Investing in Gold: A Q&A session with APMEX Director of VIP Services, Peter LaTona

We recently have been hosting a series of Q&A sessions on Facebook and Twitter for our fans and followers to partake in. Previous topics that we have covered were about Investing in Silver and Investing in a Precious Metals IRA.  For this Q&A session, Peter helped answer questions about Investing in Gold. Here below is a recap of that session.

If you like to join us on our upcoming Q&A sessions, make sure you like us on Facebook and follow us on Twitter. We look forward to answering your questions.

Q- Does APMEX utilize any hedging strategies? If so why do their premiums remain so high?

A- APMEX hedges 24/7 when the Precious Metals markets are open.  (Markets close at 5PM Friday ET and reopen on Sunday at 6PM ET). Hedging allows us to lock in prices at the time you place your order. All Precious Metals dealers have experienced unprecedented demand as of late, which has drastically cut into available products. The manufacturers had no way of anticipating this sudden increase in demand. When supplies are low and demand is high, they charge more for their products. APMEX pays more to purchase the products, so premiums go up. APMEX is also paying higher prices to our customers who wish to sell their products to us. It does work both ways.

Q- Do you see a split coming in the way paper and physical Gold and Silver are priced?

A- The paper products (ETFs) claim they correlate to the actual spot prices of the metals. However, the recent drop in spot prices demonstrated that this is not always true. The paper products fell even more than the spot prices. Jim Cramer has always recommended Gold through GLD…He now says buy the physical coins. I do not see how there could ever be a split in how they are priced. They are both based on spot prices.

Q- In your opinion, why has gold dropped so much?

A- Most of what I read says gold dropped because of the paper markets (ETFs). (Speculators) The big hedge funds, who always leverage their purchases, started taking money off the table.  As prices dropped, automatic sell signals hit computers and a snowball effect took place. At the same time, the physical market (Investors) bought at levels we had never seen before.  There is a re-balancing between investors and speculators. The basic reasons for owning Gold as an investment would seem more valid than ever….as a long term investment

Q- Do you see Precious Metals reacting to the over flooded market of Gold and Silver certificates? Do you believe the Silver incident is coming?

A- I do not know if the certificate market is big enough to move the overall market. If you are referring to ETFs, then yes, they definitely move markets. I am not sure what you mean by Silver incident, but I am not seeing anyone predict an explosive move up or down.

Q- Taking into account Gold’s recent volatility and the current economic environment, what are your thoughts as to where Gold is headed in the short/mid-term?

A- I only think of Gold as a long term investment strategy. Many analysts advise that a 4-12% insurance policy should be considered by all. I am not aware of anyone who consistently predicts short term prices with accuracy. Short term becomes more of a bet than an investment.

Q- My local coin dealer says don’t go for 90% junk. Rather go for bouillon bars and rounds. Thoughts?

A- Our customers who believe there could be a time they need real money to buy food, often buy 90%. If purely for investment purposes, I would not disagree with your dealer. Keep it simple and buy 1 oz. coins, rounds or bars.

Q- It reminds me of what happened to Silver a few years ago when it dropped from like $30 to $10 but yet you couldn’t find any physical Silver at $10.

A- Yes, similar for sure. It is not that Gold and Silver are in short supply. The problem is that the manufacturers who make products cannot keep up with demand.

Q- Peter, personal question. What is your personal favorite product, round, bullion and manufacturer?

A- I like the simple Gold & American Eagles. It is just a personal choice, many of my colleagues like Maple Leaf, rounds or bars. If you want rounds I would go APMEX rounds because most of the time they are the best price. They are made by the Sunshine Mint. For bars, I personally like the Pamp Suisse in assay.

Q- Why did the mint suspend production of the 1/10th oz Gold round?

A- I do not know, but I am fairly sure the reason was they were struggling to keep up with production of 1oz. coins

Q- Is there a shortage in physical Silver? I still see people selling plenty of Silver.

A- It is not that there is a shortage of Silver; there is a shortage of Silver products. The manufacturers did not anticipate the buying frenzy. They are struggling to catch up to demand.

Q- Exactly how does the paper futures market effect the Precious Metals market and how much can the price be manipulated through the futures market?

A- This is not an area of expertise for me, but I think of it like this. The future markets allow speculators to place leveraged bets on whether prices are going up or down. Other speculators can monitor the direction of the bets and either jump on board or play the opposite view. The reason it can really move markets is that they control much more Gold or Silver than they actually had to pay for. It is a leverage bet. I might buy a Gold contact at 100 oz. but I only have to put 10% down. The market reacts as if 100 oz. has been sold. Hope this helps.

Q- If APMEX hedges when they make their sale instead of when you purchase from your suppliers, aren’t you basically helping to drive down prices after you have sold your product?

A- it is actually the opposite. If we sell 100 oz. of Gold we buy a futures contract.  If we buy 100 oz of Gold we sell a futures contract. Our goal is to stay neutral.

Investing In Silver: A Q&A Session with APMEX Director of VIP Services, Peter LaTona.

On April 10, 2013, we had a Q&A session regarding “Investing in Silver” on Facebook and Twitter, where our fans and followers had the opportunity to ask our Director of VIP Services, Peter LaTona their questions about investing in Silver. Below is a recap of this session. To join in on upcoming Q&A sessions, make sure to like us on Facebook and follow us on Twitter. We look forward to your questions


Q What is your opinion of Brittania’s versus Eagles for 1oz silver?
A
Truthfully these are both bullion coins produced by government Mints. They will both rise and fall with the price of silver. Some people just like collecting all the coins from around the world

Q I have $500 to invest. Do you have any advice for someone like me?
A If you are looking to invest $500 in silver I would buy the best deal we have going that day. You might even consider bars or rounds because the premium is smaller.

Q The premiums in “junk silver” is going up, could this mean there is starting to be less and less of it out there?
A
It definitely means that there is less availability right now. It could be that the sellers are holding on for prices to increase or it could mean more investors are buying this product so the demand is increasing

Q The National debt is out of control $16.7 trillion. Silver and Gold prices were at record highs just a few months ago. Has the sequester given the markets a false hope that Washington is addressing the debt problem? Is this why Gold & Silver have taken a hit downward and do you believe like I do that it is only a matter of time until it skyrockets?
A
I think you are on target. The same Fed Policy that drives up gold and silver is artificially making the stock market more attractive. At what point do companies need to produce real results and not just take advantage of cheap money?

Q With the recent crash in silver, are you buying or selling silver?
A
To answer your question we are both buying and selling. I am sure you have a long term view on where silver prices will be three years from now. Make your decision based on that and do not worry about timing the market.

Q What do you think the outlook for Silver will be for the remainder of the year?
A
We try to stay away from predicting prices and I would say that if anyone says they do know, they do not. Be especially cautious of a dealer who says prices are shooting to the Moon. They might just be selling you silver. I personally believe that the macro economic factors, money printing and geopolitical tension are all factors that favor gold and silver prices to increase.

Q With Silver & Gold going down in price, is it still a good investment? Compared to Money Market Bonds? It does not look like the fiat dollar is going anywhere fast.
A
I did not say prices would go down, I can say that today right at this moment prices are down, but next hour who knows? I believe that gold and silver are a solid long term investment

Q When I buy or sell silver or gold at APMEX what do YOU report to the IRS?
A
Form 8300 for cash transactions and 1099B for when you sell. If you pay by bank wire, personal check or credit card, it is not considered cash

Q The price of silver and gold is down but the price is down? If the demand is up and they keep running out of eagles shouldn’t the price be up?
A
The price of Silver Eagles have gone up because they are in short supply. Everyone is buying because silver went down. This does not mean the overall supply of silver is scarce.

Q Hello Mr. LaTona, my question to you sir is with all major governments printing to infinity, where do you see gold and silver prices head by the end of 2013?
A
There are very few people who really think all of this global money printing will turn out well. This is a major reason people are buying gold and silver…including the Central Banks who print the money

Q I was wondering what is a better buy, government backed coins like silver eagles and maple leafs or APMEX and sunshine mint silver coins and bars?
A
I like the added security of having a coin produced by a government mint, but many people in my company prefer rounds or bars. The “spread” meaning the difference between what we pay you and you pay us is very similar on all these items, so you cannot make a bad choice.

Q How do you feel about the future of AGQ and SLW? What are your favorite Junior Miners?
A
I think ETFs will be here for a long while as they are especially good for day trading. I honestly know little about mining companies.