CORPORATE APARTMENT, BALTIMORE – Yesterday I explained why I’ve made physical gold the central pillar of my big Dow-to-Gold speculation.
There are three main categories of physical gold you can choose from… gold bars, modern gold coins, and vintage gold coins.
Below, I’ll explain which one I chose… and why…
Then vs. Now
Greetings from Baltimore.
Today is my birthday. I am 44 years old.
On this day two years ago, I was in Delray Beach, Florida. I spent the whole day in my horrible little apartment. I didn’t talk to anyone. In the evening, I went to McDonald’s on my own and ate $20 worth of sugar, fat, and salt.
I had a terrible pain in my head. But it wasn’t a headache. They were negative thoughts. I was chewing on them night and day. I just wanted them to stop… but I didn’t know how. I was close to giving up hope.
Three days later, I packed a small bag and went to Scotland in the middle of winter. It was my first step down the road to recovery.
Today, I write to you from a beautiful apartment in Mount Vernon overlooking Baltimore. My children are playing nearby, running around and laughing. Kate is preparing something special for supper.
Instead of those negative thoughts, I have memories. Instead of pain, I have pride. Instead of empty hope and desperation, I have an exciting mission. I used to wake up wracked with anxiety. Now I jump out of bed, eager to start the day…
And I love my birthday now. It’s an excuse for my family and me to have a special day together.
(When we were far from home, our birthdays felt like a friendly face in a room full of strangers. We made a big deal out of them throughout our trip.)
Here we are…
Celebrating my birthday with Miles, Penny, and Dusty in our temporary Baltimore apartment
Three Ways to Buy Physical Gold
I wanted as much pure gold as I could get for my money, so I calculated the pure gold cost for all the different gold products. I went with the cheapest product.
Normally, this would mean buying either gold bars or generic bullion coins like Krugerrands, Eagles, Britannias, Maple Leafs, and Philharmonics.
Right now for example, with gold at $1,550 an ounce in the international metals markets, you can get an ounce of pure gold in coin or bar form – including post and packaging – for about $1,600. So you pay a premium of about 3% in expenses. (Post and packaging, the dealer’s bid-ask spread and the mint’s cost make up the expenses.)
However, there’s a third product to consider now.
It costs the same as generic bars and coins in terms of pure gold per dollar, so you’ll get just as much gold for your money. But it is so much more attractive…
My Top Choice
I’m talking about vintage American gold coins.
For example, right now, you can buy $20 Liberty gold coins with dates between 1850 and 1907 in mint (almost uncirculated) condition for the same price per ounce as bars and Krugerrands, etc.
It’s the first time in modern times this has been the case.
The rumor is, a huge collection of vintage coins – the sort of collection that might have belonged to J.P. Morgan or J.D. Rockefeller and would be worth hundreds of millions of dollars – came on the market in the last couple of years. This has been suppressing the value of vintage gold coins.
Anyway, this is how I chose to buy physical gold.
First of all, I was the type of kid who loved finding “wheat” pennies in my change, which were minted between 1909 and 1958. So I get a kick out of owning gold coins minted a century or more ago. They’re a little piece of American history. All things being equal, I’d much rather own a gold coin from 1890 than 2015.
Second, vintage gold coins sometimes trade at much higher premiums than modern gold coins and bars. At least they have in the past. I didn’t buy them for that reason, but it’s nice to have that potential, all else being equal.
Finally, they’re beautiful to look at and they’ll never make any more of them.
As I said, this has never happened before. And it is a much more interesting idea than buying plain gold bullion bars and coins.
– Tom Dyson
The gold talk continues in the mailbag…
Reader comment: I decided to start taking your advice and have been buying some Vienna Philharmonic gold coins. I picked the VPs because if/when you sell them you won’t be asked to give your Social Security Number like some other coins. Of course, I am dyslexic once in a while, so who knows how that SSN would come out anyway.
I’ve also been buying some containers of storage food, just in case.
The WW2 Liberty ship S.S. John W. Brown is in Baltimore as well and might be a good place to show the kids a little WW2 history. I’ve been on it when they do cruises to the Chesapeake Bay, and that’s pretty cool, too.
Thank you, take care, and good luck.
Reader question: I’m looking at buying gold and aim to hold it long-term with reference to your “Dow-to-Gold ratio” indicator.
I’ve been thinking about buying gold bullion bars over gold coins, as I can stash this more readily, and don’t have to consider protective packaging and aesthetics of the coinage.
I note you’ve mentioned you hold gold coins, but I can’t recall you mentioning you hold bullion. Can you please explain why?
Tom’s response: Buy whatever gets you the most pure gold for your money. Gold bars are fine.
Meanwhile, others offer kind words – and a health suggestion – for Tom and family… And one reader shares Tom’s love for train-hopping…
Reader comment: As a mother/grandmother who came from an upbringing with very little money, there was never any money or advice about investing. This is now true for my children as well. So, I read carefully every word of advice from you, as well as Bill Bonner and Dan Denning.
There is a great need that you are filling for many people out there in the world today. I would gladly pay for an advice newsletter with comments from the “3 Musketeers”!
The very best for your family as you move forward in your lives, and thank you for all your help for your fellow man.
Tom’s response: Thank you! And by the way, Bill and Dan share their advice every month in The Bonner-Denning Letter. I contribute to it from time to time. If you’re interested, you can read more about it here.
Reader comment: I am really glad that you and Kate have gotten back together. Be sure to tell her every day that you do care about her, and try to show it every day, too. The reason I say this is my wife, of 54 years, just died unexpectedly, so you never really know what is happening the next day.
You two sound so good together that it makes me feel good. I have been enjoying your postcards a lot. You have an interesting family, and I do approve.
Reader comment: I thoroughly enjoy Postcards from the Fringe. I am retired on a fixed income. Lost most of my savings during the ’08 debacle. Shortly thereafter, my spouse divorced me and acquired the home since I still had two young teens.
Keep the cards coming.
Reader comment: I traveled a lot with my parents when I was a child. You’re doing a great thing for your children right now. I commend you. I wish you and yours safe and happy wandering.
Reader comment: Started reading about a month or so before you got to China. I would like to go there someday, but doubt that will happen. I have been taking Chinese herbs and tea for 30 years so I have studied somewhat the culture, economics, etc.
I drink green tea (formula 2,500 years old) every day. Have not missed a day in 30 years. It gets rid of the toxins in my body and has other benefits. I have a powdered drink every morning that puts all the vitamins and minerals in my body to begin the day. There are a lot of other things, but it’s worth it.
My wife and I are 82 years old, in excellent health, and not on any medicines. It wasn’t that way before we started on the products. So really enjoyed your experiences in China. Keep sending the postcards. I read every one.
Reader comment: I got caught riding a box car once, was put with the engineer, and watched him drive the train. He could not stop the train to let me off, so I had to jump from the locomotive while traveling through downtown Minot, ND. It just happened to be in front of the sheriff. I footed it off the street while he was stuck in traffic. It is fun, I agree.
Thanks for the fun and exciting postcards. I love them.
Tom’s note: Thanks to everyone who wrote in! We love reading your feedback and suggestions. Please keep writing us at [email protected].