Buying and Selling Precious Metals
The Texas Bullion Depository® does not endorse any specific precious metals dealers; however, the information below may be useful to those interested in acquiring or divesting precious metals for storage at the Texas Bullion Depository.
How to Buy
There are numerous methods available to individuals, businesses, institutional investors, and government agencies to physically own precious metals or have exposure to precious metals through varying investment vehicles. The degree to which a specific method of ownership is appropriate depends upon the facts and circumstances of why the owner wishes to hold precious metals in the first place.
In respect to owning physical gold, silver, platinum, or palladium there is no shortage of options – from coins to bars there are literally thousands of products produced by government mints and private refineries from around the world. A simple internet search will produce ample options to consider, but how do you know which company to trust?
The brief list below is helpful to consider when trying to find a dealer to buy or sell your precious metals:
- How long has the dealer been in business?
- Are they properly licensed in the state in which they operate?
- Do you personally know anyone that has conducted business with the company in the past? How was their experience?
- Does the precious metals dealer have any affiliations which lend to its credibility?
- Just because they have a great looking website doesn't necessarily mean the company is right for you. Consider calling and speaking with someone, especially if you're planning to acquire a large position.
If you are considering purchasing precious metals for the first time, or if you are trying a new precious metals dealer that you have not used before – consider a test transaction. If your ultimate goal is to build a $100,000 precious metals position of gold and silver, consider purchasing just 5% of that amount in your first order to get started. (You may also decide to dollar-cost-average your way into the position, which would effectively do the same thing as it relates to your first acquisition.)
Then, see how the transaction goes. Did you receive your order during the delivery window described during the purchase? Did all of your items arrive as expected?
Understanding BID / ASK Spread
Precious metal dealers apply a BID / ASK spread to all orders, which varies from company to company. This is how they make money. Depending upon the product you are buying or selling the BID / ASK spread may vary widely.
The BID price is the price the dealer will pay to you if they are buying the product from you.
The ASK price is the price the dealer is offering the product for sale to you.
The difference between the BID and ASK is the "BID / ASK spread".
In general, coins have a slightly wider BID / ASK spread than bars. And, higher weight products generally will have a tighter BID / ASK spread. For example, a 100oz gold bar will almost always have a tighter BID / ASK spread than a 1oz gold bar. This is due to the cost to manufacture the product; it takes almost as much effort to make the 1oz bar as it does to make the 100oz bar.
When the time comes to sell some or all of your precious metals be sure to consider your liquidity options. The Texas Bullion Depository does not buy or sell precious metals, but we can send your metals either directly back to you or to a dealer of your choice for liquidation.
It's important to consider the same list of five items listed under How to Buy when conducting business with a precious metals dealer to sell your metals. Additionally, be sure you clearly understand how much the dealer will pay you for your items, and when and how you will be paid.
Determining whether or not to physically hold your precious metals position, or to send to the Texas Bullion Depository for safekeeping is up to you. However, in most cases the cost for a private party to buy insurance per $100,000 is substantially more expensive than the total annual storage fees charged by the Texas Bullion Depository, which includes 100% insurance coverage in the price of our services.
If you choose to store with the Texas Bullion Depository, you can rest assured that we will safely protect your assets.