Make it complicated

Even though I did not qualify for cash for clunkers last year, I bought a car in the autumn. I needed it badly. The one I was replacing had given me almost 18 years of service.

The sales experience is one where many options are thrown at you. Each and every one costs more money. When buying a car, I expect that. I think I can say no to options I don't need, but I don't always succeed when I reflect on my performance. I console myself with the fact that some options make the car more comfortable or more fun to drive, so all is not lost. And if I get another 18 years out of this vehicle, then the additional cost is amortized over many years and makes the annual cost fairly tiny.

Buying gold is like buying a car. Salesmen earn more money by making it more complicated than it should be. The object is to have a defined amount of gold at the lowest possible price.

Buyers unfortunately lose track of their goal and pay for bells and whistles for things they don't need.

For example, when buying new one-ounce bullion coins, why should you pay a premium to have it graded MS-69 or MS-70? This jacks up the price. Experience tells us this premium will disappear over time. Bullion coins do not have long-term collector value.

Are they pretty? Sure.

Are some MS-70 coins in other series valuable? Sure.

Will either of these facts help you get more money when you want to cash in? Not in the slightest.

Gold may be eternal, but packaging, grading systems and premiums are not.