Investing in gold: Hidden costs can drive purchase above its value

We have all heard the expression, "read the fine print." Well, in coins the same rings true. Terms of sale are very important when you are talking about the bottom line in your purchase or sale. Not all transactions are conducted in the same way at all companies. Here are a few terms of sale to be aware of before making your next purchase or sale.

Commissions: In the rare coin and bullion industry there are companies that price their product with a straight price, but there are others who add commissions. This tactic is often used in phone sales. The price of an item is quoted at a lower price when comparing by phone, but when it comes time to complete the transaction a commission is added either for the company or the salesman. This tactic is sometimes also used in reverse. A company tells you a coin is worth "X," but when you send it to them to sell it they then want to discount it with a salesman's (or buyer's) commission. Asking if there is a commission can be an important piece of information.

Release charges: The release charge is just another way of stating commissions. We have seen companies selling new coins for their face value but then charging you a release charge to have them delivered to you. In the end the customer pays well over the actual value for coins. Many banks can order you current coins and often do so at their own expense, but if you are unable to find them in a bank there are companies that will sell them for a very modest premium over the face value.

Manufacturing charges: Not many companies use this term, but it is very similar to the commission tactic. Example: A company will price you gold using an NYSE spot but then ask you to pay a coining, or manufacturing, fee. Sure there are costs to obtaining physical gold, but most companies reflect that in their sale price rather than trying to add a fee on at the end.

Delivery charges: Most of us expect to pay delivery charges for items we order through the mail, but there are companies that add exorbitant charges to pad their bottom line. Other companies offer free shipping as a sales tactic. Either way a person must look at the bottom line of what the product costs in total.

Delivery times: Reasonable caution must be used by companies today with all of the fraud going on in the business world, but time can be an important piece of information for your purchase or sale. Some terms of sale state delivery can take as much as eight weeks. If you are purchasing rare coins or bullion, time can be a factor in a volatile market. Another factor is that when you are dealing with rare coins there may be a refund clause if the company is unable to find the item they sold you before the delivery date comes due. Conversely if you are selling an item, being paid in a timely manner is very important.

Ultimately when buying or selling rare coins and bullion make sure to ask about the terms of sale before making a decision. Knowing what the final number is going to be is the most important factor. Most companies are very straight forward, but asking the right questions can prevent potentially costly surprises.

• Allen Rowe is the owner of Northern Nevada Coin in Carson City.