Top 10 Precious Metals NOT To Buy

10-precious-metals-not-buyPreviously, we gave you our opinion on which types of bullion (non-collectible) precious metals to buy.  They were the ones that were either very liquid (most easily converted into cash when cash is needed) or they have the lowest margin spread (the difference between the buy and sell price at a given spot market price).

In the years I’ve been a partner in my precious metals dealer store, I seen some trends.  Things to buy, and things NOT to buy.  In general, the NOT list is loaded with items full of perfectly good gold and silver.  The problem tends to be the steep discount you get when you’re selling, and the high premium you pay when buying.

If you are able to buy any of these at very close to the spot price of gold or silver, go ahead and “pull the trigger” and buy these.  The only exception would be the top item – silver bars in excess of 100 troy ounces.  The likelihood of getting burned is simply too high.  Don’t do it!

A last nugget of wisdom:  No buyer cares one little bit how much you paid for the gold or silver you are trying to sell.  If you over-paid, don’t be shocked when your buyer laughs when you say, “I only want to get my money back out of this silver/gold.”  The market – spot price for the precious metals AND the desirability of the coin or bar at the moment you’re looking to sell – is the only thing a buyer cares about.

Here we go – our list of precious metal types to avoid:

10. Morgan and Peace Silver Dollars

These iconic silver dollars are favorites among collectors, but you pay a STEEP premium for even the most common-dated coins in so-so condition.  As an example, right now the spot price of silver is $18 per ounce.  Both Morgan and Peace dollars each contain 0.7734 troy ounce of silver (you thought it was a whole ounce, didn’t you?!).  Doing the math, the spot price of silver contained in these silver dollars is equal to $13.82.  The lowest price I can find online for one of these coins (in “cull” condition – which is barely recognizable as a Morgan or Peace dollar) is $22.81 each.  That’s a staggering 66% premium.  For slightly better condition, the premium is well over 100%.

As noted above, if you can get these at or very close to spot prices, you can do very well.  Good luck!

When selling them – and hoping to recoup your investment – you need to find someone who likes the lower-grade, common-dated Morgans.  That limits your liquidity because your sources for buyers is limited.

9. Austrian Philharmonic Gold and Silver

These are perfectly good (even excellent) examples of high-quality bullion, BUT they have limited appeal outside of Austria and the Eurozone.  I have NEVER had a request for large volumes of either of these coins.  Only inquiries such as, “Hey, I don’t have a Phil in my collection.  Got one?  If you’re buying these, buy them at or below spot prices, as you’re not going to get much more than that when selling – and likely will have to accept a pretty steep discount.

8. Chinese Panda Silver

Another gorgeous coin, but there are TONS of counterfeits out there.  I recently had a guy come in with 6 of them.  Every one of them was off in their weight – either too heavy or too light.  The Chinese – like all government mints – are VERY precise in their bullion weights.  Generally speaking, a one ounce government minted coin will weigh between 30.95 grams and 31.25 grams (with a troy ounce being 31.1 grams).  One of the fakes that came in was in the high 28 gram range, and another was in the high 32 gram range.

If you’re going to buy these – and pay the typical premium – be sure you weigh and use a micrometer for diameter and thickness on each and every coin.  If they’re in the Original Mint Packaging (a small vacuum-sealed bag) and the seller won’t let you remove them from the bag for testing, don’t buy them.  Period.

7. Any Slabbed/Certified Coin

Most slabbed coins (the collector term for coins which have had their condition certified and placed in a plastic case – or a slab) are for suckers.  Fully 95% of the slabbed coins we get in our shop are worth little more than the uncertified raw, bullion coins.  Why?  They’re not “Key Date” or error coins.  I can tell you that far and away, more people have come into my store telling stories of having been swindled by buying “certified coins” than by any other category, even counterfeits.

Put yourself in the place of the target for your sale:  A coin collector.  They want unique coins, not the run-of-the-mill common coins – whether they’re in perfect condition or not.

When buying high-value slabbed coins, you MUST know your product.  What’s the condition, what’s the mint location, what’s the error, and most importantly, what’s the value to another collector for those conditions?  As they say in our business, “Buy the book, THEN buy the coin.”  Get educated before buying collectible coins.

6. Non-Standard Government Minted Gold and Silver Coins

A number of countries – mostly Canada and China – produce coins of non-standard weights.  The Canadians have 3/4 ounce, 1 1/4 and 1 1/2 ounce silver coins.  No one likes doing math!  Stick with their 1 oz Maple Leaf (which was our top choice of coins to buy).

The Chinese do similar things.  They’ve got some 5 ounce coins that are nothing but trouble.  In the Panda example above, the same seller came in with one of the 5 ounce coins.  It weighed 5.25 ounces!  I don’t think the Chinese mints are in the habit of giving away a quarter ounce of silver with every purchase!

They also make a 12 ounce gold coin.  Good luck getting one of those sold when you’re in a pinch for cash!

The US government minted the 5-ounce “America The Beautiful” silver coins.  When they first came out, they had insane premiums.  Now they’re worth not much over spot silver prices.

5. British Sovereign Gold

The drawback with these gold coins is their gold content:  0.2354 ounce.  Not quite a standard quarter ounce.  While these aren’t toxic, they are in VERY low demand.  I usually end up selling those that I have in bulk to wholesalers.  I’ve had perhaps 10 inquiries for Sovereigns out of the thousands of customers we’ve had in the past 5 years.

If you’re going to buy these coins, you need to get them very close to spot prices (same goes for the half-sovereigns, French and Swiss 20 franc and other similar non-standard Euro gold).

4. Non-Standard Sized Private Mint Silver bars

Private mints – most of which are very good producers – generally produce their product in 1-, 5-, 10- and 100-troy ounce bars.  Anything outside of these weights is a red flag.  We get “poured bars” all of the time that are stamped with weights such as, “10.138 ounces”.  Yes, we buy them – after testing the hell out of them – and we buy them at a STEEP discount.

We know they will stay in our cases longer than a standard 10 ounce bar from a reputable private mint.  Time is money.

3. Fractional Silver

We’re talking small bars and rounds produced by private mints.  They’re primarily for novelty purposes.  The premiums are absolutely insane (2-times and more the spot price) so there is very little demand.  Just like the non-standard silver bars mentioned above, these will sit in a dealer’s case for a long time, so we pay well below spot prices for them.

If you want smaller, easily divisible silver, buy “junk silver” – again, one of our recommended types of silver to buy.

2. 40% and 35% Silver Coins

Kennedy half dollars from 1965 to 1970 contain 40% silver.  The so-called, “War Nickels” from half of 1942 to 1945 contain 35% silver.  Don’t buy either of them!

Silver is heavy.  Really heavy when you start accumulating some serious value.  These coins are bulky and heavy and not worth the trouble.

I can tell you that in the 5 years I’ve been selling bullion, I have NEVER had someone come in and ask to buy bulk volumes of either coin.  The only requests are for a single coin someone was looking for for their collection.

Everything we buy gets sold to other dealers.  There is obviously a market for this stuff somewhere, I’ve just never seen it on the retail level!

1. Greater Than 100 Troy Ounce Silver Bars

The top “Don’t Buy!” pick.  I don’t recommend you buy this stuff, regardless of the discount you are able to get.  Stamped, not stamped, it doesn’t matter.  For these larger bars or blocks, you MUST assay the metal to verify the silver content.

Do you have the tools, skills and knowledge to do this?  I didn’t think so.

The cost to ship, insure, have melted and assayed is steep, to say the least.

I can’t stress this enough.  Don’t do it!


Want to know what you SHOULD buy?  See, “Top 10 Precious Metals To Buy”

If you’re thinking of buying precious metals, before doing so, consider buying our Beginner’s Guide To Precious Metals.

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