Is now a good time to buy gold? Maybe.
The price is the lowest it’s been in about three years. Which does not mean it couldn’t go lower still. But if you think gold is near a bottom and you want to accumulate, here are some things to consider.
Trust, trust, trust.
Somewhere in China, clever guys are busy counterfeiting gold coins, bars and nuggets. We see it all the time.
Want to hear a horror story? About a year ago, a customer brought us a “native nugget” (that is, as found in nature) of what looked like gold from a well-known deposit in China. (All gold is yellow, but this gold, probably because of the other minerals combined with it, is noticeably paler than most.)
Gold was selling high at the time, and the nuggest weighed close to a pound: If genuine, we would have offered about $26,000 for it.
But first we tested. At our Maui pawn shop, we always test (and, yes, once in a while, even with our experience we miss a fake). And when the “nugget” was sawed in two, it proved to be lead.
We don’t know where the guy got his nugget. Probably he wasn’t a counterfeiter. Just some poor schmoo who bought his “nugget” from somebody he could no longer get back to. Maybe, who knows, from an address in Internetland.
Even “slabbed” coins and bars, with serial numbers, are showing up fakes these days. And the fakers are getting better and better.
So, first, know and trust your vendor.
That means, among other things, avoid those “pop up” gold buyers that appeared everywhere — including kiosks at shopping centers and hotel meeting rooms — when gold was high.
Funny thing. It’s getting easier and easier to avoid those guys, because a lot of them have already disappeared. Several have closed on Maui in the past couple of months. One was a “chain” that had outlets on several islands.
Until one morning, it didn’t.
If you bought a “gold eagle” from those guys and you are dissatisfied now, lots of luck trying to do anything about it.
If you don’t like what you buy from Kamaaina Loan And Cash For Gold, bring it back. We were here 37 years ago, we’re here now, and we’ll be here tomorrow.
Other things to think about, if you are going to hold gold:
1. Put it in a bank safe deposit box. The annual rent is cheap insurance compared to just about any other place you could keep it.
2. Keep your records. There are plenty of legit places that will happily buy your gold. Our Maui pawn shop is one of thousands of reputable pawn shops that belong to the National Pawnbrokers Association. There are other reputable buyers, too.
Unfortunately, there are also too many shady ones.
3. If you are buying $50,000 worth of gold, or more, in a calendar year from one agent, that agent is supposed to file a report to FinCen (the government anti-money laundering agency). We will.
4. If you are converting cash to gold, a FinCen report is required for any purchases of $10,000 in a day. “Structuring,” or dividing up deals to avoid having to report is not allowed.
5. If you are selling gold (as jewelry, coins or bars), in Hawaii (and many other jurisdictions) the buyer is required by law to file your ID. In Hawaii, that means a government-issued picture ID (usually a driver’s license), and, at our Maui pawn shop, a thumbprint, and a physical address (P.O. Box won’t do). If the business you are dealing with does not ask for your ID, they are flouting the law, and that should make you suspicious about everything else, including the accuracy of their scales.
We have checked and found any number of pop-up gold dealers on Maui who do not follow this law, but it isn’t something that gets prosecuted. Be smart on your own behalf.
The same cautions apply to silver coins and bars as well. You might suppose that counterfeiters wouldn’t bother with silver, which is worth so much less than gold. And that’s true — up to a point.