Commentary

By Cody Willard

For a limited time, Im offering my #1 Amazon best-seller, Everything You Need to Know About Investing . to my Marketwatch readers for free. Simply email us at support@TradingWithCody.com to get your free copy in a PDF or Kindle form.

Over the years, Ive been approached by a few companies asking me to endorse their products. One of the hardest and most-frequent pitches was from Rosland Capital, and some of the other gold and silver-related firms out there who wanted me to do a Glenn-Beck-esque endorsement  of their services. Ive always said no to these offers so far and if I ever do endorse a product it will be because I actually like it and use it myself.

I tell you that because I give some detailed advice in todays column about what I think is the easiest way to buy physical gold and silver coins and bullion and make sure that youre not getting ripped off in the process and I want you to know that Im not being paid by anybody for this and that I have indeed personally used this approach to buy some physical gold and silver in the last couple weeks.

When I started rebuilding my physical gold and silver coins and bullion a couple months ago, I answered a TradingWithCody.com  subscriber thusly :

Q. Now that were buying gold, what do you think the range for gold will be over the next five years?

A. I think you should slowly add to it on weakness such as the ongoing current pullback. I think physical gold can range from $1,000/oz to $5,000/oz over the next five years.

Today, my old friend Jim Rogers, whom I once competed against in a hilarious version of The Commoditys Price Is Right on my show on Fox, is reported to have called for a bottom as low as $900 for spot prices. His logic will sound familiar to any of you long-time TradingWithCody.com subscribers, and thats because Jim Rogers personally taught me some of the lessons I pass on to you, such as:

“So, it would be normal if gold did correct 50%. That might go some way towards shaking some of the faithful, some of the mystics. We [have] got to shake out more people. … I don’t see any signs that the faithful … are giving up and selling their gold. Not just verbal despair, not just people talking about despair, but people acting. Then gold prices will make a nice, firm bottom.”

Jim, who famously left George Soros giant Quantum hedge fund after being a founding partner, previously called the gold and commodities bull market years ago when it wasnt fashionable to be doing so and then later correctly predicted gold would hit a low of $1,200 before this current selloff would end. For gold to correct 50% from a 12-year bull market, it would trade at around $900.

I do think theres been a good bit of people giving up on gold and silver, especially the folks who were trading this stuff when prices were near their all-time highs last year and the year before. A downdraft in gold spot prices to $900 would probably bring silver spot prices down to $16-$17. Currently silvers spot price is reported at $18-19. That would only be another 10% pullback from the current quotes, which shouldnt be shocking to anybody whos just watched these precious metal spot prices drop 30%-60% over the last year.

When gold and silver took a big hit last week, I stepped up my buying of physical gold and silver coins and bullion and am already about half into my rebuilding process even though I thought Id be rebuilding this position over the next year or two. As noted at the time when I stepped up my buying :

I’m using this latest round of gold and silver spot prices showing another fresh round of intraday crashing here today to head over to my local and/or other dealers to aggressively buy another tranche of gold and silver coins and bullion. I’ll probably have to pay about 7% or more over what those so-called spot prices are supposedly showing the value of gold in the real world markets today.

And so lets get back to the original reason for todays column whats the single easiest way to buy physical gold and silver coins and bullion and make sure that youre not getting ripped off in the process?

The best way to buy physical gold or silver is to shop around slowly but surely locally and every time you drive to another big city until you find a reputable dealer that’s not trying to scalp you but wants your continued business over the next few years. Then slowly but surely build up some gold and silver coins, bars, or whatever and keep it stashed safely away.

Next point to make is that we are going to be slowly but surely accumulating this physical gold and silver bullion and coins over the next few months, quarters and years. We’re not looking to go in and plump down 10% of our savings on gold coins at the local pawn shop tomorrow. We’re talking about finding ourselves a reputable dealer or two over the next few months and then continuing to scale into more physical gold and silver bullion and coins over the next couple years.

Notice I called that the best way and by that I meant that I truly believe its important that we support local businesses and build relationships with a dealer that has been through ups and downs and will be there when you need em. But thats not exactly easy and far from the easiest way to buy gold and silver.

The easiest way? Well, you can thank Pierre Omidyar, who founded eBay and later staked another successful hedge fund manager friend of mine, one of the best distressed investors youll ever meet.

On Ebay, youre probably going to get just about the cheapest premium over spot price that you can find anywhere right now. If youre willing to spend some time and energy surfing eBay, you can pretty much protect yourself against scams by looking first at the seller feedback score. I never buy from anybody with a score of less than 98% positive and I always deal with a seller with at least 1,000 auctions under their belt.

Here’s a seller from which I have bought some some physical precious metals, with their detailed eBay feedback score:

%img src=http://i.ebayimg.com/00/$T2eC16hHJGoE9nuQhobbBQc3UuzmV!