Finally, I Bought an American Buffalo Gold Coin

American Buffalo Gold CoinI finally did today what I have long been considering doing: Buy gold. Today the waiting is officially over after I bought an one ounce American Buffalo gold coin from Bullion Direct, at the time when recent selling pressure has pushed the spot gold price from a nine-month high of $689 reached early this week down to about $640 this morning when I placed the order.

The reason for me to choose Bullion Direct over other bullion dealers after my recent study is mainly for their price, price of the metal and additional charges related to shipping and insurance. Between Bullion Direct and Kitco (APMEX is another choice among many gold dealers, but I didn’t go through them all and concentrated only on Bullion Direct and Kitco instead), it seems Bullion Direct offers better value. As of now, one ounce American Buffalo gold coin is listed at $670.20 while Kitco has a quoted price of $677.63. Other key differences include:

  • Waiting period after payment is received: Kitco – 3 weeks; Bullion Direct – 7 days
  • Shipping & handling: Kitco – $30 flat; Bullion Direct – $5.95 handling plus $9.49 and up shipping
  • Insurance: Kitco – $4 per $1000; Bullion Direct – free

Actually, after I posted the article on buying gold early last month, I was approached by Bullion Direct, pointing out, for example, that the 4% handling fee is only for credit card payment, not for check or wire.

So I eventually decided to go with Bullion Direct and the whole shopping experience was very smooth. The account opening process only took a couple of minutes to complete (information required include name, address, phone number, date of birth, and credit card information for authentication, won’t be charged if not selected as payment method). When I first put the coin in the shopping cart, the price was quoted at $673.50. As I was reviewing the order before submitting it, I was warned that I have two minutes to confirm the order, otherwise a new real time price will be quoted. It took me longer than two minutes before I hit the submit button and a new quote was displayed on my order: $669.70. Even better! At that time, the spot gold price was around $646 an ounce and the difference between quoted price and spot price is the premium that dealer charges. Including shipping and handling, the final cost of the American Buffalo gold coin is $685.14. I bought the coin through their catalog service. Though it is possible that I can get a better price through their auction style services, I chose catalog just for simplicity.

This is the first time I have bought a piece of gold, but I have no plan to make frequent investment into physical gold (my mutual fund TGLDX provides me the diversification I need already).

This article was originally written or modified on . If you enjoyed reading this post, please consider subscribing to my full RSS feed. Or you can also choose to have free daily updates delivered right to your inbox.


Author Info

This post was written by Sun You can find out more about Sun and his activities on Facebook , or follow him on Twitter .

7 Responses to “Finally, I Bought an American Buffalo Gold Coin”

  1. Moneymonk |  Mar 02, 2007 at 7:17 pm

    I though about buying physical gold coins, mainly for my little daughter.

    Do u plan to ever sell it or just keep it as and investment?

    I never heard of buillion direct, I thought kitco was the only dealer.

  2. The Sun |  Mar 02, 2007 at 10:10 pm

    Actually the reason I bought the gold is also for my daughter :D. I thought some day maybe I can just give them (I do plan to buy some more, but won’t be very often) to her as gift and that sounds pretty cool.

    I don’t think I will ever sell it unless I need the money very badly, which I don’t expect to happen. As investment, maybe physical gold isn’t a very good option as the price didn’t appreciate a lot until about 5 year ago and the price can stall for a very long time. And that’s way I have no plan to put any big money into gold.

    I didn’t use Kitco, though I heard quite a lot about it. From my only experience with Bullion Direct, I think it is quite good though I have no first-hand comparison with others, at least the price is better than Kitco.

  3. Tab |  Mar 03, 2007 at 10:51 am

    Sun, the buffalo’s are really cool looking. I have a couple of the buffalo silvers. I have picked up a couple of $5 gold coins but have been investing in buying gold nuggets from ebay. The nuggets are often picked up for less than spot but are seldom 24k but usually 20-23k. Nuggets often bring better money due to the rareness of the nugget. Often they can bring up to twice the spot price in gold if they are appealing to the eye for collections or jewelry. So far I have accumulated about 4oz of nuggets. I’ll keep you informed. :)

  4. Jason |  Mar 04, 2007 at 2:27 pm

    Sun,
    I think that in your description of owning physical gold, you talked about, but did not explicitly mention, one of the biggest reasons: the psychological factor. You mention that you have shares in a gold fund, which I would guess correlates to the price of gold, so you are in the gold market. However, based on your discussion of why you are buying gold, this does not seem like an “investment” in gold for you. If you wanted to own gold, you could have bought into the pool account at Kitco. Rather, it is the thought of owning gold, of being able to hold it in your hand, along with the psychological thought of gold as having value, which is based on its long historic view as wealth. I have to admit that gold affects me, and probably many other people, the same way. I have been buying gold and silver on E-Bay for the past few months, and can generally get a good value, but the feeling of holding the physical object is completely different than looking at some numbers on a computer screen. Just a thought…

  5. The Sun |  Mar 05, 2007 at 12:06 am

    Tab: It’s interesting to know that you are investing in gold nuggets. I only thought about either gold bar or coin (24k). Also are you buying from individuals or through a dealer that sells through eBay? To me, I feel the reputation and reliability of the dealer is very important when buying gold. I am very interested in your experience with eBay.

    Jason: It’s true that I don’t really use physical gold as an investment and that’s why I don’t plan to buy any meaningful amount of gold or silver. My investment in precious metal is through the mutual fund I own and it’s correlated to gold price though not as direct as gold ETFs (such as GLD). The reason of not using physical gold as investment is that I feel gold price is now large driven by demands (oddly enough, once gold is produced, it will almost never disappear so there are actually more and more gold in market), and it doesn’t really generate any income or return other than price appreciation. However, the price may not appreciate for very long time (gold price fluctuated between $300 and $400 for nearly 20 years until it took off in early 2001). If you invested a large amount in gold in early 80s, I could have actually lost money to inflation. During the same time, however, stock markets have generated very nice returns so I could be well ahead if I invested the same amount of money in stocks than in gold. But, as you said, owning some physical has more psychological impact than financial impact if we don’t see investing in gold only from the perspective of returns.

    There are some predications that gold price could go as high as $1000 in a couple of years, if that does happen, it will make investing in gold at today’s price look like a bargain. But nobody will know ahead if that will be the case.

    I never thought about buy gold on eBay (as a matter of fact, I never bought anything on eBay) for obvious reasons. Did you every have any bad experience? It’s possible to get a good bargain, but I feel there are just too much to worry.

  6. Jason |  Mar 14, 2007 at 11:05 pm

    Sun,
    I have made over 70 purchases on E-Bay, and have only had one purchase go bad, as in I got scammed out of my money wothout receiving anything in return. I have had to return a few items, and those generally go smoothly. My advice (now backed by experience) is to be very careful when a seller requires that you send them a check or money order.

    As for bidding on items, if you look through finished sales, you will see that even for identical items, such as 1 oz Gold Eagle or Buffalo, there is wide range of sale prices, so just bid at the extreme low end of the range. Other bidders will beat you on most of the items, but you will pick up a few items this way. Looking right now, I see that most of the buffalos are going for more than your purchase price, although a few are about what you paid.

    I had not seen Bullion Direct until I read your write-up. Thanks for the info. If I don’t feel like dealing with the crowd at E-Bay, they are definitely an option.

  7. Bullion Coin |  Feb 05, 2008 at 5:51 pm

    Yeah, eBay is a pretty decent place to get quality coins at a fair price. A lot of people always want to know what their coin is worth….and eBay is a great place to see what actual coins are going for….market price is key!