All last week, gold and silver prices inched up to new heights. At the same time, Congress opened an investigation into a high-profile precious medals firm, Goldline.
The hearings point to the hazards of buying precious metals and raise the question: Should you buy bullion or coins? Remember that when you buy coins you are not just buying the gold in the coin, you are buying the value of the coin and the markup for the seller. So, even if gold prices were to keep rising, it could take a long time before the value of the gold equals the cost of the coin.
It is not unusual for gold prices to rise this time of year, partly because gold demand goes up around holiday seasons worldwide. While there is a lot of buying and selling going on right now, people seem to be selling scrap gold to pay for basic needs rather than cashing in on spot gold prices. One congressman has said gold companies should have to disclose more about the real value of the gold in the coins they sell.
What do interest rates and currency values have to do with gold prices? For people who cannot afford gold, silver might be an alternative. Analysts point out that when you look at what they call the silver/gold ratio, silver prices look strong.
When prices go up, hucksters come out. InvestorPlace.com has some useful advice on how to avoid the worst gold deals. The site also mentions gold cons and scare tactics, including one that originated with Franklin Roosevelt in the 1930s.
