| Dear Daily Crux reader,
Today, we continue our new Sunday Interview series, where we talk the world's foremost market experts and bring you exclusive interviews you won't find anywhere else.
This week, we're covering one of the biggest topics in the investment world right now... and we believe it's one of the most useful things you'll read all year.
With gold near $1,000 an ounce – and the U.S. dollar in the toilet – interest in buying and storing gold is on a lot of minds these days. That's why we sat down with Casey Research's Jeff Clark to talk about the best places to buy and store physical gold.
Our friends at Casey Research do some of the best investment research you'll find anywhere. With a focus on natural resources like oil, gold, and uranium, their products are "must reads" for anyone who wants to keep up on the sector. As the editor of Casey's Gold & Resource Report, Jeff is one of the most knowledgeable gold investors in the world.
I think you'll find his tips on buying and storing gold extremely valuable over the coming years.
Regards,
Brian Hunt
Editor in Chief, The Daily Crux --------------------------- The Daily Crux Sunday Interview
The World's Best Places to Buy
and Store Physical Gold Daily Crux: Jeff, just for the record, we want to make sure folks know we're basically on the same page with the idea that gold shouldn't be viewed as an "investment," something you'll make outrageous capital gains with, but rather as a form of savings – a way to store wealth that has an excellent crisis-hedge aspect to it.
And with governments all over the world following insane "tax and spend" policies, the need for a crisis hedge is huge right now. Shouldn't everyone keep a good portion of their savings outside of the paper currency system and in "real money"?
Jeff Clark: Absolutely. That's very true. I actually did an op-ed piece on that topic a couple weeks ago. You'll have to read what I say about "Betsy." But you're right: Gold is technically not an investment. Gold is there as a protection for your purchasing power. That's the way to think of it. As I suspect many of your readers know but the general public doesn't, gold is money, and it's been money for 4,000 years. It's viewed by some as a commodity – and it does have uses in electronics and jewelry – but it's first and foremost money.
In my opinion, gold should be viewed as your savings account. You can support your family with it in an emergency. You can't do that with oil or wheat. It's very secure because no one's problems or liabilities or deficiencies or ability to pay come into play at all. It's your personal crisis hedge. It's the No. 1 asset that'll protect you financially when the dollar gives up and inflation gets ugly.
I think if you don't own physical gold, someday you'll likely regret it.
Daily Crux: It looks like a lot of investors controlling huge amounts of money are starting to see it that way. Some gigantic hedge funds, like Greenlight Capital, have made major moves into gold this year.
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Jeff Clark: Absolutely. China's doing the same thing. Their leaders basically admitted it last week.
China is literally buying tons of gold. They're running TV ads encouraging citizens to buy gold and silver. Last month, Russia bought more gold than they actually produced. Central banks are net buyers of gold for the first time in 22 years.
Greenlight Capital, the big hedge fund you mentioned, actually sold $500 million of GLD, the gold ETF, and bought physical bullion. In a recent survey, 20 out of 22 fund managers bought physical gold for their personal investments. Don't you think we should be doing the same?
Just because the stock market is going up doesn't mean we're out of the woods. The longer the party, the bigger the hangover. And we've had a doozy of a party. We haven't experienced all the repercussions yet.
I think what we'll see is an economy that's like an 80-year-old man with no Viagra. And then it will get worse: Gas and milk prices will double. We'll have a run on the dollar. Meanwhile, all of this will be managed by a government that has a 100% failure rate in anything they've tried to run in 200 years. That's what's coming. You don't want to own gold in that environment?
Any excuse you have now for not buying gold will seem shallow and meaningless then.
Daily Crux: Amen. Now let's get to how to own gold. What forms of gold do you encourage people to buy?
Jeff Clark: The average Joe may not be aware of it, but gold is very mainstream these days. Meaning it's easy to invest in, and there are plenty of choices. You can buy GLD and the ETFs that have been in the news recently, which are reasonable options. But physical gold should be where your first dollar goes.
What I recommend everyone buy is the one-ounce gold coins. Bars are fine, and people with significant wealth should use them. But I'd rather have 100 gold coins than a 100-ounce bar. The one-ounce coin is easily recognizable and easy to sell if you need to. If you have it in smaller denominations, you can sell only what you need if it comes to that.
And gold is easily transportable. You can literally hold $50,000 worth in your hands. And no one has to know about it.
As far as the rare and numismatic coins, they'll certainly rise in an inflationary environment. But you have to be a little more careful here because values are based on their rarity and their condition, and the average investor can't judge those things.
There are good rating services out there now, predominantly the Professional Coin Grading Service (PCGS). But it's a tricky area for the novice, and you can lose money if you don't know what you're doing. I only buy from Van Simmons of David Hall Rare Coins. I trust him, and he actually helped create the standards for PCGS.
Daily Crux: Who else do you trust when it comes to buying gold, particularly the one-ounce coins you mentioned?
Jeff Clark: For online buying, I like Kitco [877-775-4826], which charges a set dollar amount over spot, versus a percentage as most dealers do. This can work in your favor as the gold price moves up, although Kitco does change its prices from time to time. You can also buy gold and silver in their pool account at just pennies over spot.
The Coin Agent [1-888-494-8889, thecoinagent@gmail.com] is a small shop and his prices can't be beat. I really like him, and I trust him, too.
Border Gold [888-312-2288 ext. 7] is in Canada and sells primarily the Maple Leaf. If I wanted Leaf, that's where I'd go. Another one I like and trust is Asset Strategies International [1-800-831-0007]. I can personally vouch for each of them.
When you're shopping, keep in mind that you want a fairly common coin – such as an Eagle, Maple Leaf, Krugerrand, or Philharmonic. You don't want an obscure coin and have someone question if it's real if you sell it someday. Other than that, you're just looking for the best deal from a reputable dealer.
Daily Crux: Do you have a rule of thumb where you never pay 5% or 10% over the spot price of gold?
Jeff Clark: Sure, but that rule of thumb is a floating number. A year ago, that number was 9%, and if you could get that you had to grab it. Now, you shouldn't have to pay more than 5% or 5.5%. The way to avoid paying too much is to shop around, and that only takes a couple calls or clicks.
Daily Crux: So we should go to the dealers you recommend and shop around for the best price?
Jeff Clark: That's what I do. If you want to buy online, I'd go to Kitco. If you want to talk to a dealer, I'd call one of the other places I mentioned.
What you want to avoid are the large houses you see advertised on TV or online. You'll occasionally see a low premium advertised, say 5% or maybe even less. But quite frankly, that's usually an enticement to get you in the door.
They make a much higher commission on numismatic coins. So if you buy from them, some day you're likely to hear, "You know, my friend, we have a great deal right now on this rare coin. Let me tell you about it..."
Daily Crux: Something where the uniformed novice can get taken advantage of.
Jeff Clark: Yes, it happens regularly. Save yourself some hassle and avoid those guys.
Of course, you can go to your local shop, too. But right now, my local shops are more expensive than the other places we just talked about, even after shipping. One of my locals guys is charging a 9% premium right now. I like him, but that's unacceptable in an environment where premiums have come way down.
Daily Crux: How about paying for physical gold with cash? For the completely hypothetical person who doesn't want to leave a paper trail?
Jeff Clark: You can certainly pay with cash. In that scenario, you'll be going to your local coin shop.
Daily Crux: Once you've bought it, where do you store it?
Jeff Clark: The easiest way to store gold is in a safe deposit box at the bank. But you can only get to the gold when the bank is open, and you're not insured if the bank gets robbed. If you do decide to use a safe deposit box, make sure you use a local bank. You want to be able to get it in an emergency.
Another option is to hide it in your house, which is good for small amounts of gold. Avoid jewelry boxes or cookie jars. The risk here is fire or flood.
You could consider a safe, bolted to the floor. Talk to a bonded safe company. Or look for safes online with tags like "floor safe" or "personal safe" or "home safe." Sentry is probably the leading brand. And safes don't have to be expensive – they start around $150.
If you get a safe, put it somewhere you can place something over it, like a refrigerator, because you don't want it visible to strangers or easy to find if you're robbed. And for obvious reasons, you should install it yourself. Some of the kits make it easier than you it might expect.
Daily Crux: What about "midnight gardening"?
Jeff Clark: This got its name from people burying their gold at night so their neighbors wouldn't see them digging. If you bury your gold in the daylight, find another reason to dig – like fixing a pipe or removing a stump.
The advantage to burying your gold is that you don't have to worry about it getting stolen or losing it if your house burns down. But make sure you store it in something airtight and waterproof, like a hiker's water bottle or a bit of PVC pipe with capped ends.
Find somewhere on your property that you'll remember but that isn't easy to guess if someone learns you've buried something valuable.
Daily Crux: Right. What if you can't remember where you hid it?
Jeff Clark: You should definitely let one person know the details – someone you trust. They need to be able to access the gold if you get hurt or die. If you use a safe deposit box, put their name on the registration and tell them where you put the key.
But don't tell more than one person. And most of the time, your kids aren't going to be a good choice. Kids talk, and you definitely want to keep quiet about your gold.
Daily Crux: What about storing your gold overseas?
Jeff Clark: For the average American investor, there are two good options. The first would be a safe deposit box in another country. You can stuff as many gold coins as you want in a foreign safe deposit box.
The other option for storing gold overseas is actually free. Believe it or not, you can do that. And your gold will be in one of the safest places on the planet: the Perth Mint.
If you buy a Perth Mint certificate and you choose unallocated storage, which I think is safer than what some try to claim, there are no storage fees at all. All you do is pay your upfront costs, which amount to probably $250 or so above the cost of your metal, and you're done. Voilà, your portfolio is internationalized.
If I were buying a Perth Mint certificate, I'd go directly to Asset Strategies International, one of the dealers I mentioned earlier. Kitco sells them, too.
Foreign safe deposit boxes and the Perth Mint – these are two options most people can act on fairly easily if you want to internationalize your portfolio. And since we're likely to see foreign-exchange controls someday, these options could disappear.
Daily Crux: Would you ever sell your gold holdings?
Jeff Clark: Well, since gold is insurance, you cash it in when calamity hits, either you personally or the economy. That said, I would only sell my gold if I absolutely had to – if I lost my income or if the world came to an end Mad Max style. I may cash some in if we get the parabolic move in gold that I expect, but I'll decide that then.
Daily Crux: Any parting shots, Jeff? A gold prediction perhaps?
Jeff Clark: I'm totally convinced that someday gold will soar. If Doug Casey is right – that at some point we'll see a worldwide panic into gold and silver – then precious metals will soar and the stocks will scream. But we don't know when that's going to happen – it could be next month or next year – so you have to be prepared now.
You definitely don't want to get impatient or think you'll just buy when inflation starts. It'll be too late because it could happen suddenly and no one can tell you exactly when inflation will hit. You definitely want to be invested before the shift in mass psychology takes place. Just keep buying the dips and adding to your holdings.
As far as a prediction, those are a dime a dozen. Besides, the gold price will likely be higher than what you think is high right now. What I mean is $2,000 sounds high right now – think how happy you'd feel if gold hit $2,000 in the next 12 months. But in a high inflationary environment, $2,000 may "feel" low. It may take a $4,000 or $5,000 gold price then to match what $2,000 feels like today.
And the same with stocks. If I told you I expect my favorite gold and silver picks to double, that may be just the beginning in an environment where the dollar is crashing. They may have to go up four or five times. And I'm just talking about the producers, not the high-flying juniors. Of course, everything else will be going up at the same time.
In the meantime, we're still in a deflationary environment. I don't know if gold is making its permanent move up right now or not. But quite frankly, it doesn't matter. The longer it takes, the higher prices will go, and the more time I have to buy. I like to say that you can believe in deflation as much as you want today as long as you believe in inflation as much as you can tomorrow.
But remember gold's purpose: to protect your purchasing power over time. Even though the gold price fluctuates, its purchasing power has endured. Gold has the same purchasing power now as it did when King Solomon bought horses for his army 4,000 years ago.
Daily Crux: That's a better history of purchasing power than the U.S. dollar has.
Jeff Clark: Ha. By a long shot.
Daily Crux: Thanks for your time and insight, Jeff.
Jeff Clark: My pleasure.
Crux note: If you're interested in getting started with a portfolio of gold bullion and safe gold stocks, we strongly recommend taking a free trial subscription to Jeff's advisory, Casey's Gold & Resource Report. It's one of the best precious-metals advisories you can buy at any price. You can learn more about becoming a subscriber here. |
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