The Real Cost of Writing Anti-Gold Propaganda

Last week, Bloomberg went to press with a 13-paragraph article detailing the burdens of owning physical gold.  From its onset, the article details how gold, for many is not merely an investment, but, rather “a religion.”  It even states that, if you buy gold, you are at risk to succumb to paranoia. For the tin-foil hat wearing types, gold in a fund is not nearly enough, Bloomberg observes. “They need to own the metal itself.” The reason people want physical gold? While Kitco’s Peter Hug gives Bloomberg the straight-forward answer of “privacy,” he also feeds their tinfoil hat wearing angle, saying goldbugs are “worried because newsletter writers since the ’80s have been saying the government’s going to confiscate your gold, the world’s coming to an end and you’re going to need gold to barter.” There is no in-between: just privacy concerns and rampant paranoia.  Forget monumental, across the board currency devaluation.

“Acting on such fears comes at a price,” Bloomberg wants you to know. Yes, buying gold costs. But, the paper wants you to know, trading ETF representations of the gold just seems a much saner, more pleasant way to invest in gold. (read: less-subversive, terrorist)

The first of these cost-burdens is the markup you will find at your local dealer.  The paper correctly acknowledges that this markup decreases by weight. For tiny fractional gold pieces, one could be paying as much as 35 percent (did anybody say 1 oz. silver coins), although the typical premium on the coins and bars purchased by the buying public range between 2%-5%.  The paper gets the point across that it is quite intimidating getting gold shipped to you.  After all, gold deliveries must be insured. Shipping a 1 oz. gold bar from New York to California might cost $30-$50 says Hug. He also says that, if the shipment is worth over $100,000, Kitco requires an armored truck and will deliver only to a bank or Brink’s vault, not a home. That delivery costs more than $1,200.

But, the experienced gold (or silver) bug might know that a lot of the best dealers in the country offer free shipping for orders over a certain threshold (well below $100,000), and for those who cannot get over that threshold, the cost is usually under $20 for even thousands of dollars in value. As far as storing gold at home, Bloomberg informs its readers that, for a mere $88, a SentrySafe MS0100 can be purchased at Wall Mart. It’s 0. 8 cubic feet of space – fire-resistant – weights 87 pounds and can be bolted to the floor. There are many affordable safes, and plenty of ways of securing one’s precious metals in a home, although SilverVigilante maintains the best way to store lots of precious metals value is in as many ways as possible.  As we covered here:

A good idea I have come across for storage of valuables is behind a mirror, but not just any ordinary mirror. After you have carved out a hole in the chosen wall of your own property and placed in your silver, gold, platinum and palladium, then drill or screw a large, heavy-weight mirror (of course, if you live with a significant other, it must be a classy looking mirror) into the wall. Since most would-be thieves spend an average less than ten minutes in a victim’s home, they would not have time-enough to take said mirror down.

Of course, getting insurance for precious metals is a pain-in-the-neck, because insurance companies worry themselves about undermining a financial industry on which they are as dependent as the most dedicated crackheads. Gold is considered cash by most insurers, and can be covered with a “personal articles” rider. Ace Group, an insurer that covers coins and bars, charges between $1 and $1.50 per $100 of gold, depending on the security of your house. That’s about $18 per 1 oz. coin and bar.  As Bloomberg points out, though, “insuring gold means someone knows you have it…For gold bugs who fears Armaggedon and big government, this defeates the purpose of owning physical gold. The IRS can subpoena insurance records.” All this is a problem, unless of course you cover your metals as cash in a safe at home.  As Bloomberg points out, you can always get  a Glock Generation 4 semiautomatic handgun costs $619.99 at Cabela’s.

Bloomberg then aims to distress the potential gold buyer by telling the reader that if you go to sell your gold, you may need to get it appraised, or “assayed,” to verify that it’s genuine. This is dependent of course on the type of gold you are selling, as well as your relationship with the dealer. Truth be told, if you were duped into buying a bunch of numismatic coins you don’t know much about, upon getting your portfolio analyzed, you will be extremely soured at how taken for a ride you were. If you stuck to mainstream, well-recognized product, selling won’t be a problem, and your appraisal will consist of typing in your favorite spot price website and multiplying it by however many coins you intend to sell. So, unless you’re buying 10 oz gold bars and up, don’t worry about this part of the process.  Especially if you’re buying 1 oz. denominations such as the Gold American Eagle.

Whereas stock capital gains are taxed at a maximum rate of 15 percent for long-term investors, profits on gold investments are taxed at a maximum 28 percent rate, as collectibles. After all, you were the smartass that decided to invest in the inverse of the $$$, you un-American tin-foil hat wearing terrorist. So take that.  Unless, of course, you understand that Cash is King. ; )

Bloomberg says, as Bloomberg would, one way to get around the high tax rate is by looking into gold stocks, which are taxed at the lower 15 percent capital gains rate.

Certain psychoses can come along with buying gold, according to Bloomberg.

Ever see “Treasure of the Sierra Madre?” Hoarding gold at home can make you paranoid. 

This is semi-breaking news. Bloomberg reports that hoarding gold – the mere act – can cause one to go…paranoid. Yes, this just in -investing in gold bullion can make you go crazy. Nice form, guys.

In closing, Bloomberg wants to get its point across. It is here, in the last paragraphs of the article, where the point gets across:

There are cheaper alternatives to physical gold. An exchange-traded fund such as iShares Gold Trust holds bullion in foreign vaults for investors at a cost of 0.25 percent of assets a year. For those worried about government confiscation, owning gold in vaults outside the U.S. makes more sense, says Ash at Bullion Vault. The company has an electronic brokerage that allows investors to trade close to the spot price.

While Bloomberg does not promote any of the products or services mentioned, SilverVigilante absolutely recommends buying physical gold and silver as part of a diversified, rebel’s portfolio.