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

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.

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

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