Rare Coins & Precious Metals – Questions and Answers

Read Carefully & Consult More Than One Source Before
Deciding What Best Suits Your Needs

This page contains entries which save you time, money and will hopefully will eliminate minor aggravation. Your first best step in understanding the precious metal and rare coin markets is straightforward – realize they are highly random. No one not even GoldDealer.com knows what the future holds. So take your time and read Rare Coins & Precious Metals – Questions and Answers. More importantly ask questions. The more you learn about the metals, rare coin diversification, risk disclosure and buy/sell spreads the better informed you will be and the better choices you will make.

We include various approaches to investing but actual choices and distribution are your responsibility. So consider carefully before instructing us as to what you want to buy or sell because our sales representatives do not offer legal, investment or tax advice. This type of advice is best provided by an independent and professional financial adviser.

Do not buy or sell precious metals or rare coins unless you understand and take full responsibility for your actions.

Investment in precious metals and rare coins involves a high degree of risk including possible loss of principal; these markets are extremely volatile. They can also change dramatically when closed if an unforeseen “after market” develops. Because of these and other factors the precious metals or rare coins may not be suitable for all individuals. Do not proceed unless you fully understand the risks and rewards associated with this investment class. If you have questions before deciding please e-mail Ask An Expert.

1. How do I sell my bullion to CNI when out of state?
The process is easy and just the reverse of buying. First, call and describe the product you wish to sell. It could be bullion coins or bars, certified coins, uncertified coins, banknotes, tokens or other numismatic items. Second, we quote our buy price right over the phone. If you like the quote and want to proceed simply ask for a computer confirmation but understand our quotes are subject to change if the markets change while you are considering your options. Third, a new vendor account is created in your name and you are given a Purchase Order Number as opposed to an Invoice Number when you purchase from CNI. At that point your quote is locked in and guaranteed. In other words we both agree to abide by our quoted price no matter what the market direction while the transaction is being completed. The selling party, in this case you, is obligated to follow through regardless of market direction because the buyer, in this case us, has acted on your behalf and at your direction so the trade is legally hedged and an obligation is created by our company. Once a vendor account is created and you ask for price confirmation, a Purchase Order Number is generated and you are legally obligated. So please take your time and be certain this is what you want before asking us to act on your behalf. If you are out of state securely wrap and fully insure the package in a timely manner. A timely manner means your package must be in the mail the same day your Purchase Order was confirmed to assure your “price lock”. If you want to sell a bullion product Friday night and cannot get to the Post Office until Monday please wait until Monday before asking for a Purchase Order. The package should be insured and include an inventory list, purchase order number, and daytime telephone number. Your money is mailed usually within 5 days or less after receiving your package. If you have additional questions call Brent Galaway or Ken Slater directly (800-225-7531). The US mail delivers millions of dollars worth of inventory to us each year. It is a safe and secure way of conducting business nationally.
2. The CNI Balanced Portfolio Concept.
With all the hard asset choices available it is easier for investors to choose which combination best suits their needs. The most popular choices are gold, silver, or platinum bullion coins and bars, semi-numismatic coins or certified PCGS rare coins. And the more you understand about each area the more you will realize that each has a different potential. In other words, while they are similar in that they may react to inflation their short, medium, and long term price action can be significantly different.

The best approach is to investigate all 5 asset classes and build a balanced portfolio which best suits your needs. This approach is the cornerstone of diversification and is recommended. Let’s say you want to invest $25,000 and are wondering how to proceed? You might want to consider placing $5000 in gold bullion, $5000 in silver bullion, $5000 in platinum bullion, $5000 in semi-numismatic coins and $5000 in PCGS graded rare coins. You may decide that silver is not for you and move that $5000 allocation into gold bullion but the idea is to remain diversified.

This plan is based on the theory that over time, the dollar will lose value and hard assets will move higher because of this devaluation. And after you have the basics in place, the secret behind such planning is patience. All investors must plan for the long term and consider possible short term profits a windfall. Why? Because history has shown that years, perhaps even decades, may be necessary to make hard asset portfolios profitable. So the diversified investment theory is based on the systematic and long-term buying of these 5 different areas. As you learn more you will find all five related areas react differently to world events and have different supply/demand characteristics. The percentage of dollar allotment you devote to any area is arrived at by matching your specific objectives to your temperament. If you are a short-term player and want a fast in and out approach you should have a greater percentage of your money in bullion coins and bars as commissions are the smallest and replacement is easy. If you’re patient and are looking for profits based on past price history your selections will include high grade PCGS certified rare coins but the difference between the buy and sell on this asset class is larger so short term trading must be avoided. There is no guarantee that any combination will produce a profit and you could lose money if you choose the wrong combination but the idea is to hold these assets as insurance against the uncertain future of paper money.

3. Always avoid dealer-controlled coin storage programs, even those offered by reputable firms.
Literally millions of dollars in investor funds have been lost when the company closes its doors and material “on-deposit” is nowhere to be found. We have recommended bank storage for years and found it totally safe and secure. If the volume of material is large, which might be the case for say, large silver bullion positions and you simply don’t want to store everything yourself consider a professional independent storage facility like CNT and Delaware Depository (DDSC) which is used by the Chicago Board of Trade (CBOT).
4. Silver Bullion Grad School - Stay Away from Silver Bullion Gimmicks

The problem with silver bullion investing is that it is sometimes a crowed field. The minute the price of silver moves higher there is the normal reaction from the rank and file physical players (good) and then there is the reaction by silver hustlers looking to make a quick profit (bad). To informed buyers the difference between legitimate bullion and a substitute product masquerading as silver bullion (certified modern issues at high premiums) is obvious but to people new to the silver investing field it presents a problem. The biggest offenders in the “new product” junk category are the so called “limited edition” silver coins and ingots. The Franklin Mint pioneered this approach in the 1970’s and all high priced limited silver editions eventually went off the cliff and were eventually melted for their silver value. The reason being is that as the number of “limited editions” moves higher the fact that they are limited is lost in translation and so is the premium you paid over melt. A venue to stay clear of are the Home Shopping players who claim their silver products are in someway related to the rise in the price of silver. In most cases the premium over melt you pay completely negates the fact that the coin or bar is made of silver. It might look pretty, it might be shinny and have a mirror finish, it might be a limited edition, they may sell 500 items in 15 minuets but you are not buying silver bullion. You are paying for “fake” bullion products sold to you under color with the promise that silver is moving higher and so you had better act today. Don’t laugh there are thousands of people caught up in this game that will never know they have been had until it comes to selling their treasure in the secondary market. No matter how wonderful it looks the product will simply be put on a scale and in 90% of the cases is worth its weight. So if you are newbie and the presentation is compelling (and you won’t take my word for it when watching TV at 2:00 in morning) what should you do? Wait no matter how tempted you are and call us (1-800-225-7531). We will explain the difference between what you are considering and legitimate bullion products which are never sold on television at fair prices because the ad time is too expensive. The way these shows work is that the TV station gets half your money and a large and mostly undercover coin dealer gets the other half. Out of the coin dealer’s share he must pay his vendors for the product you purchased so it is easy to see there are a lot of people to be paid and all that dough comes from your purchase price. A good rule of thumb is to avoid TV and airplane magazine “silver investment” promotions. If you see a silver item which interests you check with your local coin dealer and ask for advice. He will either tell you it’s a scam or you could purchase the same product locally for considerably less leaving more money to buy real silver bullion.

Most everyone knows something about silver bullion coins and silver bullion bars but the number of these products available today may cause even the experienced investor to pause. And then there is the practical consideration as to where to buy or sell silver bullion and the notion of getting fair value. The good news is that most silver bullion is similar in nature, meaning it moves up or down with the price of silver, buy and sell prices are easy to understand, and all silver bullion coins and bars are very liquid. So real silver bullion products are easy to buy and sell but keep in mind Uncle Sam does watch some transactions closer than others, so read on before making your choice and be sure to look at our list of Reportable Bullion & Cash Transactions.

The precious metals are bought and sold worldwide using the troy ounce which is slightly more than 31 grams. This may be a bit confusing to the beginner because when weighing yourself in the bathroom or going to the Post Office the world standard is the avoirdupois ounce which is slightly more than 28 grams. In other words the troy ounce used for metals is about 10% heavier than the avoirdupois ounce. Understanding the weight component and premium are important because investment in silver bullion requires an authentic bullion product. Bullion products by definition have low premiums so investment in certified silver coins, for example, belongs on the rare coin side of the ledger and has nothing to do with silver as a commodity.

All real bullion products move directly with the New York Commodity Exchange, which opens for trading at 5:30 AM and closes at 10:30 AM California time. After the COMEX is closed the price of silver bullion usually remains constant until the beginning of the next trading day. But on occasion, especially on volatile or hectic trading days there is an aftermarket which may move both the buy and sell price higher or lower depending on continued public demand.

A simple definition of any silver bullion coin or bar is one in which there is a small premium above the content or weight value of the product. In other words you are buying only the commodity itself. Bullion coins or bars will increase in value if the world silver market moves higher and will decrease in value if that same market moves lower. This happens because bullion manufacturers usually produce large quantities which eliminates the notion of rarity. In the case of US 90% silver coins (1964 or earlier) the quantities minted were so large they too have no rarity factor and their price is an excellent approximation of their silver weight.

So what is the difference between a 1 ounce silver bullion coin, bars of silver available in various sizes and the old 90% silver bullion coin bag? Actually all of these are pretty much the same as far as our definition of silver bullion investments. But because of relative availability and demand it is important to compare ounce to ounce prices. So these commodities are similar but not exactly alike because each may offer a particular advantage or disadvantage depending on your needs.

Silver Bullion Grad School – Three Important Components Of Today’s Silver Price

1. The most obvious place to begin is the daily electronic price of silver on the COMEX sometimes referred to as “spot”. Once the COMEX or spot market is closed the physical market can and often does develop what is now called the “aftermarket”. In today’s modern trading model the close of the Comex does not necessarily mean the price of the metals stop moving up or down. Price changes are now transparent 24 hours a day over the internet and pressured directly by paper trading funds, dealer to dealer physical action, derivatives, and overseas markets. That is why CNI uses an independent pricing source regarding spot for gold, silver, platinum and palladium. This source is accepted worldwide and takes the guess work out of deciding which way the paper price of the metals is heading 24 hours a day.

2. The next and important consideration is the availability of the physical product you want. The manufacturing of silver bullion products can be erratic even with solid public demand. For example the US Mint may decide to stop Silver Eagle production because of other priorities. When they work out their production problems the US Mint will begin producing the Silver Eagle but this delay could last months and during that time a premium may develop which can add dollars to the ounce price. The important point here is that lack of availability and increased demand always lead to increased premiums over what a silver bullion product should cost under normal circumstances.

3. Unless you are a purist, paying increased premiums does not make sense because they always move lower as new production enters the marketplace. Your best move is to compare relative premiums between similar bullion products and choose the bullion product with the lowest premium. You may be looking for a box of US Silver Eagles (500 count) and decide the premium on 90% bags is much lower, and therefore a better investment choice. This is true because you could be getting 10% or even 20% more silver bullion per dollar invested, which could translate into higher profits if the market moves in your favor. Remember that premiums come and go because they relate directly to public demand (or lack of it) so if you insist on a particular product when there is not much around and the manufacturer of this product increases production the premium you paid is likely to disappear. The rule here is that premiums can change quickly with investor sentiment so you may or may not get them back when you are selling.

5. Avoid high-pressure sales tactics.
Avoid high-pressure sales tactics and if you feel uncomfortable buying a coin or bar from a phone person it can be a warning signal. When in doubt sleep on it and decide the following day. CNI does not use commissioned salespeople since this method wrongly places the dealer’s interest before that of the consumer. To be fair some firms do use commissioned people and they believe in their products. So it’s natural for them to get excited over a coin. That’s good for it brings you an opportunity, but make sure you ask questions and understand the details. A slower approach is a good idea especially if you are new to this business. Also keep in mind ethical dealers are not interested in bothering you. If you receive unwanted calls just explain this fact, and if they persist draw your own conclusions. The US protects consumers from unwanted phone calls and the process is easy with this link: US Government Do Not Call Registry
6. Make a distinction between bullion related bars or coins and certified rare coins.
Make a distinction between bullion related bars or coins and certified rare coins. There is a big difference and not understanding this can lead you down a bumpy investment road. Read on for more details but the litmus test when investing in gold is to ask this question: “If the spot price of gold moves up say 4% will the coin I’m buying provide me a profit?” If the answer is yes, you are solidly in the bullion category. If the answer is no you are considering something beside bullion, which is not necessarily wrong, just be sure you know what you are buying. Here are a few more tips that will help define a bullion purchase: A bullion investment is defined by a bullion coin or bar which is not certified and trades for close to its weight. It will go up or down following the commodity price, and there is no rarity involved. Always figure the cost per ounce of a bullion product for yourself. It is easy to figure what a 1 ounce bullion gold coin should cost but more obscure when the bullion coin gets smaller. And don’t assume that because the dealer is cheap on large bullion coins he will also treat you right on smaller bullion coins. We are not a big fan of the so-called “confiscation possibility” which is often raised today, but if you are the smaller bullion coins like the British Sovereign (0.235 oz. Pure Gold) or the French or Swiss 20 Franc (0.186 oz. Pure Gold) work well. Just be sure to multiply their weight times the price of gold. Some dealers charge up to twice our selling price for these smaller bullion coins hoping the buyer will not compare prices. If challenged on their higher selling prices these dealers tell the uninformed investor that their coins are better quality and so are higher priced. This justification is not true because of the following: All large dealers buy these gold coins from the same international sources, pay the same price, and get the same quality. The extra money you pay goes into large overheads and commissioned sales. A certified rare coin may be weight related like the $20 gold piece, but usually is not. When investing in PCGS certified rare coins you are investing in rarity. Price increases depend not so much on higher commodity prices (although it helps) but on growing demand and shrinking supply. So how do you know if you are paying too much for a certified rare coin? Always check around and compare prices. After you have established a good relationship with a dealer this issue becomes less important but in the beginning do your pricing homework.
7. Beware of unrealistic dealer promises for there are no coin genies waiting to make you rich.
Beware of unrealistic promises for there are no coin genies waiting to recommend the one coin that will make you rich. In fact no one knows for sure if any coin investment will produce a profit. All hard assets go up and down in price over the years. The best chance anyone has is to prepare for an up cycle with recognized bullion products and quality rare coins. It is fair to say that investors have made fortunes in rare coins and precious metals over the long term. But just as much money has been lost to those who were forced to sell in a down market, did not do their pricing homework before a purchase, or got caught up in some “get rich” scheme heard over talk radio. Radio and television personalities and unfortunately a few religious leaders are paid an extra fee to “push” products because sponsors have learned that if you like the person you will believe they have your best interest in mind. This leads the new investor to a “blind purchase” which in this unregulated trade is dangerous. Some of the largest companies on the airways with A+ BBB rating and polished presentations are the biggest offenders and even with a stream of consumer complaints it is unlikely the Federal Trade Commission or Congress can correct this problem
8. When comparing certified coins, note the price and grade carefully. A one point difference in the grade might change the price dramatically.
When comparing certified rare coin pricing make sure you get the price and grade correct because one point difference in the grade will make a great deal of difference in the price. Also note that the two most acceptable grading services are PCGS and NGC and prices between these two services will vary depending on relative populations. And a word to the wise in that PCGS and NGC are the best in the trade but there are other grading services, some of which use similar looking holders, which do not produce consistent grading results and should be avoided.
9. Learn not to leave money on the table when selling your certified coins.
Learn not to leave money on the table when selling your certified coins. Even with the grading standard established by PCGS in 1986 there could be some variance in the assigned grade. That is shop talk for making sure when you sell your coins the buying dealer is not upgrading the coins and putting the money in his pocket. A good rule to follow is that if you have old PCGS coin holders get an opinion as to whether the coin might upgrade before you sell.
10. It is your responsibility to report losses or gains on your income tax returns.
It is your responsibility to report losses or gains on your income tax returns, but this type of reporting is not our responsibility. Contrary to what some believe your local coin and bullion dealer is not an agent for the government. They must follow a few simple rules which for the most part do not interfere with free trade.
11. Remember The 40-Year Rule in rare coin investing. Simply stated you should avoid rare coins that are less than 40 years old.
Remember The 40-Year Rule in rare coin investing. Simply stated you should avoid rare coins that are less than 40 years old. Why? Because there has not been enough time to establish a secondary market that will provide valuable pricing information. Also understand that age does not equal rarity or value. An Indian Head cent in circulated condition is old but will never be rare because the US struck millions, most of which are still available today. Another general rule might help as a place to begin: Investors considering coins struck after the Civil War might choose an uncirculated example because they are available. From the early beginnings of the Philadelphia mint (1794) to the early 1860’s such uncirculated examples are rare and expensive so investors must now consider higher grade circulated coins simply because there is little other choice.
12. If possible, do business with members of The Professional Numismatists Guild (PNG).
If possible, do business with members of The Professional Numismatists Guild (PNG). The PNG has represented the very best the coin industry has to offer since 1955. Members must past strict background and financial scrutiny while demonstrating complete competence within the trade. This organization is the only one that offers the consumer binding arbitration in case of problems. If you don’t like the way a PNG dealer treats you it is easy to contact the Guild’s Executive Director and arrange a simple three way arbitration that costs nothing and is legally binding.
13. What is your company policy on collection appraisals?
Answer: Our policy on appraising your collection is simple and we guarantee your satisfaction. Call Ken Slater toll free (1-800-225-7531) and explain what you are trying to accomplish. Some folks can get a pricing answer right over the phone as Ken has been doing this for more than 20 years. If your intention is to sell your collection it may be necessary to send us the collection using registered and insured US mail. Either way Ken will explain value and procedure to make sure the collection is mailed securely making further evaluation easier. When we sign for your package, inventory control will check contents against your packing slip and notify you of its arrival. Ken will look up and grade each numismatic coin and make a note as to what we will pay for that particular item. He will do this for every numismatic coin in the collection and then add the value of any bullion product relative to the closing price the day of arrival. He will then call you with a total and answer any questions you may have including an explanation of how he arrived at the valuation. After you have all this information the decision to sell is up to you and the family. For the record we pay great prices because we need virtually everything saving you time and money. In 95% of all cases the customer is more than happy with our offer and we spend millions of dollars each year purchasing collections from all over the United States. But what happens if you don’t like our buying prices? That is no problem, we are here to make you happy so we will simply repackage your collection and mail it back to you. We use registered and insured mail and include a check refunding your original mailing costs. You really have nothing to lose and could get considerably more using our convenient system. If you already have an appraisal and want to know if you are being treated fairly, ask Ken for his guaranteed 10% better bid. If he can’t beat your best offer by 10% he will tell you and this will make your final decision easier.
14. What balance should I have between hard assets and my other investments?
Everyone should make their own decision on this but a conservative approach is simply use 10% to 20% of your total investment dollars to purchase inflation-sensitive precious metals and certified rare coins. Some financial planners suggest the rest of your money should be in traditional vehicles like stocks, bonds, real estate and T-Bills. When considering these types of questions it’s best to seek the advice of a professional financial adviser.
15. Do you think it is a good idea to have fractional size gold bullion coins?
All producers of bullion coins make 1/10 oz., 1/4 oz., and 1/2 oz. sizes and many survivalists believe such coins should be accumulated in case you need emergency size money. You will pay a premium for these smaller sizes but to some the added expense is worth it to have “real money” in hand if needed.
16. What is the difference between a 1 oz. gold coin and a bar of the same weight?
Modern bullion coins and bars are very close to one another as far as acceptability and price so you really can’t go wrong with either. There could be a case made for saving a few dollars by choosing the lowest premium or avoiding very large bars because you give up the option of divisibility but in general each product will move directly with the market.
17. The dollar amount over spot sometimes varies over time on your bullion coins. Why is this figure not constant?
If you notice the difference between our buy and sell (the “spread”) is relatively constant but is subject to change with changing trading conditions. The dollar amount relative to spot will vary with the trader’s physical position. This happens because we hold the real coins and bars in inventory. When our trader’s position is too high he charges less and sells for less. When his inventory position is too low he charges more and pays more. That is why the actual price we charge over spot may drift over time. Also keep in mind that the difference or spread between bullion products may change, especially if markets are volatile.
18. Risk Disclosure ~ Trader's Option ~ Buy and Sell Spreads
Precious metals and certified rare coins, involve risk, therefore profitability cannot be guaranteed. It is understood this firm, its employees or officers, may buy, sell, or have an interest in the recommended items. As with any investment our recommendations are subject to the buyer’s own good judgment and research. And while we try to answer each and every question in a reasonable manner, there is a limit to even our patience, so we reserve the right to refuse service to anyone. While due care has been exercised in development and dissemination of this web site, our newsletter, or other promotional material, there is no guarantee of correctness so this corporation and its employees shall be held harmless in all cases. Our employees are not registered financial advisers but most have years of experience in the gold business. It is further understood that employee’s suggestions or opinions, and all other promotional material is provided for informational purposes only. California Numismatic Investments, Inc. (GoldDealer.com) and its employees do not render legal, tax, or investment advice. No person knows for certain what the future may hold so price projections based on past events may not be reliable. We suggest each person investigate carefully all choices and options before investing in precious metals or certified rare coins. Use more than one information source, talk to a financial planner and take your time in deliberating which choices are best for you. Why? Because all precious metal and rare coin investments involve risk, you could lose money and so they may not be suitable for everyone. Because of the volatility inherent in precious metals and PCGS certified coins use venture capital only and in no case risk more than you can afford to lose. Also note that there are physical limitations when dealing with the precious metals and rare coins. We provide our “best effort” in making daily markets but sometimes, due to mint production or hedging problems or time constraints or system overload such a buy or sell quote cannot be supplied.
19. What is your spread between the buy and sell price of various products?
In the precious metals business this answer will depend on market volatility, relative price and the nature of the product you choose. Bullion Coins or Bars: The difference between the buy and sell usually varies between 1% and 4% on gold and up to 5% on silver. This market is driven by speculators and folks who believe real money can’t be defined by paper currency. This market can be volatile and subject to dramatic moves depending on public confidence. Consider investing up to 70% of your hard asset money in this specific area. Semi-Numismatic Coins: An example of this area would be non-certified, circulated $20 gold pieces. The difference between our buy and sell is about 10%. So the spread is larger than regular bullion, but you get a rarity advantage which may lead to better price action and possible confiscation protection. Consider investing up to 10% of your hard asset money in this specific area. PCGS Certified Rare Coins: Of these three investment areas the difference between the buy and sell in this case can be the largest, coming in between 10% and 20%. This area can be a long-term money producer because an affluent collecting base pushes prices higher and studies have shown carefully chosen rare coins provide inflation protection over the long term. Consider investing up to 20% of your hard asset money in this specific area. So which area is the correct choice? Actually no person can tell you what the future may bring and hind sight is always perfect so once you make up your mind don’t beat yourself up if you are wrong, that is the beauty of diversification. Sometimes bullion leads the race and may outperform semi-numismatic or PCGS Certified Rare Coins. Over the longer term carefully chosen rare coins have done better than both bullion and semi-numismatic choices, but the spreads tend to be larger and past performance is not a guarantee of what may happen in the future. Depending on random market forces you may find one area outperforms the other two and it is just as likely that the others may catch up or surpass your original choice. This is true because public demand creates an unpredictable market dynamic, which is why we suggest a diversified approach. Since the 1970’s a combination of precious metals and rare coins seems to be the right choice.
20. Make your own choices and use common sense. Metals and certified coins often change dramatically in price without warning.
It is important to make your own choices and exercise your own common sense in these markets for the precious metals and certified rare coins can and often do change dramatically in price. Depending on market direction you could profit handsomely, make no money at all, or lose money. And you should always be aware there is a difference between our buy and sell prices. This difference can change without notice and is solely determined on a day by day basis relative to the trader’s position, market volatility, and the ability to resell products in the wholesale market.

GoldDealer.com, our special reports, and other promotional material have been copyrighted by California Numismatic Investments, Inc. (CNI, Inc.). All rights are reserved and reproduction is prohibited. Thanks for reading and if you have questions please Email Ask An Expert before proceeding.