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Due Diligence

Gold Dealers

Gold Dealers

By BRAD PALMER

P. T. Barnum said that there is a sucker born every minute. When it comes to Americans and gold, there is probably a sucker born every second. This is because Americans are the most naïve and ignorant people in the world when it comes to gold. And this is taken advantage of by companies peddling gold on trash right-wing talk radio stations and in publications marketed to “the salt of the earth”.

The typical buyer of gold is older, conservative, and lightly educated. S/he believes that the financial system of the U.S. is about to collapse, and their only salvation is gold. After all, they “seen” it on T.V. And if it’s been given the imprimatur of approval by the assholes on right-wing talk radio, then all is right and wonderful in the world. The type of people who buy gold from these ads are people who want to go back to the gold standard with absolutely no understanding of what they are talking about.

And so how do these companies that peddle gold screw Joe Lunch Bucket and Suzie Secretary? Currently, the spot price of gold is about $1,200 per ounce. But that is for pure, or 24 karat gold. So, therefore, a 1/10 ounce coin theoretically should be worth $120. But a 1/10 ounce coin is not 24 karat gold because pure gold is too soft to manufacture into coins; the coin actually is 90% pure gold or 22 karat that has been hardened with a base metal such as copper. So the value of the gold in the coin is actually $108; thus the customer has already been taken for $12. In addition, these gold peddlers put various markups on their products, as well as “surcharges” thereby increasing the price of the coin to well over 50% more than its gold value.

And what if a customer wants to buy bullion instead of coins? They will try to switch him to coins because of how hugely profitable they are. And lastly, the coins they sell have no numismatic value or value to collectors above and beyond the value of the metal.

Gold is not necessarily a bad investment, and there are ways of investing in it that do make sense. So if you are interested, find a reputable dealer locally. If you do buy gold bullion they do charge a small commission; after all, they do have to make a living. And if you are interested in gold coins with numismatic value, be sure to educate yourself and become familiar with the Grey Sheet; this is the publication that professionals in the coin business use to determine wholesale value. And lastly, call the assholes on right-wing talk radio and ask them if they have purchased gold coins from the company they peddle on the air.

Let me know what they say.

#GoldDealers #NJBusinessBroker #NJCPA #BradPalmer

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