patrick.net

I'll let my superannuation and managed fund investors worry about it... I'm going to the beach...

yeah, you need to learn the difference between their, theirs and theirs'

Gold may not be the only way to profit in the next 10 years, but it will be one of the most lucritive investments one can make. If you believe that RE is at the end of its 18 year cycle, then, this is the same cycle which governs Gold and other commodities (ie. the Kondratiev cycle). The grand bull phase of the commodities cycle will go on for another decade or more, and it is still only 5 years young. To buy gold, you don't have to buy physical gold, although this is one of the best ways to own it. You can buy GLD which is a gold ETF, or GDX which is a gold and silver mining ETF. You can also invest in individual gold and silver miners like AEM, AUY, GG, SLW, SSRI, PAAS and many others senior and junior mining stocks.

Scavengers eat road kill. They fatten themselves through the misfortunes of others. They are given to gloating on a diet of decay. So chub out if you are so inclined, but beware of creating malignancies.

Rather than seek wealth in such a way why not simply be content to have a modest home that can serve you as a base from which to interface with the community and world around you? Would that not be sufficiently enriching?

Time for our biannual gold euphoria.

I have no problem with people going long in gold given they comply with one of the following:

1. Speculation. You are willing to lose a large portion of your speculation.
2. You are merely investing in gold as a component of a well diversified portfolio.

I could add:

3. You own a yellow or red jacket, live in Chicago, and do this for a living.

Further, we can debunk (2) because gold, as with most other metals and other commodities, almost always have an inferior reward-to-risk ratio, or Sharpe ratio. Some investors may be sophisticated enough to employ more complicated or newer techniques, like Black Litterman models, but that is a very tiny population of folks.

A general rule of thumb for all commodities is: "DON'T". These are highly volatile markets, with a great deal of reflexivity, speculation, and unbelievably aggressive professional traders.

Gold is a bit special, because of it's direct interplay vis-a-vis global central bank action. That is not a good thing. Central banks can stay irrational longer than you, the individual investor, can stay solvent. Unless you manage a global macro hedge fund, I wouldn't go around betting against the Fed, ECB, BOJ, or BOC.

Just my 0.02USD, nominal 2006Q4 dollars.

sjc,

Would that not be sufficiently enriching?

No.

By the way, scavengers are an essential and necessary component of any ecosystem. Without them, you can enjoy social nirvana, knee high in rotting decay.

We have finally reached the topic that is of burning interest to me. :)

I agree, scavengers are a necessary component of the ecosystem. The RE bulls remain in a semi-irrational state. When they burst from their loose lending binge, it's time to crawl out of the cave, fluff up your fur and have a snack.

So how exactly can we short real estate? Perhaps it's possible to short some of the development groups responsible for overbuilding in Florida, Boston, the Bay Area and other places? I would sure as heck love to short the development group going nuts in Fort Collins.

However, don't homebuilders already have a lot of risk already priced into their stocks?

-already

My post had some redundant redundancy.

Interesting article on Foreclosures from Yahoo! Finance, considering that they also spew forth a lot of NAR-backed "editorials":

http://biz.yahoo.com/weekend/distressed_1.html

All the gurus keep talking about foreign currencies to hedge their bets.Maybe FXE - an ETF euro bet - although it has gone up dramatically in the last week. Maybe FXA - australian currency ETF. Maybe the Swiss dollar ETF (forgot the initials of it). Heard that the Canadian loonie is not a good bet just yet.
If Soros is involved, he may devalue the currecy quickly and interest rates may increase which will may make American cash a good idea. However, If inflation continues, and interest rates drop, cash will suffer.
Where is my crystal ball ?
This is a great topic and I'm looking forward to hearing everyone's ideas.

As Person said, there is (or there’s) money to be made in shorting stocks. However, it is very risky. I am currently short on 5,000 GE. I hate shorting, but I wanted to have something to feel good about if the market declines before I sell most of my other stock. So far it has not.

If you believe that gold is a good investment then (as Goldboy says) it’s better to own stock in the companies that produce it. Gold rises on fear and on inflation. I never put my money in gold. I prefer to buy 10 year treasury bonds for fear or periods of recession. I buy assets like real estate and stocks for periods of economic expansion. This year I have sold assets (real estate and stock) and this summer I bought Treasury bonds (5yr & 10yr). I believe we are slipping toward recession.

One should always back-test any investment idea. See how that investment has fared in similar circumstances in the past. Not just one period of time. See that it has a reasonably consistent pattern over many cycles, and does well relative to what you expect the economy to do.

I've been convinced that this crash would happen for at least a couple of years. And, I have thought about it sometimes. I think, becoming a realtor MAY be a good way to profit from the crash.

Probably, the crash will weed a lot of people out of the field. It already has a tarnished image as a career. After the easy money folks have left the field, probably nobody will even consider it as a career anymore. Eventually though, people will be buying houses again. A realtor who can ride it out will be in a good position when the eventual recovery comes.

1. If you believe all those fb's are gonna be living in their hummers and the subprime sector is going to take a huge hit, invest in payday loan companies. :) Beware of the political threats to them though.

2. Identify the strongest of the HB stocks. They will be hammered down with all of them, but the strongest will become good buys when all the weaker players are flushed.

3. You can make money on PM stocks, but be careful. You have to be quick and on top of your game. They are extremely volatile and you have to learn to trade them, not hold them. Highly speculative play.

@danville woman

I've been following FXE and the other FX* ETFs for a while now. Most have almost no liquidity, so they are non-starters. FXE does have ok liquidity, even if thin. First, I'd stay away from any carry-trade currencies, which FXA represents. These currencies will be forced down with the dollar to a large degree.

Second, be careful to not over-expose yourself to FX. If you invest in large cap, international companies listed in the US, then you are already exposed to and hedging against the USD, because those companies already do hedging of their own cash flows. PG, for example, does a huge amount of FX hedging.

Lastly, I am dubious of commodity or currency based ETFs. I followed OIH (crude) for a while. If you dig into the market history of OIH the past months you'll see that hedge funds continually work it. They break the ETFs peg to the underlying, while arbitraging with futures and/or options. You can see periods when crude was spiking but the hedge funds were shorting the hell out of OIH. If FXE gets enough liquidity, look for the HFs to roll in there and start arbitraging that too.

Of course, you can always take a buy & hold approach to GLD, FXE, OIH, etc., but be sure you're really going to fire and forget, because you might not like what you see happen to your $ in the days/weeks/months after you buy in.

sjc Says:

Rather than seek wealth in such a way why not simply be content to have a modest home that can serve you as a base from which to interface with the community and world around you? Would that not be sufficiently enriching?
_____

No! No, no, no!

And you wanna' know why? Because I want money. I want more, and more, and more money!

I wanna' fly! I wanna wheel, and deal, and schmeal...

How in g-d's name can you sit there complacent and dreamy-eyed, when the chance of a lifetime is here before your very eyes!

Real estate, real estate, rah, rah, rah! I want more real estate, ha, ha, ha!

How to profit? Sheesh...there's a thousand and one more ways to scam people in a down market than in an up market...c'mon, let's goooo! Yay!

Just kidding...

One good place to park some of your doe is in Everbanks World Market Accounts. These are great because you can pick all the different currencies that you want your money in and it's even FDIC insured. We all know that the dollars days are numbered, so this to me is a good way to diversify your capitol.

Another good place to park some of your doe is in EPC. You can invest in some stocks outside the US in foreign currencies which pay dividends and you can also get some gold there as well.

Gold and forex is where I have disagreed with Randy. His warnings are real and helpful. No disagreement there.

But I am not sure devaluation of US$ will bring down rest of the currencies. Every central bank has an agenda, which we may or may not be aware. Their policies carry strong political implications, which may not fit any modelling techniques. I am sure George Soros and likes have figured it out, but I do not have access to their hedge funds.

I am bearish on US$. I am not betting on it, nor rooting for it. But I need "some" cushion against the possible fall of US$. Since we import so much, devaluation will increase inflation and/or may deteriorate living standards. Cannot protect fully, but willing to buy some "insurance" against it.

I am not sure what exactly are the multinational companies are doing in their hedge against the US$. How would I find out ? Anyway the US and international big cap stocks seem highly correlated.

If my bearing is expecting an inflationary recession in US, what asset classes should I use ? Gold and forex then do not seem that illogical.

Randy's comments on FEX make lot of sense. But that's not the only way to play the game. There are mutual funds that invest in global bonds. I have said before, I like MERKX, and have invested in it.

* NOT AN INVESTMENT ADVICE

Thank you Randy. I'm hearten by your observation as I continue to scavenge my own way down affluence alley out back of overpriced condos. I gather my little scraps of CRV. I get 4 cents under 24 ounce and 8 cents 24 up. I am not sure that I've become essential, but I do trug along trek in one fashion or another each day. Social nirvana is rather subjective to those with the capacity to perceive it in themselves and those around them. Still there are inequities, but they are not the ultimate reality of this universe. Social structures can be cruel, but God is good.

When the One sprang forth into the many, those many remain components of that One. Ultimately all will be reabsorbed into that One. How is that for scavenging, Randy? It is in the Upanishads, so there must be something to it. I personally am of the view that separative perception is the delusion.

What is Yes to one is No to another. Light and shadow define each other. Both play their parts in the circular rotation of time. As the circle comes back upon itself all dissolve into the undefinable.

Allah,

Everbank CDs force you to be the currency picker. Also difficult to rotate from once currency to another. Better let a mutual fund manager do that. All IMHO.

sjc Says:

...Still there are inequities, but they are not the ultimate reality of this universe. Social structures can be cruel, but God is good.

When the One sprang forth into the many, those many remain components of that One. Ultimately all will be reabsorbed into that One. It is in the Upanishads, so there must be something to it. I

What is Yes to one is No to another. Light and shadow define each other. Both play their parts in the circular rotation of time. As the circle comes back upon itself all dissolve into the undefinable.
_____

Yes, yes! A thousand times yes!

And the inequities smoothed over, like glaze on a jelly donut. Inequites abideth, but what of ye iniquities? Social structures can be cruel, but crueler yet are no structures at all. Rather, they are a free-fall from the truth. God is good, yes. God is love. But God is not nice. No, no, he's a big meanie, just ask the Elf people of Baskervilles.

Out of many, one. Out of one, many. E Pluribus Unum. We shall be reabsorbed, like Brawny paper towels placed upon a gentle puddle of milk on your counter. It is in the book of the Seven Petaled Roses of Baskervilles, so it must have some veracity.

What is Yay to one is Nay to another. Light and shadow play upon the twilight dusk of lambent rays kissing the horizon. like two lovers entwined in an unceasing, blissful moment. Both play their parts in the circumambient revolutions of space and time. As the spiral whirls is radiant arms of warmth outwards from the terrestrial firmament, into the cosmos of infinity, they come back to collapse the light into earth and dissolve like a Tootsie pop in one's mouth, in particles and undulating waves of being that are ultimately undefinable.

Now go makes some money in real estate!

A lot of this talk about gold being a risky investment and to be avoided by everyday investors is a vestige of the by-gone era, being the 80's-90's. That time (which corresponds to the Kondratiev 20 year fall season) was marked by the expansion of US and western military/industrial complexes, energy and base metals were cheap, and gold was just a useless commodity, only fit for jewelry and decorations, and, as an investment, just an ancient relic to be avoided, all together. During this period the DOW witnessed a 1700% appreciation, while gold slid to $270/oz from $850/oz in 2 decades. This was the era of strong economic growth, coupled with disinflation, or the lack of inflation. Gold does well, both in the inflationary and deflationary times, but disinflation is bad for gold, because the strong growth in the economy, justifies the government’s monetization of our currency.

Beginning with 2000 however, the tables have turned, and we are now in the winter season of Kondratiev, where the sun is rising over the East, and setting in the West. Now the infrastructure buildup in China, India and many other developing countries, becomes a drain on the limited natural resources, already in a tight supply, because the low prices of 80’s-90’s, did not justify investments into new explorations, many of which take in excess of 5-10 years just to bring to the production phase.

The housing crash was actually supposed to happen in early 2000, but was delayed by the injection of liquidity into the credit bubble by Sir Alan G. Another explanation for a delay in winter, was the fact that people live longer now, and each season lasts a little bit longer. This did not cancel winter, all together, but merely shifted its arrival, perhaps by another 5-6 years. This is what is called an Indian Summer, which does not cancel winter, nor its eventual destructive (cleansing) effect on the exuberance of debt which peaked with the termination of the Indian Summer. The last winter we had was 1929-1947, when the great cleansing of debt, rolled back almost all the paper wealth acquired during the 1920's debt bubble creation.

Unfortunately, we cannot really know how well gold would have done during the last winter, because, at that time, it was pegged by the government to the value of USD, both before and after the US went off the gold standard in 1933. However, we know that gold did very well during the deep recessions of 1970's. This shows that, contrary to popular belief, US dollar deflations are very bullish for gold, because, during these periods the FED always tries to stimulate the economy by liquidity expansion. This also took place in 2001, when Sir Alan tried to avoid a deep recession after the NASDAQ crash.

Some people believe that the FED tries to manipulate the price of gold by selling or leasing the Fort Knox gold to the mining companies, or the recent PPT activity of selling gold at 2:00 am in Hong Kong were the buyers market can be thin and volatile. Whether or not this is true, just based on the gold’s 250% rise since 2001, does not seem to indicate that the FED has been very affective with its manipulation practices. So, betting on gold, is not really a bet against the FED or the BOJ, or any other real or virtual governmental enterprise. It is simply a realization of the secular market trends, which have been in place since the early 1800’s.

So, if, we all agree that the US is currently experiencing the first snows of winter, and this corresponds to a bear cycle in all equities, but a bull cycle in commodities, both monetary, like gold and silver, and non-monetary like oil and base metals, we have only to study the 3 phases of gold’s bull cycle. The first phase is what we had from 2001-2005. Phase I is mostly limited to a small group of gold bugs, and so-called professionals participating in the early stage of the bull cycle. Phase II, is what we have starting from early this year (2006). Gold is being staged to the general public, while it breaks away from the dollar, and becomes a tradable currency, consequently going up with every currency of the world, yes, even in relation to the strongest currencies of all, like the Euro and the Swiss Frank. The final, 3rd phase of the bull market is the euphoria phase, when every Tom, Dick and Harry buys gold, and CNBC has a panel in the back of every analyst, featuring the hottest gold producers and garbage gold mining stocks (the dot-com equivalents of the by-gone era) are traded at stratospheric valuations. We are definitely not at this stage yet, because you don’t get any gold producers stock tips from the shoeshine boys, and 97% of the people can name 3 tech stocks, but not more than 3% of the general public can name even a single gold producing stock.

During the last phase III in the late 1970s, the gold trade was still only limited to those who could trust the “scum dealers” at coin shops, but now, since the NASDAQ dot-com era, every Tom, Dick and Harry has his own trading account, and can buy gold over the counter at the push of a button on his computer. This is all due to the introduction of the gold (and silver) ETFs, which track their prices to the underlying commodity, and can be just as easily traded as JDSU or JNPR. This is why the peak price of $850 (which, by the way is equivalent to the gold price of $2217, even if we do believe in the fabricated CPI inflation numbers which our government publishes), will be exceeded by a huge factor. $2217, of course, is in the bag, because no bubble has ever failed to, at least, match the peak of the bubble, which preceded it. But, gold can potentially go much, much higher, especially if, the FED, in its infinite power to combat deflation, takes the economy along the path of hyperinflation.

Taken all the factors presented in this review, in conjunction with the experience of the NASDAQ bubble and the RE bubble, which followed it, I wouldn’t completely rule out $30,000. Yes, this number, may seem exorbitant, but, if, we assume that the median house in Palo Alto drops 50% in nominal terms, which is probably more that a lot of people on this site can even hope for, this would still require 30 1oz gold bullion coins, at $30,000 per coin, to buy that house. 30 gold coins is still a lot more than what people used to pay for a house in a good neighborhood all through the last 30 centuries.

@StuckInBA,

International bond funds make a lot of sense, and they are a significant part of my portfolio. You can get an idea of currency hedging by looking at a public corp's 10K. For the record, I don't think gold investments are bad per se. I just think that for most people investing in gold represents an inferior type of investment to things like, for example, international bond funds.

@sjc,

I think you want Peter P. Such mystic philosophy is not up my alley of either expertise or interest.

@goldboy

What exactly, in all that, prevents the hedge funds from arbitraging gold ETFs by breaking the fund's peg to the underlying price of gold, over and over and over?

Who do you think pays for the arb profits they skim?

I'd be more inclined to say, if you insist on investing in gold, that you study up, become a rare coin collector, invest in rare, gold coins, train some big dogs, and learn to shoot straight.

I'll happily make my higher Sharpe in int'l bond funds and int'l big caps (most of which are either beyond the reach of or regulatorily protected to some degree from, hedge funds), thank you.

Everbank CDs force you to be the currency picker. Also difficult to rotate from once currency to another. Better let a mutual fund manager do that. All IMHO.

SIBA,

First off, you don't have to get CD's, you can get a regular money market instead, which is what I did and you can easily rotate the currencies. I can keep depositing into it as I need to. Secondly, you don't NEED to rotate the currencies unless you picked a really bad currency, that is the whole point of diversifying your capitol. One may go up while another may go down. I have chosen 4 different currencies and I have reviewed them with an investment specialist. The US dollar is going to get crucified! These currencies will all gain against the dollar.

I think having 10% of your portfolio in gold is not a bad idea, but I wouldn't go much more than that.

@Randy H

If the ETF does not track its price to gold, it is finished. It can no longer survive as an ETF. Also, the PM ETFs actually, have physical gold in store, the quantities of which are audited by 3rd party auditors, unlike the Fort Knox gold, which hasn't been physically audited for many decades. The gold ETFs actually peg their price to gold by buying and selling the physical gold, which they store. So the pegging is not an artificial peg, like the Chinese Rmnbi is pegged to the dollar, but a by-product of supply and demand. If the ETF’s share price falls below the gold’s price (ie., there is more demand for the physical gold than the ETF’s shares), the ETF will sell its own supply of gold and use the proceeds to buy back its own shares, consequently, raising the price of the ETF. Alternatively, if the demand for the ETF is higher than that of the physical gold, and the ETF’s price tracks higher, the ETF will use the proceeds from the sales of the ETF shares, to buy more physical gold for its stock, hence, creating additional demand for the metal, which did not exist prior to the ETF’s introduction. This mechanism is very powerful, because, the ETF not only makes gold trading available to the general public, but creates additional demand for the metal.

What is very interesting to note, is that while gold price fell from the high of $730/oz to the low of $540/oz this summer, the GLD ETF’s stock of gold actually increased during this period, because the selling in the ETF was not as strong as the selling in the metal. This shows that the investors in the ETF are the strong hands investor types, not the traders, which can be in and out of the underlying commodity on the first signs of weakness.

With all this security provided by the ETF, I still have to agree that investing in the ETF is not as safe as buying physical gold. As far as the int’l equities are concerned, there is no safe haven there either. I myself come from Russia, and I know perfectly well, that even the largest of the large caps in this country, are subject to corruption and manipulation of the government, the oligarchs and the US hedge funds, themselves. Gold, precious metals, and Real Estate, are the only investments which do have some intrinsic value, which no kind of paper can possibly have.

Maybe it's time to invest in malt liquor producers, beer manufacturers and anti-depressant manufacturers - those are always popular during economic downtimes. For attorneys and finance related folks - look into foreclosure/bankruptcy/lien work.

For others, life style guruing can create work in economic good times and bad times - "simplify" life style, decrease debt, surviving foreclosure/bankruptcy, etc.

I'm scared as heck of developing economy stock markets - the opacity too high to warrant the P/E ratio.

I don't think economic recessions are the time to "make money". Sure, some folks manage to short at exactly the right time or play some plays at the just the right time, but that's risky and not good for the vast majority of people out there.

But if you can hold on the bulk of your savings through most of the recession, buying opportunities at the end of the recession could lay the seed of future capital gain.

I must add that the instrinsic value of any kind of paper, including the US dollar is exactly zero. This is because, relative to gold, which cannot be reproduced by the human hand, and the supply of which is controlled by mother nature, a piece of paper, or their modern day equivalents of bits in a computer in some far-away city or country, can be produced, reproduced and manipulated, either by their original creators or anybody else who wishes.

Goldboy,

Keeping some physical gold makes sense if you're truly paranoid. My grandparents managed to survive fairly hard times by keeping some gold jewelry and silver coins, but that was for surviving warlords/revolutions.

Paper money is not worthless except under exceptional circumstances. A government, even a fairly bad government, has an interest in keeping it's legal tender worth something. I suppose one could argue that the US situation can deteriorate to become Burma or Angola, but let's just say that we're likely to have plenty of warning before it reaches that point.

And if we do indeed encounter a massive government failure of that magnitude, the government can go ahead and use its police power to confiscate your gold too. You might be able to hide a small amount of gold for survival, but it's doubtful you can hide more than 100 or 200 ounces without drawing attention to yourself.

@astrid

If we do encounter a massive government failure of the magnitude which you describe, and government begins to confiscate gold, you don't need 100 or 200 ounces. You don't even need 10 oz, because the price of just a single ounce will be more than you will ever need in a situation like this.

@astrid: Why would a stack of gold coins be so hard to keep a secret? So few people buy physical gold these days. You could stash it in your basement safe and no one would ever know. Unless you gave away the secret yourself, of course.

Heck, my own great-great uncles and aunts hid entire outdoor stills from FBI Prohibition enforcers, and those were on fire. Not to mention they were actually distributing the proceeds in town.

@everyone: Considering that a U.S. government meltdown situation is incredibly unlikely, let's get back to focusing on how to make money from the RE bust in bubble areas.

Or maybe I should be looking at that 2.5 acres of irrigated farmland after all... ;)

As far as being given plenty of warning before a situation can deteriorate, I have some personal experiences to share with you from, not-so-distant past in Russia, during the 1989 when the price of a Russian Ruble went from $1.30 to 1000 rubles to a dollar in a timespan of less than 1 week. During this week, one could only buy coffee cans and soap to protect ones life's savings.

If you sell your house, and use all the proceeds to buy gold, you've got Mr. Bernanke by the balls. No matter what he does, you still come out ahead, because if he prints more dollars, the gold price will blast off, and if he keeps the dollar strong by credit tightening, you would still be able to buy that house in Palo Alto with just 30 of your gold coins, no matter how low the price of gold gets.

No matter what [Bernanke] does, you still come out ahead...if he keeps the dollar strong by credit tightening, you would still be able to buy that house in Palo Alto with just 30 of your gold coins, no matter how low the price of gold gets.

@goldboy: Could you explain the second part? It seems that if everything stays flat, your gold won't increase in value relative to the property (popping bubble aside).

Also, with such a huge run up in gold prices last year, isn't it already possible that people have already jumped on the speculation bandwagon?

RE is much more sensitive to credit tightening and interests rates than Gold. Imagine an extreme case, but the one that really gets my point across, when the banks are all bankrupt and there is no access to credit at all, like what we had during the S&L crisis in 1992, and having to sell your house on a foreclosure. Since you (or the bank who ultimately has to sell your house), has absolutely no buyers because nobody has the cash to buy, he has to call the auction, and you are the only bidder with 30 gold coins.

Many people have already jumped on the speculation bandwagon. However, the recent crash in the gold price from $730 to $540 has scared most of the people who just joined right before the gold price topped out, and will stay away from the market until we have hit another peak (which will be close to $1000). Now, even with the people jumping in, we are still very far away from calling this a bull market top, because the combined market cap of all gold miners put together is no more than the total market cap of Google, CSCO, and just a handfull of tech companies, and these high techs are still considered cheap by some pundits, such as Cramer on CNBC. Gold/Gold Mining market is still very, very small, so if the gold/gold mining market gets just 10% the funds which are coming out of the broad market and RE, gold prices will be in outer space.

Yes, but the biggest scammer of them all is the US government. This government is so full of debt that it has no other recourse but to scam the people of their hard-earned money, by printing more and more of it, and then, lying about how much money they print, to the extend that the M3 money supply is no longer published, starting March of this year, so you have no other way to measure inflation, but to believe in those fabricated CPI statistics which the government puts out. Yes, you can believe in the CPI report, but only if you eat nothing but spam and ride your 1950's model Shwin bycicle to work. I am sure, many of us in the Bay Area actually do that. So, if yo don't you are already being scammed by the government.

Now let's see how you can get scammed out of buying gold. You always know the street price of gold, by checking www.kitco.com (updated every minute to give you the real-time street price on all 4 world markets). Now, you take that price and you add $10 comission for the gold dealer. $10 is the most you would ever need to pay in comission, whether it is in a coin shop or on the internet. This is if you are buying bullion. If you want to buy coins, there is an additional $20-$30 markup for the coinage, which you get back because when you sell the coin, you will sell it for the same $20-$30 markup, depending on the coin type. Now, I recommend Kregerand, which is South African, the first bullion coin ever made, and the cheapest. When gold prices reach $2-5K, all the gold coins will be the same price, so you might as well get the cheapest. You can actually shop comparitively, because you can find lots of dealers on kitco.com, and you can actually purchase over the internet. All dealers on kitco.com can be trusted, because kitco.com is the official website for gold bullion trading, and they certifiy all their dealers. But if you have your own dealer who you know in the neighborhood, you can go to him too.

Maybe this is a dumb question, but why would one coin be cheaper per oz. than another gold coin? Bullion is bullion. The only conceivable way is if it's adulterated with silver or another metal.