Can you really buy gold at a $600/ounce discount?

By Travis Johnson, Stock Gumshoe, February 12, 2009

Eric Roseman of the Sovereign Society has been blanketing the web with a teaser about a “different way to own gold” — one that he says might give you a discount of as much as $600 an ounce. Here’s what he says …

“Recently, I’ve been researching different ways to own gold – and two months ago — I came across a little-known form of the yellow metal.

“The shocking thing is, it has outperformed “normal” gold investments by a factor of 10… or more!

“During the great Depression – it soared 69% overnight. And according to the indicators I track, it has equal potential today. Bottom line, it belongs in EVERY investor’s portfolio (at least in my opinion).

“There’s just one problem – there’s very little to go around.

“Here’s what I mean: Last year when 1.2 million of these “little guys” were offered, they sold out in just 11 months… now… this year a similar offering has been made, except, and this is critical – that 1.2 million has plummeted to just 50,000. That’s all that are being made available in 2009 – creating huge demand.”

For someone like me, who’s not necessarily much of an expert on gold, this ain’t a waik in the park, but I’ll try to dig into it anyway. If you want the answer from Roseman, he’ll ask you to first subscribe to his Commodity Trend Alert service, which will run you about $1100 a year.

For free, there are a few things I can tell you … and I can at least make an educated guess about the rest:

First, though elsewhere in the piece he says that he wouldn’t recommend any US minted coins, the total sales of US-minted American Eagle gold coins were just about 1.2 million last year. I don’t think there are any specific US gold coins that are limited to 50,000 this year, but given his dislike for US minted coins that doesn’t seem too likely, anyway. I’m guessing that he’s comparing apples to oranges in this ad, which is not atypical for teasers — there were 1.2 million “similar” coins last year, this year there are 50,000. “Similar” is a nice word, it can mean pretty much whatever you want.

So … what are we dealing with here?

Eric Roseman, I expect, agrees with some of the other gold bugs in that he probably has some fear of US government gold confiscation — the specter here is of FDR, who confiscated bullion gold coins back in the early 1930s. At the time, gold coins that were “collectibles” were exempted, so many folks think that there is some extra safety in holding either collectible or commemorative gold coins that may be argued to have some value above and beyond their melt value.

So what coin has collectible or commemorative value, is minted in a limited run of 50,000, and trades without a huge premium?

Well, I was hesitant to answer this without digging in for a few other clues, so I skimmed through the video that they’re teasing us with for this one, and they added a few more details …

It’s from a G-7 country. It’s purer gold than the Eagle. It’s commemorative, specifically, which means that Roseman thinks it won’t be confiscated if the US again confiscates privately held gold (he does mention this as a specific concern in the video).

They of course still don’t reveal the “secret” in the video, but they do talk through the details enough to make me confident that the “$600 discount” is because some folks on eBay have been paying ridiculously high prices for American Eagle gold coins in recent months, up to $1500-1600, according to Roseman, and this coin trades for just 5% or so over spot gold prices, so closer to $1,000. That’s your “discount.”

So … let me be clear that the Thinkolator is not particularly precise when dealing with numismatics or gold, but it did help me put together a guess.

Here it is:

The 2009 Canadian Gold Maple Leaf, specifically the commemorative version that’s minted to celebrate the 2010 Vancouver Olympic Games.

This is a pure gold coin, .999 pure (more pure than the American Eagle, which is alloyed for durability), and it is minted in a limited run of 50,000 coins (per year — this is a three year series, last year, this year, and 2010, when the Olympics actually are held in Vancouver).

It’s also currently available from many dealers, though it doesn’t look like it’s available direct from the mint anymore, and I’ve seen it priced at right around $1,000 recently, a bit above in most places. It seems on a quick glance like it’s now squeaking up to more like a 10% premium from some dealers, thanks in part to the runup in gold over the last few days. Prices I’ve seen run from $1,000 or so from a few websites to $1200 on eBay, so who knows how much it might really cost if you decide you’d like to own one.

There are all kinds of other commemorative coins sold by the Royal Canadian Mint, too, including some “gold colored” coins and some very limited edition gold designer coins that cost substantially more. There is also a 2008 coin already available in this series and it has a different design, so if you’re interested in these be careful that you know what you’re looking at.

And of course, I also have no idea whether or not this is really a great coin to buy — it’s a pure gold modern bullion coin but also a commemorative, so I guess it’s fair to call it collectible … but so far, folks aren’t paying all that much more for it than they are for American Eagles or for regular non-commemorative Maple Leafs. And if this is the match, then it’s not really much of a “$600 discount” anymore — American Eagle coins are trading at just about the same price these days or even less, it looks like most folks are charging a 5-10% premium over melt for Eagles even on eBay, where wacky price swings in gold coins are commonplace as sentiment changes.

I also can’t guarantee that this is really the coin Eric Roseman is talking about — just my best guess. There may well be other commorative high purity gold coins minted in a run of 50,000 by a G-7 country this year, I’m just not aware of them.

I don’t personally own any of these, though I do have a few other gold and silver coins. And I know that there are many of you out there in Gumshoe Land who know more about this stuff than I do … please feel free to share that wisdom with a comment below.


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34 Comments on "Can you really buy gold at a $600/ounce discount?"

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Mark Bohana
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Mark Bohana
February 12, 2009 1:21 pm

Some people have been touting pre 1935 gold as a means to circumvent the confiscation of gold. I believe they want to classify this gold as a collectible numismatic variety. What is never indicated by most individuals is that the govt. taxes your collectibles (long term) for 28%. Duh, as if most of the gold bugs are going to indicate their purchase and subsequent sale of the commodity.

John
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John
February 12, 2009 1:47 pm

Travis,

I think that you are right on the money in your review of Eric Roseman’s flaunt.

I believe that it is the Canadian coin.

Also, the $600.00 saving is the difference between what he says some individuals are charging on the e-bay and what the coins can be obtained for from the Canadian Mint. If you are stupid enough to pay a $600.00 premium, then Eric Roseman has a deal for you.

I check your reviews regularly.

SageNot
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SageNot
February 12, 2009 1:49 pm

Right you are Travis, my brother dables in these types of coins &
the 2009 Canadian Gold Maple Leaf is indeed the coin being discussed above. I wouldn’t bet the farm that the 5% premium will continue much longer, especially with gold breaking out as it has recently.

The thinkolator can take a bow!

Pete
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Pete
February 12, 2009 1:50 pm

I just received a flyer for the Canadian Olympic Maple Leaf coins from First Federal Coin Corp. (800-222-3891)(included in a mailing from Oxford Club?? or one of their affiliates in Baltimore). They offer the gold coins for “as low as 5% over spot” and the silver coins for “as low as $3 over spot”–minimum of ten coins. They mention a worldwide limit of 50,000 coins each year for the gold one. That makes it certain this is what was teased. Too bad for me that they have the ten coin minimum–I might have wanted one or two.

Ed Merritt
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February 12, 2009 1:51 pm

Steve:

You are spot on with your guess I am a numismatic bug and I don’t think it will make any difference if the government wnats your gold they are going to take it. I say bury it in your yard, just don’t tell anyone where you buried it except me.

patrick o sullivan
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patrick o sullivan
February 12, 2009 2:12 pm
WARNING TO ANYONE THAT IS CONSIDERING BUYING ANY FORM OF GOLD WHATSOEVER.THE IMF ARE AWAITING CONGRESS TO GIVE THEM THE GO AHEAD TO SELL 403 TONNES OF GOLD.THEY NEED TO DO THIS OWING TO ALL THE MONEY THEY HAV BEEN GIVING TO MANY BANKS THROUGHOUT THE WORLD,NEVER MIND TO THE USA BANKS ONLY.ALSO GERMANY ARE OF THE SAME MIND,THOUGH MY INFORMATION DID NOT SAY THE AMOUNT OF GOLD THEY PLAN TO SELL.OF COURSE THEY WILL HAVE TO INFORM ALL THE CENYRAL BANKS THROUGHOUT THE WORLD ASWELL.PERHAPS YE ARE NOT AWARE OF THE WAY THE CENTRAL BANKS LEASE GOLD OUT TO… Read more »
david
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February 12, 2009 2:53 pm

The Chinese and Arabs are net buyers of gold. The IMF may have a short term effect on gold but as long as trillions of paper keeps coming off the presses tangable items should fare well. The Aulstrailian Lunar series has 12 coins that have a max of 30,000 each but carry a high premium, espesially the year of the Dragon.

john sloan
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February 12, 2009 3:09 pm
HI again Travis and all I see no purpose for the USG to confiscate gold now. The confiscaton in the 1930’s was a two step process based on the fact that then the dollar was pegged to gold in value. It was about 23 dollars to the ounce – then FDR took it all from people. But of course under the Constitution he had to give people their 23 bucks per ounce. Then he revalued the dollar to about 35 dollars to the ounce. Instant profit for the USG – a fund they still have and use. Absent prior confiscation… Read more »
Dan
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February 12, 2009 3:24 pm

Huh? Explain for dummies like myself, what does ‘remember there is no velocity of money when you keep gold in a safe deposit box’ mean?

Thanks,
Dan

Mark Bohana
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Mark Bohana
February 12, 2009 3:28 pm

Velocity of Money, I give you a $100 dollars, you purchase $100 worth of food, supermarket uses that $100 to make a profit, pay employees, pay distributor for food, and on and on. Distributor pays trucking,farmers, etc.. That one dollar you have will go thru many hands, the dollar in savings at the bank will go to X 10 to loan people $$ and his trophy wife will also be able to spend on jewelry.

Robert Cox
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Robert Cox
February 12, 2009 4:23 pm
First post but I felt compelled to add my 2 cents. I must admit to spending 40 minutes of my time listening to the recording they had on how to save $600 on gold with great interest only to be extremely disappointed that they would use such a lame example as someone buying it off of ebay? I made some nice profits in the late 70’s and am now sitting on a 300% profit on some gold purchased about 2000. I have purchased gold through 3 different companies in the last 9 years, one from Louisiana, one from Texas and… Read more »
HY FRANK
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HY FRANK
February 12, 2009 5:03 pm

Enjoy your daily articles. Am a new kid on the street. Wondering if you have any new info on ARNA. Thanks for Gunshoe

Bubba
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Bubba
February 12, 2009 6:51 pm

If gold is so valuable why are dealers taking paper money… (soon to be valueless from all the ‘advice’ I get)… for it at only a 5% ‘profit’? Somebody help me out here.

Gravity Switch
Admin
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February 12, 2009 9:58 pm
Thanks HY — I must admit, I haven’t followed it at all since I wrote about it, though the combination of more ads from S&A, the exposure it got in this space, and the conference presentation ARNA gave earlier this week all probably helped drive the price to this point, it’s certainly been a nice week for anyone who jumped right in. I wouldn’t be at all surprised if there are plenty of chances to buy on dips in the months to come if you decide this is a stock you need to own — this first Phase III trial… Read more »
Barbara
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Barbara
February 12, 2009 11:18 pm
I agree that silver coins, so called “junk silver” are the way to go. Everyone recognizes a dime, quarter and 50 cent piece and they can easily be used as a medium of exchange. These can easily be used for daily transactions and can be determined to be 90% silver by looking at the edge. Selling gold back to a dealer can be very costly and will probably be reported to the government. You might also want to check out CEF, a Canadian silver/gold ETF, which might be a bit harder for “Uncle” to confiscate. Why would the government take… Read more »
BILL MOSS
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BILL MOSS
February 13, 2009 1:36 am

Any thoughts about Kitco’s “Pool” accounts?
I think having a good food supply would be prudent to have as well, don’t you?

Myron Martin
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Myron Martin
February 13, 2009 8:54 am

Have recently been receiving mailings from the Agora group of companies offering 1/10th oz.PANDA gold coins from China that are also PURER than American gold coins. There pitch is that a limited amount of M69 graded coins will produce a future premium as the expanding middle class in China begins to learn more about numismatics investing. According to the report BOTH American grading services are attempting to be first on the block in the Chinese market.

Single coins are priced at $159. package of 5 @ $149 EACH!

Gravity Switch
Admin
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February 13, 2009 10:43 am

Right you are, Mark — everyone knows the real money is in Beanie Babies!

Doc
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Doc
February 13, 2009 12:40 pm
ETF’s are not taxed as collectibles, they are taxed as STCG/LTCG depending on the holding period. They also are not “taxed in advance or taxed before actual paper profits are realized” by marking them to market as are commodities contracts. Why would the government confiscate gold when the dollar is not backed by the gold metal………? let’s let the hypothecator ruminate on this one for a moment. The Fed requests the BEP to print ridiculous quantities of paper or digital money…backed by nothing but you and me. Foreign governments and their SWF’s see that the amount of liability created by… Read more »
Joe
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Joe
February 13, 2009 3:24 pm

if you purchase rare coins, gold or otherwise, from a reputatable dealer and then sell them a few years later, the dealer is not legally obligated to report the sale(profit or loss) to the IRS.
Check it out.

Richie
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Richie
February 14, 2009 4:20 pm
Doc’s numbers are pretty accurate. Thats assuming the gov’t actually holds the gold reserves they claim to have. After WW2 the U.S. gov’t held 4.2 billion ounces of silver. It was sold off and the gov’t now must enter the open market to produce their silver coins from the mint.This includes the Eagles. There is currently more physical gold in the world than silver. Silver is an industrial metal in addition to being seen as “money” by many people. The silver is used up and can’t be replaced. Consumption has outstripped production for 20 years. Silver will do better than… Read more »
Olden Atwoody
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Olden Atwoody
February 16, 2009 2:06 pm
I don’t mean to talk down to you, my brothers and sisters, so hear me out – for those of you that need it. There IS a great market in modern US Govt. manufactured gold cons, however there are two factors working against YOU, the casual investor: 1. Rarity – It’s hard to predict what will be a limited run. The $5 coins minted at Wes Point in recent years were rather low mintage, but others were not. Rarity drives high prices…generally, but not always. 2. Condition – The “crazy” EBay prices have to do with coins submitted to a… Read more »
Gravity Switch
Admin
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February 12, 2009 1:29 pm
Certainly true, I hear that a lot (these are the coins that Sjuggerud teases in his “gold glitch” ads that we see so often, too). Pre-1933 gold (like the St. Gaudens Double Eagles)is certainly not discounted compared to modern bullion coins, though some people argue that the premium is lower than it should be, or than it historically has sometimes been. And yes, good point on taxes — I always forget to mention that. I think I’ve heard that the GLD ETF (or others backed specifically by bullion) is also taxed as a collectible, but I haven’t checked that lately.… Read more »
Kristian
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Kristian
February 12, 2009 5:11 pm

when I sell back precious metal to my dealer he takes my SSN and reports the sale. I am held to report the gain (if any, to the IRS). Do I remember what I bought it for, and when…

Mark Bohana
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Mark Bohana
February 12, 2009 2:28 pm

GLD ETF isn’t considered a collectible, the only collectible would be something tangible, art work, bullion, etc.. What is interesting is that the govt. is so afraid of the underground economy of gold/silver that they have tried to undermine by pushing bullion to IRA’s.(where it can be controlled and accounted for) Also remember there is no velocity of money when you keep gold in a safe deposit box, and why purchase paper $$$ (fiat) with something that has value all over the world.

Gravity Switch
Admin
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February 12, 2009 3:19 pm

Thanks John. That is indeed what was teased as the 60%+ jump in the value of gold coins overnight in the 1930s — that’s how much more gold was worth in the newly devalued dollars, at least, the gold you were still allowed to own.

And truth be told, I generally agree with you on the confiscation prospects — I suppose it could happen, but it’s hard to imagine why (or how). Then again, plenty of things have happened that I have a hard time imagining, and I have not put much effort into studying the prospect.

Stever
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Stever
February 12, 2009 4:40 pm

The scary fact is that the gold you may have horded in a safe deposit box or in your mattress may one day be the only currency with velocity. As far as I can see, that is the principle reason for owning it, except of course for speculative purposes.

Gravity Switch
Admin
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February 12, 2009 8:01 pm

Hey, they’ll be happy to buy it from you, too, for 5% less … they’re just the middlemen, they do fine no matter which way the price of gold goes, and the good ones have probably learned over the years not to bet on that direction with their own money. The gas station guy will still sell you gas at whatever the current market price is, even if he’s sure that oil is going back to $100 this summer.

Mark Bohana
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Mark Bohana
February 12, 2009 8:08 pm

I would suggest you get a new dealer, since I have used Blanchard, Mint Products, Eastern Numismatics, and presently very happy with apmex.
If you purchase locally, of which I have done at various times I also have never provided an SSN. If you purchase bullion with storage: ie: 1000 ounce silver bars, with delivery from Comex, that is an entirely different situation. If you look at firms like everbank, PFG, and quite a few brokerdealers and commodity yes you will have to supply SSN.

Mark Bohana
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Mark Bohana
February 12, 2009 8:12 pm

I certainly agree, although what is of utmost concern that most people don’t recognize or realise is the problem that once gold goes to $1200++, than making change is almost impossible. Most of us that purchase gold, also purchase in one ounce coins, since the premiums are ridiculous for any smaller weights. That is the reason to certainly own silver, which I consider is only gold on steroids.

BILL MOSS
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BILL MOSS
February 13, 2009 1:40 am

Patrick, how much would that translate into money?
Where about’s in Ireland do you live?

NBK
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NBK
February 21, 2009 5:36 pm

The gov’t’s have been threatning this and many have not come through. They always do this to scare the public and or try and surpress the gold price. If they succeed, it will be short lived. The gold market is smaller than microsoft. Once this bull starts chargin, there will be no stopping until much higher prices. The key to know if GOLD is going higher is to compare LEASE rates. If lease rates are rising, the supply is falling.

Mark Bohana
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Mark Bohana
February 13, 2009 10:36 am
You can get any new gold coins, go to NGC or PCGS, get them slabbed as seen on the shopping network and you will have various gradings. The cost for grading and slabbing will depend on your quantity, and than you can sell it to the newbies, general public for 20-30% premiums. Dont forget most of these people will also let you purchase your own OBAMA dollar, with the new president painted on your dollar, hell of a deal. I am not trusting my retirement, oops I am already retired on the beach, toward statequarters,commemorative gold Panda’s or Horses, and… Read more »
Justin
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Justin
February 18, 2009 9:31 pm

GLD and the other precious metals ETF’s are taxed like a collectible in certain instances, and subject to a 28% tax rate. Read the prospectus here:

http://us.ishares.com/product_info/fund/overview/IAU.htm?qt=IAU

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