Allen Rowe: True cost of bullion
February 24, 2013
With gold and silver bullion there have been a number of changes in the modern landscape. The largest change comes via the Internet. In today’s world one can shop anywhere in the country for the best price possible, but is the best price always the best deal.
Hidden fees are sometimes the culprit in a deal. Often an Internet company will state that they have the best price, but then when one buys the true cost comes out. Commissions are often how this is done. Once the sale is established they add a 1 to 3 percent commission making the actual cost to you higher than that of other options. Shipping is another way that some companies make a hidden fee. Some companies make a great front with the actual price of their product, but once it comes to delivery the price just does not seem as nice. Whether it is a per-coin shipping and handling charge, or just an inflated delivery charge, the deal can turn out to be more expensive after this occurs.
The pitch. This is probably the largest segment of low prices on the Internet. A company will offer a good deal on a bullion product, but it does come with a hidden catch. In order to place an order you must register as a customer with them. During registration you are asked to sign their terms and conditions agreement, a segment that many just agree to without reading. Once having done this, you are now part of their marketing customer base. Your name is then turned over to their “boiler room” sales force that starts calling you and offering you “special” deals. This is where these companies make their real money. Commissioned salesmen work inventory or product lists trying to sell you coins that have a tremendous mark up on them. I have a number of customers that have tried these type of companies only to find that they are now being berated daily to buy something else. If you keep buying from them the phone calls will continue. If you stop buying they will keep calling until you go cold, no more purchases for some period of time. Then they will try a little less frequently until they deem you as dead, not likely to ever buy from them again. Once you become a dead customer to them it does not stop there. They might cease calling, but then they sell your name and information to a host of other companies that buy these dead lists in order to try and resurrect you into buying status.
Bullion is traded at small premiums around spot, trying to save a few dollars by buying from an Internet company may not add up as much as it seems to. If one thinks about it, saving $5 an ounce on 20 ounces of gold when gold is at $1,600 is really only saving $100 on an $32,000 transaction. Is that $100 really worth the head ache if the deal is not just a simple one? Checking with a local face to face company is usually more pleasant, better for our local economy, and in reality may not be costing you any more than some Internet deal you have found.
• Allen Rowe is the owner of Northern Nevada Coin in Carson City.
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