I've googled around and found that much of the discussion on bars vs ounces were based on credibility, i.e., the AGE's are US minted and guaranteed, the various bars from other mints are not necessarily. My friend bought a 1 oz AGE a few weeks ago for $1700 from the LCS, this was when spot was around 1625. So he spent around $75 on what exactly? PAMP and Credit Suisse seem to be the most authentic and trusted form of gold bullion in bar form. These can be had for significantly cheaper per ounce than AGE's. So I'm wondering if this is an issue of seigniorage? Is this simply a case of the US mint profiting? Why pay for a gold eagle when you could have the same amount of gold for less? Why pay more when you don't need to? Again, I must assume that it is because people trust AGE's, maples, krugs, etc. more than the assayers of PAMP and Credit Suisse. Thing is, you can get the credit suisse bars with serial numbers, assay cards, and sealed containers. Most of the time you get less than that with an AGE that comes with no assay card, no serial, and no sealed packaging by standard. For junk silver, its a no brainer. You can tell that they are real, counterfeiting isn't an issue due to low risk/reward for thieves, US minted, and usually cheaper than PAMP or Credit Suisse rounds. With gold I am confused. What exactly supports and props up this "gold premium" in gold coin over bars. I suppose that the existing market framework should indicate that paying more premium for gold coin now would mean recovering that cost if one were to sell it later. However, if the goal is to control a commodity (gold) by central bankers or long term investors who is to say that the premium for AGE's would persist in perpetuity, especially in the face of financial turmoil that is evident in the world today. Why would a bank pay a higher premium for AGE's on large purchases when more gold could be had if they went with Credit Suisse or PAMP Suisse assayed bars? In an end of world scenario, where gold still plays a part, wouldn't all gold be converted to melt values? I don't see why AGE's wouldn't be treated the same as bars because they have no particular numismatic value. I am aware that some gold bullion coin does have special value above it melt value, but most of them do not.
I think the two major reasons why AGEs (and ASEs for that matter) always fetch a premium is because: 1) They're reliable and known for their "integrity" 2) They're perrrrrty...
Right now Apmex, only dealer I checked, will gladly buy your AGE and give you $40 over current spot for it. For a 1 oz Pamp Swisse they will pay you $2. Apmex isn't the first place I would go to sell gold but it's a demonstration that your $75 is paying for gold that you can quickly sell.
So you are paying for liquidity then. Under what circumstances would this liquidity change? Things are stable right now, how will volatility or central bank involvement in gold effect this liquidity. The spot price is based in reality, but what is the premium based on? What market events effect this?
I go with the bars and get silver with the price diff. ie spend the same $$ then when the price goes up and you sell you have more to sell and get more $$
I would not buy anything gold that is bigger than 1/10 ounce at the moment. if the poop hits the fan, some people won't have the cash (or whatever) to trade with you. you're better off with fractional gold. I am changing what I have for smaller gold pieces. or more silver. or cash. just my two cents.
The liquidity is based on what it has always been based on with gold. Government issued coinage is the preferred mode of exchange. It's difficult to counterfeit and easy to verify if fake. These are two very important items when buying and selling gold. It was this way when the US Mint opened branches near gold production 200 years ago which eventually replaced private mints, and it is this way now. Though it's bullion, I think there is also a small numismatic component to the AGE as well. If you don't want to pay a higher premium for the AGE, then pick up Krugerrands. They are almost as liquid, because they have been around the longest, but the premium is lower. (probably because it is an ugly coin)
I was just looking on APMEX and see that the spread is about 50 dollars for the PAMP Suisse bar and the AGE. You pay 1632 for the AGE and they will buy it back for 1588. You pay 1601 for the PS bar and they buy for 1554. So the spread is near between the two but you pay more initially for the AGE. So $44 for the AGE and $47 for the bar. However, what they buy the bar for is the ask price of gold. The AGE is inflated and has an artificial value higher than spot.
For that $75, you are paying retailer profit, helping absorb the government's costs to manufactor, distribute and advertising, ect.
Keep in mind this premium over spot price for AGE is only applicable when dealing with dealers in US, outside of NA AGE typically sells for Spot price and in fact last couple years AGE dropped in popularity in places like Asia (due to other 999 bullions')
For most people reading this thread where you go and what you have the coin or bar for is not as much a consideration. But I live and work in a different part of the world sometimes - and keep them as insurance for those little emergencies that come up from time to time. For that reason there I prefer the Swiss bars because they are a known. AGE's and K-rands are not that familiar and not as easy to unload.
I agree with this also and it took me a few years to determine this on my own. I have 1oz AGE and sometimes when you sell you don't want or need to sell the entire ounce. Its so much easier to just sell a few 1/10 ounce coins.
