Gold: Close To Spot

January 22, 2009 Market Updates, Physical Gold No Comments

Buy gold as close to spot as you can. Spreads may vary up and down, but you get the best value if you buy gold as close to spot as you can.

The markets are proceeding to give back yesterday’s gains at this hour. The Dow is down 174 at 8,059, the NAS is down 55 at 1,451 and gold has been all over the board since yesterday’s close, currently trading up $1.50 at $$854.70. Gold is operating in a wide trading range between support at $820 and resistance at $860.

Gold, seems to be rising slightly, along with precious metals including platinum and silver, as investors seek to find a secure store of value in lieu of the decline in stocks on Wall Street. Between housing start data slumping to a new record (starts fell to 550,000 annually, the lowest since 1959) and initial claims for unemployment tying a 26 year high, there is not much positive news out there. Gold futures for February delivery reacted to the bad numbers by rising $9.50 (1.1 percent) to $859.60 an ounce on the Comex division of the New York Mercantile Exchange.

Gold is showing it’s resilience (at this moment it is up$6.00 at $859.20) while the dollar is rising! The dollar is up .21 at 85.82. The longer this trend stays intact, the better it is for gold’s next up leg. It is critical that gold starts to act like a currency and shed it’s reverse shadow relationship with the dollar. Two days does not a trend make, but it is looking promising.

As Close to Spot As You Can Get

With not a lot going on in the markets and gold steady in the trading range, I would like to spend a little time on gold coins. When buying gold coins I have one hard and fast rule. Buy gold coins as close to the spot price as you can! Everyone naturally looks for the best price that they can get when purchasing any item, but it is especially important when purchasing gold coins. I also like coins that are well known, like Eagles, Maple Leafs and Krugerands. They are known world wide and are readily exchanged anywhere in the world.

The difference between the spot price of gold and the price that you pay for the coin is called the “spread” and the “spread” will vary from dealer to dealer, so it is important that you check around and select a reputable dealer that offers the coin, or gold bar, as close to the spot price of gold as you can get.

I have never been a big fan of numismatics because like antiques there is a wide range in which their value can float. They also are subject to economic events which can dramatically change their collector value. Collectibles will not be as important in the future as will the gold content, in my opinion. I tend to put the numismatics in the hobby section. I am not saying that they are wasted money, but rather that I would prefer more ounces of gold for the same amount of money.

The confiscation argument is answered by one question. Who in their right mind would actually give up gold that they held in their private possession just because the government said so? Enough said!

Till next time, good luck and good trading!