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Guest Post: Hong Kong - Still The Cheapest Place To Buy Gold Coins

Tyler Durden's picture


Submitted by Simon Black of Sovereign Man

Hong Kong: Still The Cheapest Place To Buy Gold Coins

Still a bit bleary eyed from last night’s 12-hour flight from Johannesburg, I decided to walk off the jet lag this afternoon by taking a stroll down Queen’s Road in Hong Kong’s Central district.

If you’ve never been, the streets are lined with banks (and shopping malls), meaning there’s no shortage of places to buy gold. It’s commonplace in Hong Kong for banks to sell gold (same in Singapore, Austria, and many other countries), but what I continually notice here is that premiums over spot are among the lowest in the world.

Now, bear in mind that I just came from South Africa… perhaps the ‘goldest’ of the gold producing nations. I was hard pressed to find too many credible retail outlets in Johannesburg and Cape Town with Krugerrands selling gold for less than an 8% to 10% premium over spot.

Today in Hong Kong at the Bank of China main branch on Queen’s Road, I bought an ‘unsealed’ Maple Leaf (i.e. loose coin) for just 0.5% over spot; I also purchased a ‘sealed’ Maple Leaf (i.e. collector-ready) for an additional $60, or about 4.5% over spot.

IMG 0276 300x225 Hong Kong: still the cheapest place to buy gold coins

The 'sealed' Maple Leaf I purchased at 4.5% over spot; the unsealed go for 0.5%.


IMG 0277 300x225 Hong Kong: still the cheapest place to buy gold coins

This iHKD.s an image of the gold prices that Bank of China was buying and selling at this afternoon. The gold price at the time was about 12,980

Funny thing, it wasn’t even the best price in town. You can buy gold for as low as 0.2% over spot (practically a rounding error) in Hong Kong. Unfortunately, just about every bank was out of stock.

This is a special holiday week they call ‘Golden Week’; it’s one of those manufactured holidays that the government uses to encourage domestic consumption. Given the name, a lot of people traditionally scoop up gold bullion… they apparently think it’s lucky to buy gold during Golden Week. Go figure.

Needless to say, the banks start running out of stock and the premiums go up; if I had timed my visit a bit better, I could have gotten a better deal. Such is life.

Now, let’s be clear about something– I didn’t buy this gold as a speculation. I’m not constantly refreshing my screen so that I can run back down to the bank and make a quick profit. You don’t buy something that’s appreciated 10-years in a row and has increased 7-fold in the same period as a speculation.

If you want to speculate, buy ridiculously cheap assets that people hate. Buy things so that people will think you’re crazy for wasting your time… they’ll even get angry. Then let it sit for 5 to 10 years.

Gold isn’t really in that category anymore. Your friends and family probably won’t hold a group intervention session to stop you from buying a few ounces. Gold is not hated… by -most- people.

You know, on my flight to Hong Kong last night, I read an article in the FT entitled “Gold bugs beware– the bubble is finally bursting.” As you could imagine, the article goes on to say that gold’s $300 drop in the last month portends the end of a decade-long bull market in gold.

What a completely naive position. Amazingly enough, the author is a university professor who is responsible for shaping the minds of future business leaders. This fact alone is evidence that gold is not in a bubble.

Look, it’s extremely unlikely, almost impossible that gold could continue to go up year after year after year, as it has over the past decade. Nothing goes up (or down) in a straight line. But gold’s long-term strength is in its value as a currency alternative, not a speculation.

Gold remains one of the only true anti-currencies out there. The concept of a ‘print-at-will’ fiat currency is garbage… and in a way, the world owes a debt of gratitude to Ben Bernanke and the Eurozone for making this point abundantly clear to anyone who is paying attention.

As more people wake up to the unfolding disaster and watch their worthless paper currencies be reduced to British Thermal Units, the long-term prospects of gold make sense; for the foreseeable future, there are simply no liquid, internationally recognized, traditional, politically benign alternatives to paper.

So if you’re out there in the world, consider stopping by Hong Kong to pick up as much gold as you can; the premium savings alone may offset the cost of your trip. And, if you’re a creative, enterprising individual, consider coming to Hong Kong to buy gold for others (at a profit, of course). Start a trend– become the world’s first ‘gold mule’.


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Tue, 10/04/2011 - 12:51 | 1737645 GeneMarchbanks
GeneMarchbanks's picture

Do you just travel to strange locations to collect gold coins and rare sexually transmitted diseases?

Tue, 10/04/2011 - 13:20 | 1737761 Chaffinch
Chaffinch's picture

Sorry - off-topic. To back up all those stories about physical demand being high, there is a Notice on the Bullionvault website today labelled 'prices and liquidity warning' - it says that they are waiting for a substantial
shipment tomorrow ( presumably bought on the London spot market) and due to unusually high demand margins (from sellers other than Bullionvault themselves) may be higher than normal until that shipment arrives.

Tue, 10/04/2011 - 13:24 | 1737781 malusDiaz
malusDiaz's picture

Tired of no change? Buy your change damit!

100$ per per person... empties all the change in the country!



-100$ brick of nickels.... 97$!~ 

-100$ brick of pennies... 50$!  (thats for the zinc ones, 200$ for copper!)



Want real change? Buy some fucking change then and spread the word. 

Tue, 10/04/2011 - 13:23 | 1737776 au_bayitch
au_bayitch's picture

Gene, you have been to the Dusk til Dawn also.

Tue, 10/04/2011 - 13:43 | 1737854 Popo
Popo's picture

Anyone have any thoughts on the "sealed" vs. "unsealed" thing?   I've never thought about it until seeing that price list.

Is "unsealed" a particularly bad idea?   Seems like "re-sealing" would be a pretty simple affair for anyone actually wanting to rip you off...

Tue, 10/04/2011 - 14:24 | 1738022 AnarchoCapitalist
AnarchoCapitalist's picture

A sovereign round is a sovereign round no matter what you wrap it in. Sovereign coins are bullion and need not be sealed (if they are in good condition) as they are already easily recognizable. No one "collects" bullion in the numismatic community.

As far as being "re-sealed" it is not as easy as you would think because the Royal Canadian Mint puts an imprint on the seams of the plastic (in between each coin). Again, it doesn't matter for bullion and no one would take the time to do this as it SHOULD not command a premium if unsealed.

The only time that a seal matters is if it is a numismatic coin that has been assayed OR if it is a gold bullion bar. Pamp Suisse art bars are my favorite and they are individually sealed, numbered, and assayed. You will pay less when buying "loose" precious metal art bars.


Tue, 10/04/2011 - 14:49 | 1738137 batterycharged
batterycharged's picture

Buying gold coins on the streets in China? Of course it's sealed!

It's actually foil around some chocolate. Enjoy that $1600 milk chocolate delight!

And if you're feeling really saucy, pick up a $100 iPad while you're at it.... =P

Wed, 10/05/2011 - 11:29 | 1741326 herewego...
herewego...'s picture

a bank is a bank. especially in HK.

BOC > BOA :-)

Tue, 10/04/2011 - 13:49 | 1737880 DosZap
DosZap's picture


For a dude that gets around, your a gullible sob.................$65.00 for a regular Mape,over a 0.5 over , on the same coin?

Dude,if it was a Proof Coin I could see it.

Mapes are mapes,it's obvious that coin was not sealed in Canada.

Oh, well...............your loaded guess it makes zero diff.

Around the US, if you can get it inder 4-5% prem, you have a Coup d' etat.

Tue, 10/04/2011 - 14:00 | 1737914 DoChenRollingBearing
DoChenRollingBearing's picture

A week ago, I bought gold (Eagles) for a bit over 5% premium (coin shop).


eBay / 24hgold widget Gold Eagle premium over spot: 26%

APMEX Gold Eagle price: $1721, premium over spot: 6.6%

eBay / 24hgold widget premium Silver Eagle over spot: 81%


No one wants to let their physical go cheap it seems...

Wed, 11/09/2011 - 17:27 | 1738487 barkster
barkster's picture


Tue, 10/04/2011 - 16:10 | 1738624 fiddler_on_the_roof
fiddler_on_the_roof's picture

I can get Gold maples  from my local dealer $42 over spot. ie 2.6%

Tue, 10/04/2011 - 14:57 | 1738186 Gavrikon
Gavrikon's picture

Yes, except for the gold coins.

Tue, 10/04/2011 - 17:59 | 1739219 eurusdog
eurusdog's picture

If it is "out-of-stock" you can't buy it at that price. Basic economics!

Tue, 10/04/2011 - 12:53 | 1737654 kato
kato's picture

yawn. next you gonna tell about your junk shopping at Aberdeen? how you can get a fake adidas t-shirt for less than retail.

Tue, 10/04/2011 - 13:38 | 1737831 jm
jm's picture

His next post will be about the anal cleanse he got in Wan Chai.

Tue, 10/04/2011 - 13:44 | 1737863 Popo
Popo's picture

Simon's a con artist.   He wrote a paper once on "network infiltration" -- or 'how to bullshit your way into any crowd in another country'.   Now would you take financial advice from a guy who wrote that?  

Tue, 10/04/2011 - 13:49 | 1737883 jm
jm's picture

Guess he already wrote that piece about his anal cleanse...

Tue, 10/04/2011 - 14:12 | 1737966 tmosley
tmosley's picture

Care to post the paper?

He has a good message, but that doesn't mean he's not a scam artist, just like those guys that made all those slick videos, but were running pump and dump schemes on the side (using the goodwil they bought with their excellent videos).

Tue, 10/04/2011 - 20:14 | 1739619 Vlad Tepid
Vlad Tepid's picture

It's tucked away on his website.  Can't link it from the ol' work computer but if you're still looking I'll link it in a few hours.  I actually found that piece a little interesting, in an entertaining kind of way.  Every time I read Simon, I can't help thinking that I'm reading about Michael Westin from Burn Notice - campy, over the top, unrealistic, but fun.  This world-wide coin checking-out spree has got me baffled though.  Doesn't he have a "local supplier?"

Wed, 10/05/2011 - 04:15 | 1740387 Vlad Tepid
Tue, 10/04/2011 - 12:54 | 1737662 Libertarians fo...
Libertarians for Prosperity's picture










Tue, 10/04/2011 - 13:02 | 1737697 BadKiTTy
BadKiTTy's picture




Tue, 10/04/2011 - 13:04 | 1737701 Robot Traders Mom
Robot Traders Mom's picture


Tue, 10/04/2011 - 13:11 | 1737734 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Yes, but she was a statuesque 12 footer.

Tue, 10/04/2011 - 13:04 | 1737702 cabtrom
cabtrom's picture

Paper good, paper make good fire. Paper keep porch monkey warm and back side clean from poopie. Paper goooood!

Tue, 10/04/2011 - 13:12 | 1737736 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

People hate gold because they missed the first leg up and have to tell themselves that there will now be a leg down to feel better about missing the first up move.  Feedback can be a bitch.  So is jealousy.  Life is not, life is a beautiful goddess with long strands of golden hair. 

Me love life.  Me hold no judgement.  Me stupid monkie.  Me like being stupid monkie.  Make life simple.

Tue, 10/04/2011 - 16:09 | 1738613 theotheri
theotheri's picture

How wrong you are.  It's the gold monkeys who are misguided lemmings.


Gold is the subprime mortgage of this decade.

Tue, 10/04/2011 - 16:56 | 1738949 fuu
fuu's picture

Cry more.

Tue, 10/04/2011 - 13:27 | 1737766 fuu
fuu's picture

This is a guy who was calling for sub $1000 gold last summer and was warning people against buying a $17 dip.

Tue, 10/04/2011 - 13:07 | 1737708 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

A great experiment to do is to hold a gold coin in front of a baby, and hold up some tungsten or some other look alike.  The baby's eyes will always light up and focus solely on the gold.  Even babies know how rare gold is, which I think we could say would make gold inherently valued.

Tue, 10/04/2011 - 13:09 | 1737726 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

It works for diamonds too but the baby has to be a female!

Tue, 10/04/2011 - 13:37 | 1737780 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I grew up living next to one of the most prominant gold investors in the world.  I was always interested in his rock collection he had in his yard and so I started my own.  I would look for quartz wherever I could find them.  I remember he was over for a dinner party and gave me 'fool's gold' to add to my collection.  I said it looked like gold.  He said it wasn't, it was just tungsten, and this is why it was called fool's gold, because some people have trouble telling the difference.

Tue, 10/04/2011 - 14:06 | 1737940 DoChenRollingBearing
DoChenRollingBearing's picture

Fool's Gold is pyrite, no?  Pyrite is a mineral, not even a metal.

Tungsten is a hard dark grey metal I think, that just happens to almost exactly as dense as gold.

Tue, 10/04/2011 - 14:15 | 1737979 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Correct.  Good catch.

Wed, 10/05/2011 - 01:58 | 1740299 chindit13
chindit13's picture

Noticed that myself, though I'm not one of the most prominent gold investors in the world.  Nobody would ever mistake a piece of pyrite for a piece of bullion (pyrite in natural form is far more interesting looking than gold), but in situ, when the gold is not pure, a mistake could be made, especially if it is just trace amounts.


Tue, 10/04/2011 - 14:06 | 1737942 kito
kito's picture

im actually trying to corner the tungsten market. my first stop is simon blacks casa........

Tue, 10/04/2011 - 13:14 | 1737744 Smiddywesson
Smiddywesson's picture

Ok, I'll try, but if he swallows my gold, well, I gotta do what I gotta do.

Tue, 10/04/2011 - 13:56 | 1737906 FeralSerf
FeralSerf's picture

Go diaper diving?

Tue, 10/04/2011 - 13:11 | 1737730 fuu
fuu's picture

Why hello there liar boy.

Tue, 10/04/2011 - 13:57 | 1737908 tmosley
tmosley's picture

RnR is so mad he broke his caps lock key.

Tue, 10/04/2011 - 12:54 | 1737667 thunderchief
thunderchief's picture

I give your article an A plus as it is on the scene. 

Buyers around the world need real info like this.

Tue, 10/04/2011 - 12:56 | 1737673 LFMayor
LFMayor's picture

So Munchanesen, where you headed next?  I hear talk of a pawn shop in DickSmack, Nebraska that's offering .175 over spot. 

Tue, 10/04/2011 - 13:08 | 1737722 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Yes, but they are out of stock!

Tue, 10/04/2011 - 12:58 | 1737677 reader2010
reader2010's picture

You really wanna trust your serious-looking Chinese dealers getting you the REAL Eagles and Maples?  Good luck, dude. I've heard enough stories already.

Tue, 10/04/2011 - 13:05 | 1737704 thunderchief
thunderchief's picture

The Chinese hawk a lot of fake stuff, but all you have to do is go to where they sell the government sealed real thing.  Gold, silk or anything else.  I would trust it more than in the western world.  And you get to keep it.  That's why so many Chinese are rich.  And westerners are poor today.

Tue, 10/04/2011 - 13:12 | 1737735 reader2010
reader2010's picture

Bullshit. Take a hard look at the stuff you got from the OFFICIAL place instead with some scientific instruments. Some Chinese are richer because they fuck and exploit their fellow citizens like there is no tomorrow. How about getting some Foxconn slaves to make you filthy rich?

Tue, 10/04/2011 - 13:09 | 1737723 Astute Investor
Astute Investor's picture

Understand your reluctance to purchase from an independent dealer in HK, but didn't SB make his purchase directly from the Bank of China?

Tue, 10/04/2011 - 13:15 | 1737749 BobPaulson
BobPaulson's picture

I'm pretty sure the tungsten stories have to be an urban myth.

A quick test you could do would be to have a real gold coin with you and drop each on a hard surface like stone or tile. Tungsten has a much higher stiffness modulus and would make a decidely different sound and would bounce around much more.

Tue, 10/04/2011 - 13:38 | 1737833 zuuuueri
zuuuueri's picture

And you always have to be on the lookout. 

This is fresh on my mind because just last week I made a purchase and among the numerous coins i had a very obviously fake one. The color was off, the feel was off, and it had no ring at all, just a dull thud. Took it back the next business day and the folks were shocked that such a thing could have gotten past them. I got some asscovering talk about how they inspect every coin etc, theyll pass it to their experts to investigate, but,  they also gave me a good one immediately.

From now on i think i'll check them all at the counter as i'm buying, instead of waiting til i get home. 

enjoy the tight spreads in HK, for a retail customer in europe the spreads are awful even if you're dealing in the six digits. In the states at least you have tulving and a zillion small private shops that move bullion in a competetive market. europe is one big cartel.

know the coins you're dealing with, study them well, and check them carefully, even if it's a reputable dealer. 

Tue, 10/04/2011 - 20:21 | 1739635 Vlad Tepid
Vlad Tepid's picture

...tight spreads in HK....

Tue, 10/04/2011 - 13:16 | 1737750 chubbar
chubbar's picture

Isn't any big deal to bring along the "fisch" when buying coins.

Wed, 10/05/2011 - 01:58 | 1740296 AE911Truth
AE911Truth's picture

The Fisch fails to detect the following fake gold coins:

Subject: counterfeit gold alloy consisting of 51% gold mixed with osmium, iridium, ruthenium, copper, nickel, and rhodium


Link is from December 2010. It worked in Decemebr.

Wed, 10/05/2011 - 10:52 | 1741314 BobPaulson
BobPaulson's picture

Can't see how you get a mix as soft as gold when all the components are harder and alloying makes a mix that is harder still. Copper and zinc are close. I would think they'd need to put some tin in that to get the right softness and rigidity.

I see a market for a cheap micro-indenter.

Wed, 10/05/2011 - 16:48 | 1742827 10 Euro Münze
10 Euro Münze's picture

Fun with math!

osmium about $400/oz  22.59 gr/cm3

iridium about $450/oz  22.56 gr/cm3

ruthenium about $166/oz   12.45 gr/cm3

rhodium about $1800/oz  12.41 gr/cm3

Copper  8.94 gr/cm3  $0.0066/gr

Nickel 8.9 gr/cm3

Gold $1640/oz  19.3 gr/cm3  51% of the alloy

It would seem you would want to minimize the Rh content since it is more expensive than gold. Let's assume theRh  content is 0%.   19.3 = (Y x 22.59 + (1-Y) x 8.9)  Y = 10.4 / 13.69 = .75

Alloy cost = .51x$1640 + .49 x (.75 x 400 + .25x.0066x31.1)= $1141/oz   savings $500/oz (best case). 

Tue, 10/04/2011 - 13:53 | 1737897 DosZap
DosZap's picture


You got that right.

Even the Pandas are coming in at under 1oz.

Little bstds short the 1oz coins!!!!!!!,then chg a prem.

To ALL, if your buying Panda's, make the dealer WEIGH them.

Seriously, the chinkos are shorting the coins in gold.

Tue, 10/04/2011 - 14:10 | 1737960 DosZap
DosZap's picture

Red arrow the TRUTH all you want dipwad.

Wed, 10/05/2011 - 01:57 | 1740294 chindit13
chindit13's picture

The "dealer" here is the PBoC.  One can also buy from a host of other banks in HK, including HSBC.  Yes, these banks lack the cache of Joe's Gold Shop in Keokuk, Iowa, but I guess that's why they can't demand the big premiums.

I used to be a regular visitor at the gold window at many of these HK banks back in '99 and '00.  Didn't see you there.  Back then I had to pay a whopping 1% premium, though I did eventually find one source where I only had to pay a dollar over spot rather than the $2.85 or so that was the 1% premium.

A lot of these bars and coins have left my possession during this latter part of gold's run up.  Nobody questioned their authenticity.

Tue, 10/04/2011 - 12:58 | 1737680 Big Corked Boots
Big Corked Boots's picture

I miss the sales pitch on the Chilean Galt's Gulch.

Say, Mister Black, where can *I* get more information on your exciting new development?

Tue, 10/04/2011 - 13:46 | 1737860 MissCellany
MissCellany's picture

I was thinking much the same thing. Black much resembles Bonner -- they've both developed quite a knack for smarmy, "self-deprecating" jet-setting, bragging, and name-dropping. Might even have developed quite a little direct-mail style Ponzi scheme of their own. Bleh.

Tue, 10/04/2011 - 12:58 | 1737684 Tense INDIAN
Tense INDIAN's picture

me not doing bad with forecasts of my own ::

Tue, 10/04/2011 - 13:00 | 1737692 SilverDosed
SilverDosed's picture

"First Gold Mule?"

I think not, people have been smuggling gold across borders for quite some time.

Tue, 10/04/2011 - 14:27 | 1738035 Treason Season
Treason Season's picture

I believe that was said tongue in "cheek".

Tue, 10/04/2011 - 14:41 | 1738100 Moe Howard
Moe Howard's picture

Perhaps "head in ass"?

Tue, 10/04/2011 - 15:04 | 1738189 Treason Season
Treason Season's picture

If beastiality is your thing go for it. Why you would acknowledge it on a public forum speaks volumes about your asinity.

Tue, 10/04/2011 - 15:20 | 1738320 Treason Season
Treason Season's picture

Looks like Moe Pancho Howard and his ass don't appreciate a little humor.

Tue, 10/04/2011 - 15:28 | 1738354 knukles
knukles's picture

Beastiality refers to sex with animals. 
Not inserting golden objects up your bung.
And is properly spelled Bestiality, genius.

Tue, 10/04/2011 - 13:01 | 1737694 High Plains Drifter
High Plains Drifter's picture

tilman fertitta , casino owner and also owner of the ufc, due to his friendship with dana white, and also grandson of old mobsters from galveston, texas, shows off his gold dispensing atm machine....imagine that....i believe the mob is using him to get into legitimate businesses in order to have him launder drug houston, he owns landry's seafood and cadillac bar and grill and the kemah board walk...he is politically connected of course in texas and he puts on this face that he is good for houston.........yeh sure pal....

Tue, 10/04/2011 - 13:10 | 1737696 Bokkenrijder
Bokkenrijder's picture

Hong Kong is also an excellent place to buy 'real' Rolex watches, Luis Vuiton bags, DVD's and Armani suits.

Use the following ancient rule of thumb: one 'real' gold coin should buy you about one 'real' Armani suit. ;-)

Tue, 10/04/2011 - 14:57 | 1738187 Thisson
Thisson's picture

Can I use a fake gold coin to buy a fake armani suit? ;-)

Tue, 10/04/2011 - 15:29 | 1738366 knukles
knukles's picture

Or how about one of them gold coins filled with chocolate for a washable Sears suit?

Tue, 10/04/2011 - 13:06 | 1737710 bill1102inf
bill1102inf's picture

"Gold Week", come back next week and we will buy it back for 10% less.

Tue, 10/04/2011 - 13:06 | 1737713 Putty
Putty's picture

I did learn something from this.  There are places in the world with a $5 bid/ask spread on a 1oz gold coin.  Compare that to kitco's $90 spread for similar item.    

Tue, 10/04/2011 - 13:28 | 1737794 HITMAN56
HITMAN56's picture

Local farm mkt, outside Where do u get ur mkt data for spot gold?  Old dude: Kitco   Me: Is it accurate   Old Dude: Ya, everybody uses it....I walked away

Tue, 10/04/2011 - 14:56 | 1738182 DosZap
DosZap's picture


Kitco's Spot chart is almost accurate.(usually it is off approx $10.00 up or down, close but not exact.)

To get the real deal, is very expensive(the one's that change tit for tat along with REAL TIME SPOT.)


Tue, 10/04/2011 - 16:44 | 1738895 HITMAN56
HITMAN56's picture

Bro, "almost" doesn't make money trading gold. And not "exact"?? dude, exact is what the game is all about.  Thanks for making the last sentence bold, I couldn't see it. Also, thanks for remining me how much my Reuters costs every month. And as for the other mank that jumped in on this convo, Canadians are in bed by 9pm. TD Bank North's website looks like a cartoon. Do this, download the bbg mobile app, its delayed like 15min, so its prob still faster than Crapco, then either get a reuters subscript, or just read ZH, its free.

Tue, 10/04/2011 - 14:32 | 1738059 DosZap
DosZap's picture


Kitco, at least is Canadian.

Try the prems rate on APmex................LORDY.

Tue, 10/04/2011 - 13:07 | 1737716 Hansel
Hansel's picture

I'm the baddest-ass gold bug in the world.  I fly all over to buy gold coins.  I paid 0.5% over spot for this coin in Hong Kong, which if you include the airfare, works out to about 150% over spot.  I'm like the goldbug version of James Bond.  #Winning

Tue, 10/04/2011 - 13:10 | 1737720 DormRoom
DormRoom's picture

How can Marc Faber, and Jim Rogers, both reputed 'contrarian investors' advise buying gold, when gold ads are on every late night channel, gold shops are opening across the country, gold bullions are on magazine covers, an explosion of gold newsletters, and gold trading is covered by the mainstream media?


As contrarians shouldn't they be selling gold?


Tue, 10/04/2011 - 13:22 | 1737774 Smiddywesson
Smiddywesson's picture

As contrarians shouldn't they be selling gold?

An excellent point DormRoom.  But profitable contrarians aren't contrarians just for the sake of being contrarians.  Timing is required to make a contrarian play.  For example, shorting a bull market isn't very smart unless you do it at the right time.  Most of the time during a bull market, the public is on the right side of the trade.  The public is just starting to join this trade.  That doesn't mean it's time to bail, especially with the currency being destroyed. 

Tue, 10/04/2011 - 13:32 | 1737802 DormRoom
DormRoom's picture

uhm.. the public has no money to join you.  Their house & 401k are underwater.  Why would they invest in another perceived risky asset.  Most of the demand is from hedgefunds and institutions using gold as a hedge for trading purposes.  Once trades are  done, or unwound, they'll pull out of gold (GLD & future contracts), and there will be a demand collapse.

Tue, 10/04/2011 - 13:36 | 1737821 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Wrong.  The biggest demand for gold over the last decade has come from Central Banks, who buy gold in the hundreds of tonnes. 

Tue, 10/04/2011 - 13:46 | 1737869 bankruptcylawyer
bankruptcylawyer's picture



if there is  a total market collapse youre gold will not be worth that much in terms of ggoods and services until the goods and services market is stabilized with respect to trading in units of commodoties.


until then the good and services market is built on something far more fundamental than gold. blood sweat and tears.

as others say. load up on seeds, ammo, and friendly neighbors ...that is the real hedge against a doomsday scenario.

Tue, 10/04/2011 - 14:13 | 1737961 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

In Project Mayhem, we have no names.

The basis for these claims is substantiated on the fact that the future is uncertain, so how can you know how goods will trade in this environment?  Historically, gold and precious metal has been a great hedge against doom.  Those fleeing war have been able to pay their way to safer places with gold.  And if I have ammo, and seeds, and I do not need any more, maybe I will be trading my excess goods for more PM, making it valuable.

Those who have prepared themselves for the collapse will use PM as a way to trade.  If you do not have gold or goods, then yes, you will either cry or work.

I think your story is unsubstantiated.  I think we need to think about how trade will work.  Considering that PM defines monie, and we do not live on an island economy, I think PM will play a huge role in any collapse of the fiat ponzi.  Trade will never cease, and thus PM will continue to act as a medium of exchange, because it functions as monie.

Tue, 10/04/2011 - 18:22 | 1739305 BigJim
BigJim's picture

Even iron-age peoples valued gold. In fact... even neolithic peoples did.

Unless you think we're all going back to utter barbarism, PMs will retain value.

Tue, 10/04/2011 - 13:26 | 1737787 cabtrom
cabtrom's picture

I hear ads on the radio all the time saying "Be a day trader", "We'll teach you how to buy and sell stocks". So I'm guessing stocks are now in a bubble? Someone please tell me what to do!

Tue, 10/04/2011 - 13:34 | 1737812 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

1% of investors have gold in their portfolio.  Most of that 1% do not own bullion.  Just because you hear commercials does not mean the commercials are effective in changing the status quo of investing.  Come on DormRoom, think!

Tue, 10/04/2011 - 14:24 | 1738026 kito
kito's picture

you should be selling gold because the deflation tsunami is going to wipe out anything in its path except for cold hard cash. and that pullback in the tide that happens just before a tsunami devastates coastal areas is happening right now........

Tue, 10/04/2011 - 15:02 | 1738220 DosZap
DosZap's picture


Only if you want to take the chance on not being able to get it back.

The only way we correct a LOT lower here,is if the Stock Mkt totally tanks, and / or the EZ Falls apart, and eveyy dumb ass in Europe runs intothat SO Called safe haven the dollar yet again.

Personally I am keeping what I have, and will be adding much more, IF the Euro collapses, and the prices dive here.(fine by me, if I can buy it again at $500-800.00 oz.), highly unlikely though, as the Pac Rim,Chinese,Asians, and Indians, and Vietnamese will be sucking up EVERY last ounce.

Because we ARE going into Hyperinflation, after the deflation ship is finished. And I guarantee you it's coming.

Tue, 10/04/2011 - 18:31 | 1739330 BigJim
BigJim's picture

If there is a 'deflation tsunami', chances are pretty good your cold hard cash will vanish along with the overwhelmed bank you're keeping it in. I suppose you might be keeping it in a safe at home; but if there is a deflationary tsunami, what do you think governments all over the world will do to pay their bills, in the face of collapsing tax intake?

They will print. They will print like there's no tomorrow, and your deflation will flip into hyperinflation, as it always has throughout history. Good luck timing that move, bucko.

Tue, 10/04/2011 - 14:25 | 1738031 CapitalistRock
CapitalistRock's picture

Buying gold is contrarian. Fewer than 1 in 500 Americans own even a single ounce of gold bullion. The other 499 prefer the number on their bank statement as a store of value.

Tue, 10/04/2011 - 14:44 | 1738115 kito
kito's picture

you shouldnt be so ameri-centric. the world doesnt revolve around the u.s. anymore. there are 2 BILLION plus asians that have been on a spree over the past several years. 

Tue, 10/04/2011 - 14:49 | 1738119 DosZap
DosZap's picture

Dorm Room,

Sorry for the BOLD, stuck for some reason.


What have shops ( that are stealing people blind), and are springing up all over.......because there's a sucker born every minute.

Cause JR, and MF to not BTD just like anyone else does?.

When they see ANYTHING as cheap, compared to fundies, and where they think it's headed, they BUY.

Just like all here do that have any brains.

You think these ad's and TV mercials are selling to people(Sheeple??), hell no.

They are looking for SUCKERS.

I have YET to see ONE offering anything but HIGH Prem crap first, and then if they cant make you swallow that, they hit you w/ 20-30% prems over spot on regular coins.

It's sickening(EVEN here),to see and read the prices some of the ZH'rs are paying over SPOT.


Tue, 10/04/2011 - 16:01 | 1738551 Greenlight
Greenlight's picture


99% of the "gold shops" you see on every corner are only buying.  They sell nothing.

Tue, 10/04/2011 - 18:26 | 1739316 BigJim
BigJim's picture

Nice try. But most of the gold ads are for companies buying gold (from credulous top-callers), not selling it.

Here's some homework for you, troll; what percentage of all wealth does gold presently represent? And what is the historical norm?

Tue, 10/04/2011 - 20:26 | 1739645 Vlad Tepid
Vlad Tepid's picture

DormRoom - Perhaps you misunderstand the meaning of the word "contrarian."  If people are being urged to sell, and everyone is selling, Faber and Rogers wouldn't be very contrarian by selling now would they?

Tue, 10/04/2011 - 13:08 | 1737721 oddjob
oddjob's picture

Is there no five '9' Gold Maples in HK?...why settle for second best?

Tue, 10/04/2011 - 13:13 | 1737739 user2011
user2011's picture

Well, I can buy guns anytime of the day.   Take that !

Tue, 10/04/2011 - 13:15 | 1737747 snowball777
snowball777's picture

Simon Black saved 4% of spot on electro-plated fake coins! LOL

Tue, 10/04/2011 - 14:14 | 1737976 DoChenRollingBearing
DoChenRollingBearing's picture

My *guess* is that you are 100% right.

Tue, 10/04/2011 - 14:15 | 1737982 tmosley
tmosley's picture

That would be quite the scandal if Chinese BANKS were found to be passing off fake gold coins.

I sort of doubt it.

Tue, 10/04/2011 - 16:30 | 1738785 snowball777
snowball777's picture

I was being facetious, but even some back of the envelope math ((13560 - 12973) / 7.7845) == $75 US, when has the same coin for $65 over spot, shows that his brilliance fails to impress.

Hardly worth the flight to HK just to avoid having "the authorities" know about your one coin purchase (unless you can somehow fly to HK for $66-$70), especially if it requires being scanned or groped to accomplish the aforementioned "Midnight Express" impersonation.

Mr. Black thinks very highly of fact, that may be all he thinks about.

Tue, 10/04/2011 - 21:24 | 1739779 merizobeach
merizobeach's picture

The Bank of Taiwan (commercial not central) sells kilogram bars at just USD10/oz above CMI 24H spot price.  Smallest physical delivery available is 100g bars (from UBS), and the premium is only $20/oz above spot.

Tue, 10/04/2011 - 13:26 | 1737765 HITMAN56
HITMAN56's picture

you mean here?

Tue, 10/04/2011 - 13:22 | 1737769 Edward Fiatski
Edward Fiatski's picture

If I was operating a gold shop in China, my stock would rarely run out, if you know what I mean.

Nice copper coin you have there.

Tue, 10/04/2011 - 13:27 | 1737789 mynhair
mynhair's picture


Is that an intraday double top in SPY?

Tue, 10/04/2011 - 13:32 | 1737808 Vergeltung
Vergeltung's picture

golly, another SB travel vignette. I'll remember, next time I'm in Hong Kong, you know, when I can afford the $4000 air fare for me and my family, to buy some gold coins.


Is this stuff relevant to, what, perhaps even .005% of ZH readers? I mean, jeebus. well, I guess there's enough great stuff on ZH we can afford to have a little pablum here and there.  :-)


Tue, 10/04/2011 - 13:33 | 1737811 Stevious
Stevious's picture

Nice, but beware.  While Hong Kong has a "preferential trade agreement" with the US and thus the 4.1% import tarriff is waived, many other countries do not.  Since all gold must be declared it is important to know if the country you are buying it from does have a preferential trade agreement.

With a "non-preferential" trade country you can buy dore (less than 0.995 quality) and import that duty free, but you'll have to have it refined.


Tariff Duties on U.S. Gold Imports

For gold products, the 4-digit prefix of the Harmonized System Code (HSC) is 7108. The 2 most popular subcategories for America’s imported gold in 2009 were:

  • Semi-purified dore gold (HSC 7108.12.10.20) … US$4.3 billion (52.4% of total)
  • Gold bullion of at least 99.95% purity (7108.12.10.13) ... $3.2 billion (10.3%).

Only the second sub-classification above (gold bullion) is subject to a U.S. tariff duty of 4.1%.

However, that duty does not apply to countries that have signed a preferential tariff agreement with the U.S.

America’s 2 largest gold suppliers, Mexico and Canada, have preferential tariff and free trade agreements with the U.S. Accounting for 52% of American gold imports, these trade partners delivered $5 billion worth of duty-free gold last year.

Most of the other product categories for gold are duty free. The only other exception is miscellaneous semi-purified gold (HSC 7108.12.50.50). That product item represented $82.9 million in sales or 1% of U.S. total gold imports in 2009. The customs duty is 4.1% for gold imported from countries not covered by a preferential trade agreement.



Tue, 10/04/2011 - 13:35 | 1737818 s2man
s2man's picture

Dilbert's CEO: I have an MBA and I keep losing money in the stock market.  How can this be?

Pointy haired boss: I bought gold because its shiney.  I've doubled my money.

Tue, 10/04/2011 - 13:38 | 1737827 Saxxon
Saxxon's picture

There are some surprisingly asinine comments here.  I like this info.  I go abroad several times a year and HK comes up about once a year.  I wonder how many of you lugnuts even have a passport.

And yes, coated fakes are indeed quite possible; everything else is faked in that part of the world.  Caveat Emptor.

Tue, 10/04/2011 - 13:43 | 1737857 Vergeltung
Vergeltung's picture

well, hello .005%

Tue, 10/04/2011 - 13:41 | 1737841 Rynak
Rynak's picture

Whenever an article starts out with how cheap stuff is in some country, you can be sure that it's another article by "cheap man".

Tue, 10/04/2011 - 13:54 | 1737878 Pool Shark
Pool Shark's picture



I call BULLSHIT! Mr. Black:

How about Krugerrands for just 3.6% over spot, right here in Los Angeles?:

And you don't even have to travel to a communist country...

(p.s., they also have AGE's for 4.8% over spot...)


Tue, 10/04/2011 - 14:10 | 1737951 DosZap
DosZap's picture

Pool Shark.

Dude, less my calc is off, it is closer to over 7%.

Spot $1611/Sell $1716?. 1oz Krug?.

Tue, 10/04/2011 - 14:19 | 1738001 tmosley
tmosley's picture

Also note that that company does not update its website very often.  Often you will call about a particular product (especially COMEX deliverable bars) and they won't have a single one, even though it is listed on the website.

Trolls love to post links to them, showing how much stuff they "have" for such low prices.  Reminds me of the old story of how a man went to a store and was about to buy something, and balked at the price.  He told the proprietor that the store across the street had the same thing for half the price.  The proprietor suggested he go buy it over there.  The customer said "I can't, they don't have any".


Tue, 10/04/2011 - 15:38 | 1738387 Motley Fool
Motley Fool's picture

Krug's are actually about 8% at least above spot in SA. That's if you are lucky.

  Here is the biggest seller in Cape Town :


Currently at spot + 14%

Tue, 10/04/2011 - 15:44 | 1738430 Pool Shark
Pool Shark's picture

They set prices once a day.

Go back and look again later today; you will find they consistently charge ~$60 over spot for Krugs.

Works out to right about 3.6%

Tue, 10/04/2011 - 13:55 | 1737903 Fuh Querada
Tue, 10/04/2011 - 14:29 | 1738046 DoChenRollingBearing
DoChenRollingBearing's picture

Harrowing story, thanks for sharing.

Tue, 10/04/2011 - 14:04 | 1737937 pazmaker
pazmaker's picture

Hi Simon,  how is Ragini doing?      send her my regards!


Tue, 10/04/2011 - 14:10 | 1737957 TonyV
TonyV's picture


Don't worry, two weeks from now that coin is going to be 10% over spot.

Tue, 10/04/2011 - 14:13 | 1737971 Bansters-in-my-...
Bansters-in-my- feces's picture

Who the fuck just kicked Gold in the nuts...???

Tue, 10/04/2011 - 14:24 | 1738023 Bastiat009
Bastiat009's picture

What you buy in Hong Kong in the morning is worth a lot less in the afternoon when banks in London and New York decide to sell the gold that was given to them by central banks (given with a bonus).

Tue, 10/04/2011 - 14:36 | 1738080 broke433
broke433's picture

You gotta be dumb to buy shit the Chinese central bank promotes

Tue, 10/04/2011 - 14:56 | 1738184 falga
falga's picture

Golden week has nothing to do with Gold! It's how the 4 weeks of holidays spread across the year are called in China. This week is a holiday because of the "October revolution"...

Remember China is a communist country!

Tue, 10/04/2011 - 15:02 | 1738222 Saxxon
Saxxon's picture

No one in Hong Kong gives a damn about The PRC's October 1 holiday.  Try hanging up a Chairman Mao poster in HK - it'll be down in minutes.

Tue, 10/04/2011 - 15:07 | 1738240 Motorhead
Motorhead's picture

I'm gonna go out for pizza.  I wonder if my wife would mind if I just took a two-month detour to "stop by" Hong Kong and pick up a gold coin or two.

Tue, 10/04/2011 - 21:32 | 1739795 merizobeach
merizobeach's picture

"two-month detour" Traveling by container?  You could really deck out one of those 40' boxes for the journey; not much of a view, though, if you're in the middle of the stack.

Tue, 10/04/2011 - 15:14 | 1738279 10 Euro Münze
10 Euro Münze's picture

I buy my gold from the pawn shops and Turkish jewelers for the spot price.  At least where I live the locals don't give crap about owning gold and silver.  The shops buying gold from the public have to send it to a melter, if I do not buy it first.   They are only paying public 75% of spot for the stuff. I'm not sure what the melter gives, but it has to below spot.

I give them a better price than the melter and they get their cash flow back quicker.  I cringed when he told me he sent lots and lots of old US gold coins to the melter.   I've picked up plenty of pre-1930 $20, 410 and $5 gold pieces from them in the last year and a half.   Half the fun anymore is the excitement to see if I can snag a $20 double eagle, or a $5 indian for spot.   

Since the recent fall in price the physical has dried up a bit.   I only got a 20 Fr Swiss 1927 coin today.   Last weekend I got 5 pre-1900 20 RM, 3 pre-1900 10 RM and 1 5 RM German 90% gold coins for spot.   I picked up 30+ silver eagles and 40+ silver maples for silver spot as well last Wed.

I have quite a collection of old gold coins from around the world. 

I only pay a premium when I need to get a large quantity all at once from a regular dealer.    

They guys know me now so well they save the old American gold coins for me until I come back in.    The system has been great at dollar cost averaging.   They never have too much at one time, and I usually can scrape together enough cash to take the undamaged "money" type coins.  I don't touch the gold medallions and stuff that was not official currency where you can check the sizes and weights on the internet.  

It is kind of fun.  You never know what countries gold coins you will get next. 

Tue, 10/04/2011 - 18:48 | 1739383 Fred C Dobbs
Fred C Dobbs's picture

What city are you located?

Wed, 10/05/2011 - 16:17 | 1742654 10 Euro Münze
10 Euro Münze's picture

I don't need to create any competition for my sweet deal, so I won't give the exact city name. 


I live in a town on the south west side of Germany.  I know in larger German cities there is enough public demand, the gold buying shops can sell at a premium to spot. 

Tue, 10/04/2011 - 16:16 | 1738693 moondog
moondog's picture

I want to personally thank JPMC or whomever drove the price of silver down today. I bought below 29, which keeps my average cost still in the mid 20's. Hold for 1, 5, 10 years...whatever it takes to pay off whatever debt I have left, and buy a piece of land with the rest. The silver retirement plan.

Tue, 10/04/2011 - 18:25 | 1739313 frank888
frank888's picture

Few things about this article :


He wrotes :

= It’s commonplace in Hong Kong for banks to sell gold..

Well, not so common..The main ones ( HSBC, Standard Chartered..) doesnt sell physical gold !


The discussion about how many % you buy over spot is a little bit silly. What is important is the SPREAD that you have between the buying and selling price ! In HK, its around 0.34% and it doesnt change overtime !

Lets be clear. If you buy an unsealed coin with Bank of China ( usually they do not sell unsealled )  then if you want to sell it, Bank of China will NOT buy it back from you contrary to the sealed ones and if they do they will not use their buying price for the sealed ones.

What you can buy unsealled is the 5 tael bar ( 99% gold ) with Hang Seng, Bank of China, Wing An. here the spead is lower, between 0.12 and 0.21%


They were already running out of stocks few weeks ago...

Wed, 10/05/2011 - 00:27 | 1740174 virgule
virgule's picture

Malaysian bank UOB ran out of bullion coins recently. Supposedly they've been ordered for 3 months, but no shipmet has come through since :-(

Sun, 10/09/2011 - 12:33 | 1754844 Philippines
Philippines's picture

You can also buy bullion in HK. Go to a prominent jewelry store on Queens street. They are something like 37 grams, .9999 purity and spot market price. You have to pay cash for bullion. If you pay for .9999 "art", you can use a credit/debit card. There is a premium for this "art" though and not spot price.

Wed, 10/12/2011 - 12:19 | 1766111 karmete
karmete's picture

