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Frequently Asked Questions



Answers

 

Is there any danger that you will disclose anything to the government?

The short answer is NO, we do not disclose your transactions to the government or anyone else. There are extremely rare circumstances where certain reports could be required, but a reporting obligation is only triggered about once in every ten thousand transactions – and make every effort to notify customers in advance. Please visit our Non-Disclosure Policy page for more information.

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How do I hold precious metals in my IRA account?

There is no substitute for holding physical precious metals in your Individual Retirement Account (IRA) rather than holding more risky paper alternatives such as precious metals exchange traded funds or even mining stocks.

On our IRAs page, we show you how to Secure Your Retirement with Physical Precious Metals.

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Which do you suggest to purchase for investment, privately minted bullion rounds or government minted coins? And which would be preferred for use in monetary exchange in case of bankruptcy of the dollar?

Our silver rounds (like other one-ounce rounds in the marketplace) are the exact same weight and purity as the government minted American Silver Eagle. While the Silver Eagle is technically legal tender for a paltry $1, it has no greater intrinsic value than a silver round. That's why we generally recommend people buy silver rounds over Eagles. You pay a higher premium on the Silver Eagle and you won't necessarily recoup that when you sell it in the future. 99.9% pure silver rounds and pre-1965 quarters, dimes, and half dollars (90% silver) are generally the best ways to get the most silver for your money and both are highly common and recognizable forms of silver in the marketplace. Like the American Eagle, both of these less pricey forms of silver would be suitable for making transactions should the dollar fail. If that happens, you can be confident everyone will know all about silver and its various forms!

Premiums on Money Metals Exchange's silver rounds are very low, particularly as you get into higher order sizes. When you sell silver rounds back, you typically receive the spot price. Although you can generally get a bit more than spot for Eagles, you usually won't recoup as much as you paid in additional premium.

Meanwhile, in a bull market, premiums (as a percentage of value) typically fall. In other words, if the price of silver doubles, it's not likely that whatever premium you paid on purchase will fully double as well. Therefore, buying the forms of silver (and gold) which carry the lowest premiums is a good strategy. One other thing to consider: Buying silver from local coin dealers normally involves higher premiums and often sales taxes as well.

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You are suggesting investing in bullion coins, bars, and rounds. But some of the biggest advertisers of gold and silver on TV, etc., always try to steer me into buying rare coins instead as an investment. Why are they saying that?

The fact is many coin dealers prefer to steer people into rare (i.e. numismatic) coins because they carry much higher profit margins for the dealers than do bullion coins. The numismatic market is far less liquid, there is usually a gigantic gap between the buy and sell price, condition is a huge factor in the price, and other considerations make it hard for even a knowledgeable person to be a savvy buyer.

Liquidity may be especially limited for little-known, unusual, or exotic coins. Unless the dealer has an immediate need for the coin you purchased, he may be reluctant to repurchase it from you at all. At that point, you would be on your own to track down another buyer.

On the other hand, gold and silver bullion coins, bars, and rounds are highly liquid, easily traded, and priced on a global market around the clock. At any given time, you know what the spot price of gold and silver is, and this is the primary basis for the price of any bullion product (which usually includes only a small premium over the spot price).

Money Metals Exchange has always maintained that it's best to start out with low-premium bullion products. They're the least risky, least subjective, most cost-effective, and most direct way to invest in precious metals.

Meanwhile, you may have heard the argument that you should buy numismatic coins because they would supposedly be exempted from a future confiscation – as collectible gold coins were in 1933. However, we don't give the retail bullion confiscation argument much credence for a variety of reasons that Money Metals Exchange newsletter has addressed at various times, and we would certainly not rely on it as the sole basis to enter into the highly speculative collectibles market.

There are risks in everything, but the risk in buying numismatics from local dealers, at coin shows, or over the Internet on free-wheeling marketplaces such as eBay at "bargain" prices is that you could get sold a coin that has been tampered with or whose grade certification has been forged to make it appear more valuable than it actually is. There is also a risk of counterfeit coins – even if made of actual gold or silver – because the price of the authentic item is often many multiples of the metal value.

Speculating on numismatic coins is somewhat akin to speculating on artwork. Sure, you can make money buying and selling artwork, but it's a specialized field, and if you are thinking of putting serious money into it, you had better make sure you know what you are doing.

All that said, it can be great recreation to dabble in collecting rare coins, particularly if you appreciate the beauty, symbolism, and history of these items.

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I have a collection of American Eagle proofs. I am wondering if the value of the "proof" coins will rise with the silver price. For future purchases would you recommend the "proofs" or the regular American Eagles?

The proof coins will continue to command a premium over regular silver Eagles. But whether that premium on proof coins increases in proportion to rising silver prices is another question entirely. It may, but more likely it will not.

Some people do have a special affinity for the brilliant luster and high contrast of the proof finish, but over time we suspect this interest will not grow proportionally to those who want lower-cost precious metals. Only you can decide how much you value aesthetic or historic/collectible qualities in coins. But as leading silver expert and friend of Money Metals David Morgan teaches, the surest way to invest in silver is to buy the most ounces you can get for your money.

So if you're just looking to protect your wealth in silver and cash in on rising prices, then don't pay the large premium charged for proof coins. Instead, use your savings to buy additional ounces of low-premium silver.

If silver prices triple from here, will the premiums on proof coins more than triple, as would be needed to outperform mere bullion? We doubt it. Premiums as a percentage of the total coin value tend to fall in a precious metals bull market.

Our mantra: Take note of the "bid/ask" spread. This is the difference between your cost to purchase versus your price to sell today. For proof coins and other numismatics you will find this spread can often be 30%, 40%, or more. Compare that to bullion coins, rounds, or bars, which will generally offer bid/ask spreads of less than 10%.

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Let's suppose that silver does hit $100 an ounce (or more). What does one do when it comes time to sell? Worthless paper money does not seem to be an answer, so what is the benefit of having bought silver? Just what does one do with it?

The particular dollar amount at which you choose to trade out of your silver isn't necessarily important. If you think of silver as a currency, then what matters is what goods, services, and other assets are going to cost in terms of ounces of silver.

We suspect that in the near future silver will become much more valuable not only in terms of depreciating dollars, but also versus foreign currencies, stocks, bonds, houses, and most other assets. In other words, silver's real purchasing power will increase across the board, giving you the ability to convert your silver into any of a number of assets – not just dollars – that will be incredibly cheap in terms of ounces of silver.

Silver is money. When the time comes to exchange some of your silver, you should easily be able to swap it for paper currency. In the event folks are reluctant or unwilling to accept paper currency, precious metals will almost certainly take on a leading role as a medium of exchange.

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I have questions about the Monthly Savings Plan.

Please see our Monthly Program FAQs for questions about the Monthly Program

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What determines the premium on gold and silver products?

Premiums vary according to the product in question (American Eagles will always carry a slightly higher premium than common rounds) and market conditions. When demand is soft, premiums may fall, especially on secondary market products such as pre1965 U.S. silver coins. Secondary market products – items that are being resold rather than sold for the first time as brand new – can often be purchased at a discount to newly minted products and very close to actual spot prices.

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Which bullion products offer the absolute lowest premiums?

Privately made bars and rounds, as opposed to government issue coins, are hard to beat when it comes to low premiums. That is why Money Metals recommends them so often. Investors will often find the combination of uncirculated beauty and low cost to be a “sweet spot.” About the only way to lower costs even further is to make some compromises when it comes to condition. It is sometimes possible to buy scratched, dented, and/or tarnished items at a discount. Investors who don’t care much about aesthetics may be able to get slightly more precious metal for their dollars. We classify scratched or dented gold and silver items as “Bargain Bin,” and they are discounted at MoneyMetals.com.

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When considering what types of gold and silver bullion products to buy, does purity matter?

Not usually. The only real factor that matters is the melt value of the gold or silver product in question. For instance, while not all of the popular one-ounce gold bullion coins have the same purity, they do all contain one full troy ounce of gold. The most popular retail silver bullion product where this purity question comes into play is with “junk silver” – aka 90% or 40% U.S. silver coins. When buying junk silver, you effectively get the copper filler for free. You pay only for the silver content. When it comes to Pre-1965 90% silver dimes, quarters, and half dollars there is 0.715 ounces of silver for every $1 of face value (i.e. 10 dimes, 4 quarters or 2 half dollars or any combination thereof that adds up to exactly $1). There are some situations where purity does matter and must be considered. For example, when purchasing bullion specifically for a precious metals IRA, the IRS requires that products (other than American Gold Eagles) meet a certain purity standard.

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Are gold and silver prices manipulated?

All markets are susceptible to manipulation by large institutional traders, central banks, and governments. Precious metals markets are no exception. In fact, Deutsche Bank, HSBC and ScotiaBank, Merrill Lynch, and JP Morgan Chase have all been hit with criminal and/or civil charges for rigging gold and silver markets. Since 2015, big banks have paid penalties totaling over $10 billion to settle charges of market manipulation. Government directed/sanctioned manipulation is more insidious and tougher to combat. The U.S. government’s Exchange Stabilization Fund and Working Group on Financial Markets (i.e., “Plunge Protection Team”) intervene in markets when they veer off course. Evidence suggests central planners suppress gold prices through a variety of mechanisms, such as engaging in secret “swaps” with other central banks.

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If gold and silver prices are being artificially suppressed, then why should I bother investing?

Market manipulators can’t overturn the laws of supply and demand. Over time, prices will reflect the realities of limited supply and growing demand for gold and silver. To the extent that metals prices are currently suppressed, supply shortages will eventually emerge, so it’s an opportunity to obtain them at a discount to their fundamental value.

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How do I safely store my physical gold and silver?

We recommend a two-pronged approach. First, store some of your bullion at home in a well-concealed safe for immediate access in case of emergency. Store the remainder of your bullion in a secure, insured precious metals storage facility. Insist on segregated storage like that provided at Money Metals Depository to avoid any commingling of your bullion with that held by other customers. Safe-deposit boxes at banks are generally not suitable for precious metals storage. In fact, some banks have policies that explicitly prohibit gold bullion. Plus, your gold would be at risk in the event the bank goes under or gets raided by government agents. You don’t want your gold tied into the banking system, even indirectly.

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What can I do with gold and silver coins?

In a way, this is an odd question. Nobody ever asks, “What can I do with stocks, bonds, or bank deposits?”

Fortunately, though, physical precious metals offer far more versatility than conventional paper assets in terms of what you can do with them. Basically, all you can do with a stock or bond is sell it for cash, donate it, or in some cases borrow against it.

You can do all those things with bullion – and much more. Since precious metals exist outside of the financial system, they can serve many non-financial purposes.

Unlike digital entries in a bank or brokerage firm, gold and silver coins are beautiful! They are meant to be appreciated for their aesthetic qualities, which confer a pride in ownership and a special sentimental value when given as gifts.

Silver has myriad uses in high-tech, industrial, and medical applications. Silver has germicidal properties and can be used to purify water, preserve milk, or treat wounds. (Don’t try any of that with stocks or bonds!)

Your coins could theoretically be melted down and repurposed in any number of ways. More likely, though, you will hang onto them until you are ready to sell and/ or barter with them. Since gold and silver have nearuniversally recognized value, they can be used as money around the world in transactions with any willing party.

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If the economy collapses, won’t gold go down with everything else?

Not necessarily. Gold is a counter-cyclical asset. It shows virtually no correlation with the stock market (and other conventional assets), meaning it can go up when stocks fall – especially if investors in large numbers seek gold as a safe haven.

During an extreme credit crunch such as occurred in 2008, gold may temporarily sell off during forced liquidation sprees. But despite suffering some downside volatility in late 2008, gold actually ended the year in positive territory.

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Are gold mining stocks a good substitute for physical gold?

No. It’s important to keep in mind that physical precious metals and mining stocks are entirely separate asset classes. Gold is a tangible form of money; mining stocks are financial assets that are subject to a host of additional risks besides the market price of gold. During the turbulent market conditions of 2008, when gold prices gained overall, the leading gold miners index (the HUI) lost nearly 30% of its value. Incidentally, since its inception, the HUI gold stocks index has actually underperformed the gold price – although it tends to outperform during bullish periods for the yellow metal.

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Can I hold gold and silver coins within an IRA?

Yes! You can even hold platinum and palladium bullion, subject to certain IRS requirements, inside an IRA. For more information on how to open one, call 1-800- 800-1865 or visit MoneyMetals.com/programs/iras.

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Will I have to pay taxes when purchasing or selling precious metals?

Tax treatment is the same for all bullion coins, rounds, and bars.

The IRS miscategorizes gold, silver, platinum, and palladium bullion in the “collectibles” category, despite the fact that most such items carry no collectible premiums. It’s confusing (and unfair), but that is the way it is until the U.S. Treasury changes its regulations or Rep. Alex Mooney (R-WV) passes his Monetary Metals Tax Neutrality Act (H.R. 1089) which would end ALL income taxation on precious metals.

As of the current time, bullion sold after holding one year or longer is taxed federally at the 28% rate for “collectibles.” Bullion held less than one year is taxed at personal income tax rates, just like short-term capital gains taxes on stocks or bonds.

That said, investors are never taxed simply because their metal holding appreciates in value. This capital gains tax applies when the metal is sold, and the investor realizes a gain or a loss in terms of fiat dollars.

Unfortunately, dealers are increasingly forced to assess sales taxes on behalf of those states that impose them on precious metals purchases (see page 8).

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Will you report my precious metals transactions to the government?

A dealer has no obligation to tell the IRS about a customer’s purchase or sale except in extremely rare situations. The primary exceptions are purchases using more than $10,000 in actual cash and sales of very large gold, silver, platinum, and palladium bars. In the overwhelming majority of transactions, dealers are NOT required to file any kind of report or 1099 form. Furthermore, Money Metals is absolutely committed to protecting our customers’ privacy All that said, you have an obligation to report capital gains or losses realized upon a sale as measured in Federal Reserve notes.

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Why do I have to pay a premium over the spot price when buying bullion?

Retail bullion products including bars, rounds, and coins carry small premiums over spot prices. The premium includes minting costs plus the dealer’s overhead and profit. The premium also incorporates any wholesale premiums the dealer must pay to acquire the inventory.

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Why are gold and silver prices quoted in troy ounces?

Precious metals have their own unique unit of measure known as the troy ounce. It’s been around since the Middle Ages and is believed to have originated from traders in Troyes, France. When you see gold or silver prices quoted “per ounce,” it really means “per troy ounce.” In effect, a troy ounce is more than 10% heavier than a common Avoirdupois ounce. A troy ounce is equivalent to 31.1 grams or 480 grains, whereas a common ounce translates into 28.3 grams or 437.5 grains.

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Is silver money?

Yes, both historically and constitutionally, silver is money. Silver has been used as money since ancient times. It has been functioning as money far longer than any fiat currency has lasted. The U.S. Constitution, under Article 1, Section 10, instructs states to make payment in nothing but gold and silver coin and authorizes the federal government to coin gold and silver as money. The Coinage Act of 1792 defined a dollar in terms of silver. Specifically, a dollar was to be 371.25 grains (equivalent to about three-fourths of an ounce) of silver, in harmony with the Spanish milled dollar. Thus, the true foundation for U.S. circulating currency was not gold, but silver.

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How do I safely store my physical gold and silver?

We recommend a two-pronged approach. First, store some of your bullion at home in a well-concealed safe for immediate access in case of emergency. Store the remainder of your bullion in a secure, insured precious metals storage facility. Insist on segregated storage like that provided at Money Metals Depository to avoid any co-mingling of your bullion with that held by other customers.

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