How Would You Like Your Gold?

How Would You Like Your Gold?

Guest Post by Dennis Miller at Miller On The Money

My wife and I pulled up to the drive-through window at our local burger joint. Why is it easier to understand a rapid-speaking, strange-talking tech service specialist in some foreign land than it is a drive-through clerk 50 feet away talking into the squawk box? We wanted two simple burgers and drinks. We struggled to understand at least ten questions, and many had to be repeated, to finally place our order. We got home, opened the bag, and they got it wrong.

It’s more than just burgers and Happy Meals! It’s easy for us to preach – Got Gold? – but making all the necessary decisions to do it correctly can be a virtual minefield.

Last week, we offered some general guidance. Friend Rich Checkan, President and COO of Asset Strategies International, sent along a report “How do I own gold?” which outlines many options. Rich is an expert who understands the challenges facing our readers.

Bottom line – if you are buying gold to hedge inflation, you need to get it right the first time! Rich agreed to an interview.

DENNIS: Rich, thank you for taking the time to educate our readers. I want to set some parameters for today’s discussion.

Mutual friend Chuck Butler constantly urges readers to own gold (and silver) as a hedge against inflation. Most readers are baby boomers, not trying to get rich, but trying to avoid getting poor. Retirees think they are safe with government bonds and CDs, while inflation clobbers the buying power of their life savings.

We suggest a minimum of 10% in metals. Most readers rely on their nest egg to produce some income, which metal stocks can do.

Rich, let’s start with a multi-part question…. Do you agree with our 10% suggestion for physical metal? What do you see as the safest metal to own, and why?

RICH: Dennis, thank you for bringing me into this important conversation.

I wholeheartedly agree with a 10% allocation in physical metals; we’ve been preaching this to clients and readers for over forty years. We didn’t get there by throwing darts at a dart board.

The World Gold Council does extensive research on the effects of gold in various portfolios – different currencies, various stock/bond mixes, and varying allocations to gold as well. They found there is a sweet spot for gold, regardless of the currency choice or stock/bond mix. Typically, including between 8% and 12% in gold increases performance and decreases risk.

Ten percent is smack dab in the middle of that range, and it makes the math really easy.

I prefer to fill that ten percent allocation with gold bullion… the world’s only real money. I don’t have a preference for coins versus bars. I like whatever has the lowest premium at the time, as long as it is London Bullion Market Association (LBMA) approved.

I know you guide your clients to coins because it is easier for them to sell, and I won’t argue with that.

That allows you to get the most gold for your money.

DENNIS: I’ve seen TV ads for numismatics and collector-type gold. I’m very wary.

The “We Buy Gold” folks have a reputation for ripping off their customers.

I have some sports memorabilia, which I was told would be a good collectible – and it may have appreciated. I don’t know how to sell at a fair price. My fear is I will encounter a “We Buy Baseballs.” How do I know what it is really worth, and how do I sell it and get a fair price?

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