We at WealthCycles believe the global economy is in the precious metals cycle right now. Eventually, the cycle will peak and decline. When that happens, it will be time to sell your gold and silver and transition into the next asset class. "But what then?" many of our investors and readers ask. How do I go about selling my gold and silver, especially during a time when they are worth a lot of currency?
In this article we describe the main criteria you should consider in selling your precious metals, as well as pros and cons in selling to different types of buyers. While we have done our best to cover all the relevant information, we may have neglected to answer the question that is most on your mind. If you have additional questions or thoughts, please post them in the comment section below.
Full disclosure: WealthCycles' sister company, GoldSilver.com, is an online dealership of gold and silver. In this article, we have endeavored be as objective as possible in this regard.
Please note, this article addresses sales of bullion gold and silver. If you need information on sales of numismatics (collectible coins), it is important that you consult numerous experts in numismatics. Numismatics are a separate industry unto themselves. Please, please, please consult more than one expert in numismatics before you attempt to sell them. Do not attempt to clean, seal, or do anything else to alter numismatic coins before consulting experts, as this can seriously degrade the value of your coins.
We have broken down the criteria to consider when selling gold or silver bullion into four subcategories: security, privacy, speed, and rice.
Security - The security of the sales transaction is important to any precious metals investor. If you have a large amount of gold (over 10 ounces) or silver (more than 500 or 1,000 ounces) security is especially important.
Precious metals investors should consider incidents such as the one that occurred in Chilliwack, British Columbia, as cautionary tales. Basically, two thugs invade an individual's home and steal $750,000 in silver bullion. It is a tragic story but one from which we can learn valuable lessons. (Click here for the article).
Privacy - Just as important, if not more so, than security is privacy. After all, the Chiliwack robbery might not have occurred if the thugs had not known this individual had gold and silver to begin with.
Buying gold and/or silver is one of the most private things you can do in society today. Any stock, bond, or real estate trade is recorded, with the records easily accessible.
Gold and silver can be bought in cash from a local dealership, leaving virtually no record of your purchase. Gold and silver can also be purchased online so that not even the seller sees your face.
Many precious metals investors have a strong interest in preserving their privacy. Some forms of gold and silver sales and some quantities sold do trigger a 1099B reporting requirement to the IRS. This simply means the dealership has to send a form to the IRS stating you sold gold and/or silver to them. You can find more information on 1099B reporting here.
Speed - For many investors, one of the main motivations for buying gold and silver is fear of inflation or hyperinflation. So the speed at which you can (1) sell your precious metals, (2) receive payment in currency and (3) move that currency into another asset is vitally important.
Price - Who doesn't want to get the best price for what they're selling? Price should always be considered in any transaction.
A note on price - since precious metals are commodities their price over spot does not change dramatically. A typical variable between dealers is 2% to 7%.
Additionally there are generally two types of venues where you can sell your gold and/or silver-your local bullion store and online dealers.
Local Bullion Store
Your local bullion store is probably the first and most obvious place you could turn to sell your precious metals. The process is simple enough: Load the gold and silver into the car, and drive down to the store. Make the trade, and walk off with your profits.
The one major variable you need to take into consideration is your location. The main question is, do you live in, or near, a big city?
Your answer to this question is important because big cities, in most cases, have many more gold and silver bullion dealerships than less populated areas. Being located in a big city expands your options for all the above categories when selling your gold and silver.
If you do not live in or near a major city, you will most likely encounter more difficulties when trying to sell your precious metals locally.
For this reason we have broken down our ratings on selling your gold and silver to a local bullion store into two different categories: (1) big city and (2) smaller city.
Online Precious Metals Companies
Selling your gold and silver to an online dealership is a bit more complex than selling to a brick-and-mortar bullion store, but it has other advantages. In order to sell our gold and silver only, there are two basic options. If your precious metals are stored in your home, you will have to ship them to the dealership. Shipping your metals can be daunting, but it can be done. If your precious metals are stored in a storage facility, especially one that works closely with a bullion dealership, the process is far easier.
As with any type of Internet commerce, the seller of precious metals must be careful whom he or she does business with - especially if you will be shipping physical gold and silver to the buyer. It is essential that you know and trust the dealer with whom you are doing business. Do your due diligence and approach online dealers as objectively as you can (see our section on due diligence at the end of this article).
Overall, here are our ratings for the different methods of selling precious metals. But keep in mind that your particular situation may be slightly different.
Security
Local - Big City - 3.5/5
Local - Small City - 3.5/5
Online - No Storage - 4/5
Online - Storage - 5/5
Local Bullion Store -
We already hear the argument now. "Why did you give security a 3.5 out of 5 for a bullion store? Have you seen how secure those stores are?" The answer is, yes, we have. We have seen many of them. And we agree that, in most cases, the stores are very secure.
However, the security of the store itself is not the issue. The issue is your security. How secure are you when you are transporting your gold and silver to the local bullion store? This is of particular concern if you are selling large quantities of metals.
Try to think like a thief. A gold and silver dealership has cameras to record transactions, double doors, and, most likely, armed employees. A much easier target for the thief would be the dumb rich guy who is lugging his big green monster box of silver into the store. It would be much easier and less risky to rob you than it would be to rob the store. Think about whether thugs might be stalking local bullion stores looking for big spending targets.
In terms of security, we don't believe there is much of a difference between a big city and small city. Thus the ratings are the same.
Online Dealership -
In our opinion, dealing online is better in terms of security.
We gave a lower security rating to sellers with "no storage," because you will have to package up your metals and send them off, introducing a small chance that they could be lost in the mail. Also, storing larger amounts of precious metals in your house introduces a degree of risk.
If you do have to ship your precious metals, GoldSilver.com has found great success using USPS registered mail. 99.99% of all packages shipped were delivered safely and securely. You can also buy insurance on the packages to cover the value of the metals (click here for USPS Registered Mail Insurance details)
But storing your metals in a secured vault storage facility is by far the most secure option. Your metals are guarded 24-7 by armed guards. And even if they were successfully robbed, a reputable storage facility will have insurance to cover your losses in case of theft. (Be sure to check with your bullion company to confirm your storage facility has insurance against theft and other disasters).
Privacy
Local - Big City - 4/5
Local - Small City - 3/5
Online - No Storage - 4/5
Online - Storage - 5/5
Local Bullion Store -
If you live in a big city, privacy when selling your precious metals is fairly good, although not perfect. By splitting up your bullion and selling between a number of different stores, you can create the appearance of having only a small volume of metals - for example, by selling $5,000 at one store, $7,000 at another, and maybe $9,000 at another.
However, you do have to show up at every one of these stores in order to make your sales, so your privacy would not be complete.
Another issue to note is, if you take the cash you receive from selling your metals and try to deposit $10,000 of it into your bank account, you will most likely trigger some required reporting, as well as some general suspicion. Think about how relatively few people deposit over $10,000 dollars in cash at one time, and you'll understand how your doing so might draw some attention.
We rated a bullion store located in a smaller city slightly lower in privacy because there is chance information would get around more easily in a smaller town. That is, the smaller the city, the more likely it is that people will know one another. Of course, the element of privacy will vary from city to city, and you should take your knowledge about your particular city into consideration.
Online Dealership -
Selling your precious metals online is more private than selling them at a local brick-and-mortar bullion store. How much privacy you achieve by selling online depends on whether you have to ship your metals to the dealership or whether your metals are stored in secure vault storage.
If you do have to ship your metals from your home or office to the online dealership, the loss of privacy comes from the fact you have to drag one or more heavy packages to the US Post Office or other shipper, then deal with USPS or shipping service staff.
One concern we hear repeatedly is whether, at the peak of the precious metals bubble, with lots of transactions taking place, the mail or shipping staff would begin to recognize the signs of a package that contains precious metals. Thus, shipping your metals to the online dealer results in a slightly lower privacy rating.
Keeping your metals in secure vault storage is the most private method available when it comes to buying and selling precious metals. If you place an order with an online dealership, have your metals shipped directly to a vault storage facility, then sell from vault storage, the only people who would know about the transaction are you and the precious metals dealership, and the party who runs the particular vault storage facility (excluding IRS 1099B reporting unless applicable to the particular transaction).
Speed -
Local - Big City - 5/5
Local - Small City - 4/5
Online - No Storage - 3.5/5
Online - Storage - 5/5
Local Bullion Store -
Living in a big city gives you a huge advantage in the speed at which you are able to sell your precious metals. An anonymous source who formerly worked for the FBI's anti-laundering department has told us it is easy to sell many dollars worth of gold and/or silver in Los Angeles within a single day, thanks to the sheer volume of stores willing to buy gold and silver.
To illustrate our point, we did a Google search on "Los Angeles Gold Coin" that came up with more than 100 locations.
Unfortunately, many smaller cities do not enjoy this advantage of speed, a factor that, again, may vary from city to city.
Online Dealerships - No Storage
Selling your metals into an online dealership will be the slowest way to sell your precious metals and can take up to a month for you to receive your currency. The reasons: (1) the dealership must first receive your metals, which, depending on your shipping method, may take as long as two weeks. (2) The dealership then confirms that what you sent matches its records. (3) Then the dealership makes its book entries and sells the metals. (4) Lastly, the dealership sends you the check or wire in payment for your metals, which can take an additional few days. The entire sales process will most likely take between one and half weeks and or longer.
Online Dealership - Storage
The great thing about selling to an online dealership when your metals are held in secure vault storage is that the transaction is very fast. The online dealership can confirm via a third party that you possess the amount of metals you are trying to sell in your storage account. Thus the transaction is simple and fast, and often a wire payment can be issued the same day or the next day. Payment by check can be FedExed to you overnight.
Price -
Local - Big City - 3.5/5
Local - Small City - 3/5
Online - No Storage - 4.5/5
Online - Storage - 5/5
Local Bullion Store-
One advantage of living in a big city is that there is a lot of competition between local bullion stores. Often, you can get a very good price by just calling around. One of the easiest things to do is gather a list of some local dealers. Call several and ask them what price they are paying for your form of metal. Do this with at least three different dealers.
A smaller city will have fewer bullion stores and thus less competition, so you might not get top price. But keep in mind, your local bullion store still has to compete with dealers online. So their prices should not be completely out of line.
Online Dealership -
The upside for selling to an online dealer is you will most likely get a better price than by selling to your local bullion store, mainly due to economies of scale. Typically, online dealers deal in a national marketplace, sometimes even international. This allows the online dealership to pay you more dollars for your ounce of metal.
Keep in mind if you are shipping your metals, you will most likely have to bear the cost of the shipping and insurance.
Other Considerations -
Below are some additional issues you should be aware of.
Home Delivery -
Remember the individual who was robbed by those thugs in Canada. If you are thinking about investing a lot of currency in gold and/or silver you may want to think twice before having all of it delivered to your home. You may want to take physical delivery of a portion of your gold and silver holdings, but if you own more than 1,000 ounces of silver or 25 ounces of gold, you should seriously consider vault storage.
Vault Storage and ETFs -
WealthCycles has published an entire article dedicated to Exchange Traded Funds (ETFs) and the potential pitfalls of investing in ETFs. If you haven't read it we hope you will.
In terms of vault storage, many people expect it to be very expensive. Most are surprised when they find out it is really quite inexpensive. GoldSilver.com vault storage is in fact cheaper than ETF storage. You can read the analysis here.
Before you put your precious metals in storage, make sure to conduct your due diligence by researching the following:
(1) Who owns the storage facility? - In general, if the dealership from whom you purchase your metals also owns the storage facility, this creates the conditions where fraud can occur.
(2) Who owns your precious metals? This may sound like a silly question (as in, "Of course, I own my metals"). Just make sure to check. Allocated storage is a great example of a type of storage where actual ownership of the metals is a bit tricky and may not present all the options you think you had.
(3) How quickly/easily can you sell your precious metals from the storage facility and get your currency? - It's no use having your metals in a storage facility if it takes two months to get the currency once you have sold.
(4) What are the parameters or obstacles of taking physical delivery of your metals from the vault storage facility? Can they be delivered internationally in case you would like to relocate elsewhere?
For a more in-depth look at storage checking out our article on the subject: How to Store Your Precious Metals.
Due Diligence - Reputation -
Your reputation is key when dealing online or locally. Make sure the place where you go to sell your gold and silver has a good reputation as well.
When considering a local bullion store, you might want to check sites like Yelp, Yahoo, Google Pages, YellowPages.com, or other local review sites.
To research an online dealership, look up its BBB (Better Business Bureau) rating. Also, before you do business with any dealer, make sure you do at least some of the following Google searches:
- (Company Name) review
- (Company Name) scam
- (Company Name) experience
When doing these searches, you are looking for genuine reviews of the companies. Unfortunately, some companies will pay marketers to go out and post overly positive reviews for their company or to post negative reviews about their competitors. So you really need to use your discerning eye and pick out the reviews that seem to be genuine, written from the "person on the street" perspective. Take all reviews with a grain of salt, of course.
BBB Ratings -
When you look at the BBB ratings, don't just focus on the company's overall rating. Although that's a good place to start, you also need to look at the Complaint Closing Statistics. This is the section that shows how many people brought a problem to the BBB and how it was resolved. Look at the two examples below:
Example A:
Example B:
In both of these examples, each company has an A rating with the BBB.
In example A, we see the company only has two complaints. In response to both complaints, the company is "Making a full refund, as the customer requested." That's a positive customer response, in addition to the company's A rating, is a sign that the company is very reputable.
In the second chart, we see the company has 64 complaints. What's more, in nearly half of the complaints, the company is "Agreeing to perform according to their contract." Essentially, this indicates the company did not do what it agreed to do, the customer brought the issue to the BBB, and only then did the company do what it was supposed to do. That type of response should at least be an indicator to you that the company might be a bit difficult to work with.
When considering the volume of complaints, also keep in mind how much business each company does. If business X has 100 customers and 1 complaint, its complaint percentage is 1%. If business Y has 10,000 customers and 50 complaints, its complaint percentage is 0.5%. In other words, business Y would be the more reputable company. So make sure to consider size of the company's business in terms of looking at the number of complaints.
How you will receive the currency -
Of course, if you sell your precious metals at a local bullion store, you should receive your payment at the time you sell. There should be no waiting.
Selling your metals online, however, is a different story. Keep the following in mind when selling your precious metals online.
(1) Know how much currency you will receive - Never, never send your precious metals into an online dealer without knowing how much currency you will get in return. Always have a formal contract for how much you will be getting for your bullion before you send it in.
(2) Know the process - When you call in to sell your precious metals to an online dealership, it is good to know the process - if for no other reason than your own blood pressure levels. Know how many steps it will take to complete the sale, and about how long each step will take.
(3) Know how you will receive your currency - Is the company going to wire you the funds or send you a check?
(4) Know how long it will take to receive payment - Know the approximate date the funds will hit your bank account or when the check will arrive at your home.
We hope this How-To article has helped to illuminate some of the positives and potential pitfalls of selling your gold and silver. We invite you to continue this conversation in the comment section below. List any comments or questions you have. And please share this free premium article with others you think will find value with it through Twitter, Facebook, e-mail, or your preferred social media.
Michael Maloney is a serial entrepreneur, investment advisor and monetary historian who is the author of the Rich Dad's Advisors: Guide to Investing in Gold and Silver and founded GoldSilver.com. This was first published on his WealthCycles.com site.
