money (I know, still the same percentage). Perhaps they would give a better price for a larger purchase.
I didn't check the cost comparisons of shipping, storage, and the like, since those would likely only muddy the picture further.
It's a wonder that anyone buys physical gold and silver considering the strange (or at least strange to me) process. I know that you're buying (supposedly) for capital protection and a hedge against inflation, but it still seems to be a murky world compared to other forms of investing.
Perhaps those of you out there who are more educated in this area can enlighten me. Anyone invested in physical gold or silver? If so, can you tell us about your experience?