Buyer’s Guide to Gold and Silver

When purchasing Sunnah Money (precious metals like gold and silver coins and bars), the most important things you should be aware of are 1] what the spot or daily price is, 2] the cost premium, and 3] tax isnt normally charged.

Spot & Daily Price

Gold and silver are traded daily on various commodity exchanges around the world and the current trading price is known as the spot price. The daily gold price is fixed twice a day in the London exchange (LBM) in USD, GBP and EUR at 10.30am (London AM) and 3pm (London PM), while also being fixed at the end of the trading day on the New York exchange (NYMEX/COMEX). The daily silver price is fixed once a day both on the London and New York exchanges.

When purchasing precious metals in most places around the world, the spot price is always used as the base purchase price, while in other places, the London or New York fixed prices may be used (Dubai’s gold price per gram is fixed twice a day). The daily fixed price of gold and silver can normally be found in the foreign exchange (forex) portion of the business section in daily newspapers.

Cost Premiums

All precious metal coins and bars are sold at a premium over their spot or fixed price. The premium is normally set as an amount over the price per gram or troy ounce, which normally decreases the larger the coin or bar is. Alternatively the premium is a fixed price (aka making charge) set for the minting and/or packaging of the coin or bar. As a general rule, the premium of minting a coin will always be higher than that of a bar. One should always calculate the premium as a percentage over the spot or fixed price in order to know how much of a deal you are getting for it. Premiums paid when purchasing precious metals are normally not recouped when selling it back to a dealer, as dealers will normally purchase it from you at or slightly below the spot or fixed price. So in order to get the best deal when selling gold and silver, sell it either to individuals in auctions (ebay) or classifieds (craigslist).

Bullion vs Numismatic Coins
When purchasing gold and silver coins, one must be aware of whether the coin is bullion (priced relative to metal quantity) or numismatic (priced at a high value [50% and more] over its metal quantity due to rarity). Do not purchase numismatic coins as they are geared towards coin collectors and are sometimes called medallions.

Bullion Coins vs Rounds
Bullion coins normally refers to coins minted by government mints, which have a face value on them and have legal tender status, while bullion rounds or medallions refers to coins minted by private mints without a face value or legal tender status. As a result, bullion coins are more widely known and have a higher premium than bullion rounds, and thats why silver 1 oz coins would normally be around 13-15% above spot, compared to around 7-10% for rounds.

Popular Bullion Coins
maple leaf
Maple Leaf
Canada
american eagle
Eagle / Buffalo
United States
krugerrand
Krugerrand
South Africa
philharmonic
Philharmonic
Austria
Kangaroo 2010
Kangaroo
Australia
panda
Panda
China
libertad
Libertad
Mexico
sovereign
Sovereign
Britain (UK)

Junk Silver
Various countries, like the United States, Canada, UK, Australia, and France, use to mint 40 to 90 percent silver coins as dimes, quarters, half dollars, dollars, half crowns, florins, shillings, six pences, and three pences until the 1960s. These circulated old silver coins can be purchased in face value bag form ($100 to $1000) and are normally sold at the closest value to spot price. The benefit of these coins are that they are small, more easily recognized, have legal tender status and have real face value.

Precious Metal Storage

One of the most difficult things to consider after you purchase physical precious metals is the issue of storage, which is one of the reasons some people prefer alternatives to physical metal. One of the first places people consider storing their metal is in a safe deposit box at a local bank, which is a good choice but not perfect as you have limited access to it during banking hours. The second common place is home storage in a safe or hiding place, which is a good idea for small metal quantities but not perfect as houses can catch fire, broken into and/or affected by nature disasters. A third place for storage is to bury it on your property, ideally when no one is looking, in an airtight and waterproof container. A fourth place is storing it with a private vaulting/depository company (aka segregated vault storage) which you an approach directly or through companies like GoldSilver.com (Brink’s) or GoldMoney.com (VIA MAT), which is good if you have a large quantity of precious metal and the storage fees are cost effective. Whichever of these you choose to do, only tell one person you trust about where it is, whose job it is to access it if you are unable to. The options above all have their advantages and disadvantages, which is why it maybe best to use a combination of them to be safer.

More Reading
Robbed! – Article about the best means of securing your metal
Think Like a Thief – An update to the above article [comments]
Options for Storing Precious Metals – Solari.com [comments]

Country Guides

In order to make it easier for individuals to get specific information on how to get a hold of gold and silver bullion in their country, I have prepared country specific buyer’s guides. If a guide isn’t written for your country, you can still benefit from reading the guide of a country close to yours.

United Arab Emirates | Qatar | South Africa | Canada | United Kingdom | United States | Australia | Saudi Arabia | France

United States – Gold Silver Inc, NWT Mint, APMEX, CMI Gold & Silver, Tulving, Euro Pacific Precious Metals, JH Mint, Gainesville Coins, Miles Franklin (SGT)
Australia – ABC Bullion (Sydney / Perth dealer), BullionMark (Sydney / Perth dealer), Ainslie Bullion (Brisbane / Perth dealer), Gold Bullion Australia (Gold Coast / Perth dealer), Gold de Royale (Brisbane), Perth Mint Distributors

Other General Information

Government Minted Bullion Bars: Royal Canadian Mint, Perth Mint
Popular Swiss Private Bars: Pamp Suisse, Credit Suisse, Valcambi
Popular Private Bars: Johnson Mathhew (US), Englehard (US), Heraus (Germany), Umicore (Belgium)
Popular Private Mints: Northwest Territorial Mint (US), Sunshine Minting (US), First Majestic (Canada)
Popular Online Stores: APMEX (US), Gold Silver Inc (US)
Important Measurements: 1 (troy) ounce – 31.1 grams,  1 tola – 11.66 grams,  32.15 ounces – 1 kg

Videos

How To Buy Gold Now – [3 mins] One of the first videos i watched about buying
How To Buy Silver & Gold – [14 mins] Goes over the most common questions
How to Buy Gold and Silver Bullion – [24 mins] Perth Mint’s beginner’s guide
How to Buy Gold and Silver – [7 mins] Explains to users about buying close to spot
What Products Should I Buy? – [2 mins] Brief guide to the various types you can buy
What is Junk Silver? – [4.5 mins] What it is and with examples of US and UK coins
Fake Silver 101: Buyer’s Guide – [7 mins] Guide to detecting fake silver or gold
Junk Silver or Fine Silver? – [5 mins] Silver bug David Morgan gives his view on it
- The Mints -
Visting the Royal Canadian Mint – [7 mins] Rick Mercer Report visits the mint in Ottawa
The Perth Mint – [9 mins] Brief history of the mint and the products it offers
- Coin Creation -
Making coins – [5 mins] Excerpt from a Discover Channel video on how coins are made
Making Stuff visits the Royal Canadian Mint – [5 mins] How the mint makes regular coins

More Reading

Bullion Coin, Junk Silver – Wikipedia
Junk Silver Coins – Silver-Bullion.info
How to Buy Gold or Silver – RunToGold.com
A beginner’s guide to investing in gold – GoldCore.com
How to invest in gold – ThisIsMoney.co.uk
Australia Silver Buyers Guide – BullionMark.com.au
Coin melt values in United States and Canada – Coinflation.com

Books

Michael Maloney’s ‘Guide to Investing in Gold & Silver [online]
David Morgan’s ‘Get The Skinny on Silver Investing

28 Responses to Buyer’s Guide to Gold and Silver

  1. zaid says:

    Assalam alaikum Yusuf,

    Mashallah, excellent post.

    Do you know anywhere that I can purchase LBMA bars? What is the minimum amount I need to purchase to qualify for a possible discount?
    Thanks, by the way do you have an email address I can contact you on?

    • Yousuf says:

      Salams Zaid,
      Well LBMA approved bars that you can find in Dubai include PAMP, Valcambi, Credit Suisse, Istanbul Gold Refinery, and Nadir Metal Rafineri. You will find PAMP and Valcambi easily available as bars from 1 to 100 grams and larger.

  2. Asad says:

    Dubai is best place for gold .invest in bar and coin is better than ornament my question is that gold bar tt and coins 8gm king george 22 cts at dubai airport are having same price that of inside dubai at that time.

    • Yousuf says:

      Yes the prices in Dubai are very good, but the prices at the airport will be more expensive than in the city, as does anything you buy at any airport. :)

  3. Mohamed says:

    Salam Yousuf,

    Quick question, one of the options not considered above for the storage is private companies offering Lockers. Do you think it’s a good idea?
    Last question, do you consider a government/bank confiscation a relevent risk in the UAE as it already happened in countries like the US historicly?

    Thanks

    • Yousuf says:

      Salams Mohamed,

      Well a bank is a private company offering lockers, but yes I should add that there are non-bank private companies that offering precious metal storage. Well there are no private companies in UAE other than banks that offer lockers, according to my research, but if there were non-bank private companies, I would feel more comfortable with them rather than banks.

      Well the so-called 1933 US confiscation was a government order to trade in gold for dollars, so they never broke down people’s homes or raided people’s bank safety deposit boxes looking for gold, and those who didnt trade in their gold never had it taken. At that time, the US was on a gold standard and people were trading in their paper dollars for gold, so the US gold deposits were running dry, in addition to gold coins being used as money, so that is quite a different case today. I think any government who tries to confiscate people’s wealth, though they are doing it daily due to us using paper currency, would get alot of opposition in this day in age and some would be willing to die to protect their wealth. I believe that the UAE will not consider such a thing as it would be against Islam to do so, but online time will tell if that turns out to be true if it happens.

      Governments in europe are currently limiting the amount of money people can withdraw from banks and the amount of money they are allowed to hold in paper form and even the amount of gold one can buy. If you attempt to take out amounts of money from the banks in the US which they feel is questionable, they will ask you what you are taking it out for (check out Gerald Celente’s latest videos for his tale of doing so). So if such things happen here in the UAE, where they wish to restrict the amount of money you can have in paper form or take out of the bank, that would be a major sign for pulling all your wealth out of the banks.

  4. tracey says:

    Do you know any shops in Gold Souk, that purchases used gold?

  5. Mirza says:

    Can any one give me information about dealer in pindi from whom i can buy 24carat 1tola gold bars.

  6. Shahid Alvi says:

    Dear Yousuf,
    All three methods you suggested for storing PM are risky and not advisable. If you read the book of Mike Maloney, he has in detail discussed merits of each type of storage option and i beleive it will wise if you also post them on your website for the good of people.
    Mike Maloney thinks that segregated vault storage is the best option for storing PM. For Canada he has suggested the name of Cube Global Storage, Vancouver, BC. Do you know any thing about this Company? How reliable they are? Is it a good idea to trust them with your precious metals?
    Regards.
    Shahid Alvi
    Riyadh, Saudi Arabia
    Best regards.

    • Yousuf says:

      Hi Shahid,
      Well everyone has their opinion on what is risky and what isnt and that is why I have given all of them and included their disadvantages as well. I went over Mike’s book and the only thing he encourages is the 3rd Party Vault Storage option, which his company provides. I have wanted to add that option to the list and have just done so.
      Unfortunately I didnt know about the canadian storage company before you mentioned it and me checking it on Mike’s company’s website, so I would know how reliable or trustworthy they are. As you live in Saudi Arabia, I would believe there are means of you finding private storage in the country possibly through Brink’s UAE office (+971-4-2996936).

  7. asad says:

    dear yousef tell me in pakistan karachi where and who main dealers of gold bars and coins sell/buy at good price

    • Yousuf says:

      Dear Asad,
      Unfortunately I have no knowledge about where to purchase gold in pakistan. If you do find any information about what good places are there, please to let us know, so others can benefit from the information.

  8. Rob says:

    Hi Yousuf,

    I have been following your comments for quite some time, nice.

    Can you tell me what is the most popular (TT & 1 ounce) gold and the most popular 1 kg Silver in Dubai.

    I mean the brand.

    Thx.

  9. T.F says:

    Hi Yousuf,
    How r U? wish u r doing well.

    I want to know that today is a good day to purchase Gold and Silver before 31-Dec-2012?. or not. and why.

    if yes, could you please let me know the price for (TT Gold & 1 Kilo Silver) and from where I can get the cheapest price?

    Thanks for reply by today before 4:00 PM.

    T.F

  10. patrick says:

    Dear Yousuf,

    Within a few weeks i gonna visit Dubai and i want to buy 18 carat gold jewelery (europe models) can you tell me a good adress in the souk and what are the prices (gram) for 18 carat jewelery in Dubai .

    best regards

    patrick

    • Yousuf says:

      Hi Patrick,
      The deira gold souk would be the place to go, but any of the malls with do as well. I dont buy jewellery myself, so i couldnt recommend a specific shop.

  11. abou khalid says:

    Dear Yousuf
    i’m new in gold trading, and i will be open new company in DMCC SOON.
    i have many customers form africa, they bring for me 2 to 10 KG weekly.
    Is it possible to give me an idea of ​​selling cash within the market
    Addresses of companies that buy gold in large quantities
    Will they take the expenses (FEES) on the quantity, WE WANT TO SELL
    How can I take advantage (PROFIT) of these processes.

  12. David says:

    Hi all.

    Further to my comment a few months ago with regards to G.B Jewellers being closed for refurbishment, I can now confirm that they have re-opened.

    Went there today to get some silver (1kg) and gold (100g). Price for both was better at Classic Diamonds (a few meters away) which used to be the other way around.

    I ll keep on visiting them each time I go to Diamond&Gold Park to get a better opinion over time.

    Alternatively I have just contacted Al Etihad Gold (not far from Gold&Diamond Park) to see if they were willing to supply Silver to individuals.

    Yousuf probably already knows if they do and if there is an advantage to it but I thought I would check before my next round.

    Nice week to all.

    David

    • Yousuf says:

      Mints normally dont deal with individuals unless its large quantities. The prices at the mints will be closest to spot that you will find anywhere in the market. I called Emirates Gold once many years back for a few kilo silver bars and they directed me to a supplier they deal with (Ceetees). Al Etihad Gold main dealer is Al Bahrain Jewellery which has a showroom and office in the gold centre building. Thanks David for keeping an eye on the Diamond & Gold Park.

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