Diversify! Don't Buy Fake Gold and Silver – Part 2

A while ago in this blog I recommended that you protect yourself against counterfeit precious metals by buying your metals from several reputable dealers. Today I want to broaden this strategy a bit further.

DON’T ALWAYS BUY THE SAME PRODUCT

I'm naturally a collector. I like accumulating parts and assembling them into larger sets. However, when it comes to my metals investment I try to avoid a collector mentality. I want to stay emotionally detached from the individual pieces so I can readily sell them when appropriate. This regimented mindset can actually be a liability when assembling a metals portfolio.

Even if you aren't a collector and consider yourself to be a straight investor, diversifying your holdings is critical.

It would be easiest to pick one silver dealer, and then only buy one type of product from that dealer. This has potential to create vulnerability in your portfolio. If you have only one product from one supplier you have nothing to compare it to. These are the types of situations that lead to people losing all of their savings.

When purchasing, my goal is always to get the most metal per dollar spent. Comparing offers across several dealers will naturally result in a variety of products being acquired. I personally avoid art pieces (bullets, skulls, etc.). These have an undeniable appeal, but I can't easily compare them to similar products by other manufacturers. When buying these products you have to have great faith in the assay as described. I don't think I trust people that much with my own investments.

Remember that anyone with some skill and a desire to make money tries to improve their skills, and counterfeiters are no different. When I read that a particular product has fakes, I tend to avoid those entirely, even when buying supposedly legit stock from a reputable dealer. I don’t know if what I am buying is the real deal, or simply improved forgeries. This may be overly cautious, but it’s just a personal philosophy.

What are the odds that my silver holdings are counterfeit? I would be disappointed but not surprised if I’ve bought some undetected fakes over the years, but ALL of my holdings? Doubtful.

The types of products that I buy often depend on changing market conditions, dealer stock, and my personal budget. All of these change with time and have led to a diverse and more sound portfolio. Old numismatic silver coins (US and foreign), junk silver, government rounds like eagles and maples from different countries, private issue rounds and bars of different sizes and all from diverse mints, and scrap sterling. It’s very unlikely it is ALL fake. Some items are scarcely worth the counterfeiter’s attention.

I can sleep well at night. Hope you can too.