KITCO Pool Account.

I'm looking into buying some precious metals and found the KITCO pool account. Does anybody have any experience using this? It seems like a great way to buy at a very low premium and sell at a very low premium as well. In addition, I wouldn't have to worry about storing the metal or finding a buyer when I want to sell.

Let me know if you have any experience, or what you think.

Thanks

 

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I also like this concept, and would love to hear about other people's experience.

 

If you are buying physical, it's always best to take possession of your metals or store them in your bank SDB, home safe or safe place. Check the account minimums for opening Kitco pool accounts and if any restrictions based on your country to that of where the metals are kept: restrictions, taxes, surcharges if you decided to take delivery, etc.

 

Ditto on krispy's comments CoinKeeper. Always have physical possession of your metal. If this group goes belly-up, you may not ever get what you paid for.

 

Barings Bank was founded in 1762 and was the oldest merchant bank in London until it was brought down by one rogue trader in 1995.

Lehman Brothers was founded in 1850 and survived the Civil War, the Panic of 1907, WWI, the Great Depression, and WW2. They filed for bankruptcy protection in 2008.

My own personal rule is to never trust anyone with my money, my women or my dope any more than I have to.

 

CoinKeeper,

I've had a KITCO pool account for about 3 years now. As far as the ability to trade PM easily, with minimum premiums, you're right...excellent. Their service is also top notch, ime.

There are, imo, 3 "downsides"

1) You can not purchase with a credit/debit card...purchases MUST be money orders, bank transfer, check, etc...with the accompanying delay in postal time, etc. This isn't a huge deal, PARTICULARLY if you only have to do it a few times, to fund the account originally. Merely an annoyance.

2) There's frequently a bit of a delay in completing a purchase/sale, even if the funds are already in, or deposited into, your account. Not a HUGE delay, but say 1 business day...again, more of an annoyance than a real issue...it just seems that in today's world, their system could say "Oh look...yes, you have the funds on hand, ok, sale complete". not as if they have to "package' anything.

3) As said above, there's NOTHING physical or tangible backing any of this up. Invest accordingly.

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As a satisfied Kitco pool customer for several years now, I'd put it this way:

Would I use it as an inexpensive way to invest in metals for the long term, under a buy and hold strategy? Absolutely not. My long term "wealth protection" DEMANDS having the metal on hand...that's the whole point.

Would I, and do I, use it as an inexpensive way to "play the market" with small amounts I can afford to risk losing, in an effort to profit from short term movements in PM prices? Absolutely. In this regard, for me, it's like poker. Yes, there's a risk of losing my whole bankroll, but that risk is small, and further mitigated by sound play and strategy, and knowing not to take your entire wad of cash into one game.

 

Thanks gboulton! I really appreciate the information. I would primarly use it to play the market. I've got about 1/2oz gold, 1oz of palladium, and 25oz of silver in my bank safety deposit box, and would put about $1500 in the pool for short term market play. I just bought a few ounces of silver for my pool just to start with and see how the transaction goes. If it all goes smoothly, I'm planning on buying a couple ounces of palladium. I believe it has the potential to go up, and it is very hard for me to liquidate palladium locally without losing 15-20% to dealers. The pool would allow me to sell quickly if necessary.

 

I hear only good things about how it works from day to day, and it's one of very few ways to get exposure to rhodium. GoldMoney or BullionVault, I believe, offer less risk.

 

That does sound interesting. I have a follow-up question: supposed you only deal in paper, without ever having the PM shipped to nor from you, what will be the fee for the buy/sell transactions? and how should these transactions be reported in tax?

 

In kitco's case, the fee is whatever kitco's "premium" is...usually very small, as compared to dealing with physical metal.

As an example, with Silver spot at $24.20 right now on the world market, Kitco's buying from you at $24.09, and selling to you at $24.31...so, 11 cents per ounce premium. Pretty reasonable, since silver can EASILY move that much even in "normal" times. It is not, in my experience, at ALL unusual to find yourself covering the premium inside of a day.

As for taxes, it's simple capital gains.

http://taxes.about.com/od/capitalgains/a/CapitalGainsTax.htm

 

"if you don't hold it, you don't own it"

 

I like this part, at least you are not paying so much tax as on trading physical PM, which you'll have to treat as collectibles tax-wise.

 

I would recommend that you do some internet searches on Nadler and Kitco.

Another option would be to open a brokerage account and directly trade paper PMs. GLD, PHYS, SLV are examples but do some research on them.

Another more interesting option would be to use Bullion Direct to buy and sell physical bullion coins. The advantage of this approach is that you can always tell BD to liquidated all or part of your account in gold coin.

Some advice. If your goal is to make gains via short term trading, don't put any money in this that you are not prepared to completely lose. I would highly recommend reading http://harveyorgan.blogspot.com until you understand what he is talking about. Zerohedge is also worth looking at every day.

 

this one. i need to learn it. no clue. no knowledge about it.

 

Check with a tax advisor before relying on that assumption. I don't know, but have read that in the US you have to pay the collectibles rate on gains from a gold ETF. If so, the same should apply to the Kitco pool account.

 

So i went to my local post office and sent kitco a money order. I wonder how long it will be until kitco receives my payment. I'll let you know when I know!

 

I don't know about any "collectibles" rate. As far as I have ever heard as long as you hold any investment beyond the defined period, it is long term capital gain. Hold it less and it is short term capital gain, added to your regular income.

 

http://www.irs.gov/taxtopics/tc409.html http://www.irs.gov/publications/p17/ch16.html www.irs.gov/pub/lanoa/pmta01809_7431.pdf

 

I don't think you want a worthless note saying this is what you have, you want the real thing.

 

"Worthless" is imprecise. It's worth something until Kitco or the world financial system collapses. Both of those *could* happen, but they haven't yet.