Guardian Commodities™ is a leading US-based broker of gold, silver, platinum, and palladium bullion.

Tarek Saab is an entrepreneur, speaker, and nationally syndicated author. More

Gold from the Govern Mint
June 2009 GuardianCommodities.com Amidst the twenty-four hour news fiasco concerning the swine flu pandemic, television stations have failed to mention that the largest gathering of swine can be found on Capitol Hill. As an American taxpayer, I have had the “swine flu” since the Clinton Administration.

According to the majority of my customer base, our comrades in the land of the giant obelisk and all-seeing eye, in tandem with their masters at the Fed, are very much to blame for our economic tribulations. Which naturally brings up a related question: why are precious metals investors so enamored with governmentissued bullion, such as the United States Eagles, the Canadian Maple Leafs, and the South African Krugerrands? Nearly every day customers inquire about the merits of government bullion versus private-issue bullion, and I have consistently taken the minority position and favored the private mints (even though we sell everything at Guardian Commodities). I have listed the three most common arguments in favor of government coins below, along with my responses: ARGUMENT #1: The weight and purity of these coins are backed by the full faith of the government. RESPONSE: The irony of this argument is that investors are gravitating to gold precisely because their faith in the U. S. government has become shaken. The reasoning is circular: If one doubts the integrity of our politicians and the financial system, why demand a coin issued with the full faith of the same architects manipulating it? The “full faith” of the United States government is hardly reassuring. Let me be clear. I do not doubt the weight and purity of the United States Eagle. I simply doubt the good faith of the U.S. Government. Does anyone deny the plausibility of underhanded tactics at an institution run by Timothy Geithner and the U.S. Treasury Department? I’m just sayin’ . . When considering GATA research about price suppression, who can we trust? Our socialist Canadian brothers up north? Our communist Chinese partners to the East? How ethical is the track record of the South African government? Instead of blindly accepting the markings on any coin, buyers should always be cautious. ARGUMENT #2. The coins are universally recognizable. RESPONSE: By whom? Less than one percent of the United States population owns gold or silver bullion. Ask your neighbor if he knows the difference between a Gold Krugerrand and a Golden Girl. If you are worried about dealers recognizing private issue bullion, consider this: you can walk into most places and receive cash for a 14-karat gold bracelet from the Home Shopping Network. So why would you have trouble selling private-issue gold bullion? Gold is gold. ARGUMENT #3. The coins are legal tender. RESPONSE: You must be joking. The face value of a gold U. S. Eagle is $50, while the cost of that same Eagle is roughly $1,000. So I ask: What sharpshooter is going to square a $50 tab at Applebee’s with a $1,000 gold Eagle? The face value of these coins is already inconsequential. If and when the price of gold skyrockets, the face value will be rendered valueless.

COST: More often than not, the premium for a private issue coin is significantly less than that of a government coin, which means you can purchase more bullion for your money. Honestly, does it surprise anyone that private businesses are more cost efficient than the government? Why pay more than necessary? AVAILABILITY: The availability of government bullion rises and falls dramatically with market conditions. In fact, the United States Mint recently ceased production on fractional coins altogether. In October of 2008, nearly every dealer in the country was placed on a waiting list for bullion, and in many cases the lead times exceeded four months for those customers patient enough to wait. Considering the risk involved with the default of any business in our present economic situation, and beyond that, the risk involved with the default in each business’ bank, I find it mystifying that investors would harbor the risk of floating hard-earned cash for lengthy periods of time. The risk is entirely unnecessary. A good private mint not only carries significant stock, but also fills wholesale gold orders within a seven-day window. CONFISCATION: I have been told that many customers purchasing U.S. Eagles are now being asked for their social security numbers and other contact information. Call me paranoid, but why would Big Brother want this information? History repeats itself, and the threat of a 1933 gold confiscation lingers like a bad toothache. Whatever happened to privacy? Those entering the bullion marketplace for the first time are rightfully concerned about counterfeit coins. They want assurance that the gold is real, even though counterfeiting is less common that one might guess. But these questions linger whether the coin originates from a government outfit or not. Counterfeit coins do exist, and criminals are indiscriminate when it comes to their make and model. I will go into detail about the process for evaluating gold authenticity in my next article. In the meantime, for those who survive the swine flu, my humble opinion is: purchase private mint bullion to save time and money, and be diligent regardless what products you purchase. ‘Til next time, that’s my Saab Story.