Gold and Silver as Y2K Hedge? Bullion Experts Advise 'Buyer Beware'

Buyer Beware

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FALLBROOK, Calif. -- Thinking of buying gold or silver as a financial hedge against Y2K problems? Make sure you are well informed, cautions the Professional Numismatists Guild, the American Numismatic Association and the Industry Council for Tangible Investments, which together recently issued a consumer advisory.

'If you don't know your bullion coins, you'd better know your bullion coin dealer,' said Richard Schwary, president of the Professional Numismatists Guild, a nonprofit organization composed of the country's top rare coin and paper money experts. To make an informed purchase, investors need to be aware of three crucial marketplace factors, Schwary said.

These are:

  • The actual cost per ounce of precious metals: Premiums fluctuate dramatically depending on bullion prices and supply and demand for the coins. 'Do some shopping around and compare prices,' Schwary advises.
  • Bullion value versus collector value: Investors should distinguish between bullion coins (or barter coins), whose values fluctuate according to the current price of gold or silver, and rare coins, which carry a significant collector premium based on historical supply and demand. The majority of the coins being purchased for Y2K investment are bullion, or barter, coins, Schwary notes.
  • Timely delivery of merchandise: If immediate delivery of your bullion coins is not possible once you paid for them, obtain from the seller in writing the specific delivery date confirmation. Due to the increased demand for gold and silver bullion coins, the U.S. Mint and its distributors have experienced delays in delivering products for sale in the marketplace because of a backlog of orders, Schwary explained. Retail buyers may experience weeks-long delays.

In the past 6 months, sales of bullion coins have increased 500% for national and local dealers of these coins, Schwary said. 'Y2K is the biggest deal that has hit precious metals in the past 20 years,' he said. Prices have also gone up about 30% across the board, although in the last 30 days prices have leveled off, he said.

Buying bullion coins as a hedge for hard times is nothing new, Schwary notes. People purchased them during the Depression and World War II. 'Pilots were given gold sovereigns that were sewn in their pockets,' he said. 'They have always been used in the event the paper money system failed.'

In the case of Y2K, he added, if nothing apocalyptic happens, investors could sell their bullion coins without a loss since gold is at a 20-year low. 'There's much less a downside to buying coins than buying an electric generator,' he said.

Richard Schwary, president, the Professional Numismatists Guild, Fallbrook, Calif., 310-674-3330; web site:

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