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How to Buy Gold 5% Below Market Prices!

J. Wu Posted in Investing by J. Wu
March 10, 2008 04:44 AM - 21 Comments

buy-gold-bullion.jpg A few weeks ago, I talked about the important of buying gold bullion as part of your overall portfolio. The US dollar is tanking, inflation is eating away at the American standard of living, and investing in gold is the best solution to protect your assets.

Today I will walk you through the steps of buying gold bullion at 5% below market prices by taking advantage of cash-back credit cards.

Buy Gold Coins & Bars. Avoid Gold Shot & Un-assayed Nuggets
As a rule for new gold investors, always buy pure gold that has been assayed! Stick to government minted coins and gold bars issued by authoritative banks Credit Suisse and world-recognized assayers like PAMP Suisse.

Gold bars tend to have lower premiums than coins because they are cheaper to mint. This means you will usually be able to buy a gold bar closer to the spot price. The drawback about bars is that they don’t have a “collectible value.” Coins, on the other hand, have collectible values that increase depending on how rare the coin is.

Avoid buying loose gold and nuggets from shady jewelry stores and eBay. Unless if you are a pro, you won’t be able to tell if the gold has been diluted with filler metals like zinc.

Popular Government Minted Gold Coins
gold-eagle.jpg

  • Amercan Gold Eagles - The most popular. Gold eagles are minted by the USA and contain 1oz of pure gold. They are universally recognized and accepted by gold dealers all around the world. Can’t go wrong with these.
  • South African Krugerrand - Krugerrands also contain 1oz of pure gold, and are also universally recognized. The premiums on Krugerrands are cheaper than Gold Eagles, meaning you get more gold for your dollar. The only drawback is that because it contains a greater percentage of alloys (to make the coin more durable), the coin is copperish colored and doesn’t have the same bright yellow luster and shine as Gold Eagles.
  • Canadian Maple Leafs - These are pretty much the same as Gold Eagles, except made by Canadians. The premiums on these coins are also usually a little higher than Gold Eagles, so I don’t really bother with these.

Getting 5% Off Your Gold Bullion Purchase
gold-coins.gif Here is the sweet part. The Citi Cash-Returns credit card (click here to apply) awards 5% cash-back on ALL purchases for your first 3 months. Are you seeing what I’m getting at?

At the time of this writing, Gainesville Coins is selling the 1oz gold Krugerrand for $1019.71. The spot price of 1oz of gold on the Hang Seng Futures Market is $976.50.

1 krugerrand @ $1019.71 - 5% (50.99) = $968.72.

By getting 5% cash-back, you would be paying less than the spot price!

The reason I prefer Gainesville Coins is that they accept credit card payments and also PayPal. However, if you don’t like Gainesville Coins, you can also link your Citi card to PayPal, and shop around on eBay for deals. Since you can make PayPal payments with your credit card you will still get 5% back. Remember though, stick to government minted coins and gold bars to avoid getting ripped off!

Leave a comment to share your experiences with this method of investing in gold!

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Comments (21)
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  1. Roger - Canoga Park said:
    on March 10th at 12:46 pm

    Very good advice by Bankaholic.com. Stay away from gold ingots and gold nuggets, you will have to get these metals assayed at your expense to sell.
    In 2003, I bought several 1oz. U.S. Gold Eagles at $348 a piece and hundreds of Silver Eagles at $6.53 a piece. Now that both metals are high in value, it is hard not to sell. I will hold gold until it hits $1044, that would be a 200% return. Not a bad investment.

  2. Jonathan said:
    on March 10th at 02:46 pm

    Excellent article. I’m curious about the value of silver vs. gold. Obviously gold is worth more, but do we see similar trends in price of silver vs. price of oil or silver vs. US$?

  3. Matt said:
    on March 10th at 09:50 pm

    Where can you sell the gold coins once you have them? Does Gainsville buy them back?

  4. Bankaholic.com said:
    on March 11th at 02:36 am

    I don’t know if Gainesville buys gold, but a lot of jewelry shops do. Your local coin / hobby collectible store is your best bet.

  5. Jarod the Pretender said:
    on March 11th at 02:37 am

    eBay is a good way to sell gold coins too. Just don’t accept PayPal b/c the fees will kill you.

  6. Nick said:
    on March 11th at 02:31 pm

    why would you sell them back to a local coin hobby store or jewelry shop? they will not give you face value for the gold. They are in business to make money, so how do you think they will buy it back for you to make a profit and them make a profit if it is not going up in value. You would have to hold the gold until it goes up.

  7. June said:
    on March 13th at 03:06 am

    Yea, I don’t understand who would give you the right price for these coins. Will someone let me know? Then, I’ll definitely go and invest in these $1 coins.
    I’m also wondering, will anyone besides pawn shops buy your gold/platinum jewelry for its gold price or at least close to it?

  8. Jarod the Pretender said:
    on March 14th at 07:29 pm

    Gold broke through to $1010 today!

  9. Fred54 said:
    on March 15th at 02:24 pm

    Better Idea, open a foreign bank account thats offers basket of currencies accounts and dump your US dollars as fast as you can into Euro or Swiss Franc accounts. You can’t invest as a US tex entity but you can open standard savings accounts. This will give you a long position in the new international reserve currency, the Euro or the world most stable currency, the Swss Franc. Buy dollars when you need them but not until you need them. I only keep a 2 week supply of US dollars in country.

  10. chemdiox said:
    on March 18th at 02:38 am

    yea, bankrate tables are all advertising driven. you have to pay to have your bank listed there

  11. GoldSkeptic said:
    on March 20th at 02:36 am

    Gold is falling now…would you revise your $1500 prognostication based on the .75% rate cut instead of 1%? What your time horizon here?

  12. Bankaholic.com said:
    on March 20th at 06:12 am

    Yes, I am very depressed that gold didn’t make a run for $1500.

    However, based on technicals and todays sell-off in the financial stocks, there could be a possible bounce at around $925 to $933 in gold.

  13. Bill said:
    on March 24th at 08:45 pm

    I opened the Citi account and used it to pay my taxes online…went very smooth…..use it for gas, big bills, and I got a check with my first statement….very pleased….wish they would keep the high rate for more than 90 days

  14. madelein said:
    on April 1st at 02:27 am

    i have 26 oz of gold bullion. you think i should sell it to kitco.com or wait until the prices will raise. But kitco they charge $30 for processing fees. i’m frustated, please help me or tell me wat to do with this situation

  15. madelein said:
    on April 1st at 02:31 am

    i just recently buy the gold from gainesvillecoins that are worth $1038 1oz bullion bars. i just didn’t know what to do since i’ve read the gold charts on nymex.com they predict that until 2012 the prices will run for $1035 1oz

  16. Winnie said:
    on April 6th at 05:36 pm

    What’s the difference between gold proof coins and gold uncirculated coins in terms of value? Which one would you recommend? I looked at the site from US dept. of treasury and the gold proof is costing 1200 now..Is it still good time to invest in gold?

  17. Forsi said:
    on April 22nd at 03:27 pm

    Fred54 said:
    on March 15th at 02:24 pm
    Better Idea, open a foreign bank account thats offers basket of currencies accounts and dump your US dollars as fast as you can into Euro or Swiss Franc accounts. You can’t invest as a US tex entity but you can open standard savings accounts. This will give you a long position in the new international reserve currency, the Euro or the world most stable currency, the Swss Franc. Buy dollars when you need them but not until you need them. I only keep a 2 week supply of US dollars in country.
    Fred54, in the U.S. it is illegal to advertise foreign bank accounts and a trip to your local bank reveals no information either. How can we tell what are the safe banks overseas? What do you know about Millinium Bank? Thanks.

  18. Alan Greenspan said:
    on May 26th at 05:12 am

    Why buy gold when the price is already so high? Doesn’t it make more sense to wait for the price to come down to more stable levels, then buy with this technique, thus compounding profits as it goes back up? This IS assuming it will go back up after this bearish economy turns bullish and back again. Historically, our economy swings in 8 year cycles (give or take). In 2008 we see an almost perfect mirror of what we saw in 2000 and looking back we can see this cycle, only skipping the Regan administration due to the markets being buoyed by this thing called a Tech Boom, which went bust, finally, in 2000. So, if we buy when gold is at or near record prices, like it is now, we wouldn’t likely see much for the investment, and may even see the value decrease, right along with our investment. Buy when it goes low, save the percentage at that point, then ride the bull back up maximizing investment profits. By the way, this is a GREAT idea, saving with cash back on a precious commodity is VERY astute. Hats off to the brainiac that thought of it. It’s absolutely awesome!!

  19. Jimminy Cricket said:
    on May 26th at 05:43 am

    What’s Gainsville Coins, where are they, what’s the web site, etc? We don’t have them in our phone book.

  20. Dan said:
    on May 29th at 12:31 am

    Your local coin/PM dealer may give you a cash discount, typicaly 3-5% (Most have the “cash discount” as the advertised price.)

  21. Craig Callahan said:
    on June 10th at 04:24 am

    Their website is:
    http://www.gainesvillecoins.com

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