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We, at Citizens Gold have always urged our clients to become educated and do their due diligence before buying. Gold comes in many shapes and sizes and no one shape or size fits all. There is no one right purchase for every buyer. It all depends upon your objectives, time frame to hold and risk tolerance. The age of the purchaser, his asset base and employment status are important considerations. Nobody should put all their eggs in one basket-that is so true. Gold should never be the only one product or investment in an asset portfolio. Many experts have recommended that it should not exceed 20% of one’s entire asset base-and we agree. Gold, as a safe haven or hedge against inflation is a great concept if properly utilized and it can indeed protect against the weakening dollar and can in fact serve as a hedge against other assets declining in value.
Whether bullion in the form of coins, bars or otherwise is the right type of investment depends upon the buyer. Gold bullion-which has its value strictly in the value of the metal, trades with the spot gold market and is often affected by global or National economic developments, conditions and news. On the other hand, gold in the form of pre-1933 Numismatic products trade both based upon the spot price on any given day (for the intrinsic value of the metal if melted) as well as other factors. Various degrees of premiums attach to the purchase of each product-bullion or so called private gold. Rare coins and scarce coins are valued upon factors other than merely the spot price of the metal. The condition of the coin, the mintage, the design and the historic sales or auction records affect resale value. As a matter of practicality, there is a lower premium attached to bullion than to private gold. No seller or reseller of gold to the public or the industry is a nonprofit enterprise. All are in business to make a profit. All pay to acquire the product they sell to the public. The premium that gold companies pay to acquire bullion is generally less than the premium attached to acquire private gold. In turn, the premium that a gold seller charges a customer to purchase a product is generally less for bullion than for private gold.
All our premium ranges are disclosed in our brochure, in our educational documents and on our website. Those premiums vary according to various factors, the primary one being supply and demand. When a customer gets ready to sell his holdings, he necessarily needs to overcome the spread or premium in order to get in the money in terms of making a profit. This is no different than a supermarket buying an apple for 50 cents and selling it to a customer for 60 cents. If the customer wants to sell the apple and make a profit, he needs to sell it for more than the 60 cents he was charged, irrespective of what the supermarket paid for the apple. The amount of profit the supermarket made- 10 cents, in part goes to the cost of its lease, its employee wages, electric and other items of overhead. If the factors affecting the premium have changed from the time of acquisition to the time of the customer’s sale, the ultimate price he realizes, may be positively or negatively impacted, irrespective of whether the spot price of the metal is higher or lower on the date of his resale than the date of his acquisition of the product.
Sometimes a customer gets ready to sell a product and realizes that he may have done better had he acquired private gold, a numismatic rarity or bullion with the same dollars than the product he decided to acquire. Sometimes, the educated investment turns out to be the right decision. Nobody has a crystal ball and nobody can predict with entire accuracy which type of product will in fact perform better than others in the time interval between acquisition and resale. Historically, however, gold has in fact outperformed the Standard and Poors Index and the stock market in general-see the charts and graphs in our materials.
Some potential clients have asked whether they can accomplish the same objective by buying gold stocks and what downside, if any exists for them to do this. While gold can certainly be purchased in the form of a stock certificate in a company, many clients have correctly pointed out that they would rather take physical possession of the actual gold, than to potentially be the victim of the horror stories we have all heard when a company goes bankrupt or even where the selling company offers to store your gold for you. Citizens Gold always delivers the gold to you by the US Postal Service, Brinks or other safe form of delivery. We do not store it for you or give you a certificate. Even when purchasing shares of stock in a reputable gold refinery, the price of that stock is affected and sometimes drops based upon factors other than the price of gold. For instance, gold stocks may drop based upon how the company is run by the CEO, whether their overhead and expenses are too high, whether the CEO takes a multi-million dollar salary or whether the company buys a private jet for the CEO’s use. At Citizens Gold, we have a simple formula- we sell the product you think is the best match for you and you and you alone take delivery of it and hold it until you are ready to sell it or leave it to family as a part of the buyer’s estate. When you are ready to sell, you decide the timing and to whom you will sell and at what price. We will offer what we believe is a competitive price and our 1% liquidation fee on bullion buy backs is what we believe is very competitive and beneficial to our customers. However, our customers are encouraged to shop the market and sell to whom they want, when they want and at the best price they are offered.