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’.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
GeneMarchbanks's picture

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

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.

malusDiaz's picture


Tired of no change? Buy your change damit!

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

http://en.wikipedia.org/wiki/United_States_Mint_coin_production

 

 

-100$ brick of nickels.... 97$!~ 

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

http://www.coinflation.com/coins/basemetal_coin_calculator.html

 

 


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

au_bayitch's picture

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

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...

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.

 

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

herewego...'s picture

a bank is a bank. especially in HK.

BOC > BOA :-)

DosZap's picture

Simon,

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.

DoChenRollingBearing's picture

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

Today:

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...

fiddler_on_the_roof's picture

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

Gavrikon's picture

Yes, except for the gold coins.

eurusdog's picture

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

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.

jm's picture

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

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?  

jm's picture

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

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).

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?"

Libertarians for Prosperity's picture

 

 

ME LIKE SHINY METAL!  ME REALLY LIKE SHINY METAL!

LOOK HOW SHINY IT IS!

HOW MUCH SHINY METAL YOU HAVE?  I HAVE MORE SHINY METAL THAN YOU!

I DIG HOLE IN BACK YARD TO HIDE MY SHINY METAL!

SHINY METAL FROM GOD!  SHINY METAL MAGIC!

PAPER FOR STUPID MONKEY!  SHINY METAL FOR SMART MONKEY!

 

BadKiTTy's picture

ME WORTHLESS TROLL

ME SAY THINGS AND THINK THINGS FED WANTS ME TO THINK 

ME THINK ME VERRRRRRRY CLEVER! 

Robot Traders Mom's picture

ME TROLL. ME HAVE NO FRIENDS IN REAL LIFE SO ME SURF INTERNET TO HAVE HUMAN INTERACTION. ME HASN'T BEEN LAID SINCE ME WAS 27 AND SHE WEIGHED 300 POUNDS.

Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Yes, but she was a statuesque 12 footer.

cabtrom's picture

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

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.

theotheri's picture

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

 

Gold is the subprime mortgage of this decade.

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.

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.

Tuco Benedicto Pacifico Juan Maria Ramirez's picture

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

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.

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.

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.

 

kito's picture

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

Smiddywesson's picture

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

tmosley's picture

RnR is so mad he broke his caps lock key.

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.

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. 

Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Yes, but they are out of stock!

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.

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.

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?

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?

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.

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.