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Precious metals are rare commodities. As such they are fungible and their values are equivalent to each other without regard to where they come from. Commodities are normally traded on commodities exchanges.
Unlike agricultural commodities like grain, pork bellies, sugar, etc., the supply of precious metals is not renewable. The four principal precious metals are gold, silver, platinum, and palladium.
In this review we'll tell you all you need to know to make a good decision about CMI Gold and Silver, the oldest bullion dealer in the U.S.
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Now back to the review...
CMI is a gold and silver dealer in Phoenix and one of the oldest in the nation. In the early 70s, Arizona was the nation’s fifth-largest silver producer. In 1973, CMI was formed for trading silver the supply of which was dwindling.
In 1974 Americans regained the right to own gold bullion. That right to own it also bestowed the right to buy and sell it for investment purposes.
Having already established a brokerage business for silver, CMI was an early entry into the trading of gold bullion in 1974.
Since its inception, CMI has embraced a mission of honest, objective, and straightforward professional service of advising our clients and customers regarding the buying and selling of precious metals.
Most importantly, CMI wants you to be fully aware of the risks and dangers of investments in precious metals as well as their benefits.
CMI’s professionalism is unmatched with more than 50 years of experience in buying and selling the four major precious metals – gold, silver, platinum, and palladium.
The firm has been led by Bill Haynes since 1973. To this day they remain a family enterprise with the addition of Bill’s two sons to the management group.
Gold Confiscation History
It's important for every gold and precious metals investor to know a little about the history of gold in the United States.
In 1933, President Roosevelt signed an executive order "forbidding the hoarding of gold coin, gold bullion, and gold certificates within the continental United States”.
Hoarding was a problem because the supply of US gold reserves limited the Federal Reserve’s authority to increase the money supply which was a necessary device for stimulating an economy during the great depression.
That was known as the “gold standard” for the US currency which the executive order effectively abolished. The restriction on private gold ownership in the United States was repealed in 1974.
Many unscrupulous gold and silver dealers, particularly telemarketers, are cultivating fears of reinstatement of restrictions on private gold ownership intending to manipulate the price of precious metals. Avoid such con artists.
Reviews of CMI Gold and Silver
CMI has been evaluated by numerous reviewers. We are proud that the Better Business Bureau has given us an A+ rating.
CMIGS has consistently received excellent reviews from satisfied clients. The following is representative:
“True professionals. I have first introduced to CMI about 2 years ago, and have had nothing but the best experiences. In addition to a great value, they always go the extra step to further my education so I can make the best trades. Cannot thank these guys enough!” - Barbara H.
Investment in precious metals can be indirect for example gold certificates, special mutual funds, or mining company stocks.
You can also invest directly in physical ownership of the metals. CMI specializes in selling and buying physical precious metals. CMI has available on our website an excellent Buyer’s Guide for investing in precious metals.
The most popular physical ownership investment is gold bullion which comes in two forms: bullion coins and bars.
Gold coins are produced by various government mints, including the U.S. Mint, the Royal Canadian Mint, Australia’s Perth Mint, and the Austrian Mint. Gold bars are produced by many mints/refineries around the world. 1-oz. bars are the most popular.
When investing in precious metals, you should buy forms that have the smallest premiums and are easy to sell. Premiums are the mark-ups to the price that metal items sell for over the value of their precious metal content.
Popular gold coins such as American Gold Eagles and Krugerrands are the most widely traded coins in the United States and therefore easier to sell. However, gold bars usually carry smaller premiums than gold coins.
In a strong precious metals bull market, silver produces bigger percentage gains than gold. However, silver carries much more bulk and weight than gold. Therefore, handling and storage are more of an issue for silver than it is for gold.
The U.S. Mint’s 1-oz. Silver Eagles are the most popular government-issued 1-oz. silver coins. They have a nominal face value of $1 but sell for the value of their silver content plus a premium.
That premium is always higher than the premiums on standard silver bullion items.
Gold Investment Coins
Gold investment coins provide hedges against currency debasement and devaluation. Do not confuse them with numismatic and collector coins that some brokers push at huge premiums compared to the value of their gold content.
Gold coins sell at small premiums over the value of their gold content and make the best gold investments. American Gold Eagles are the best-selling gold investment bullion coins in the world. The Krugerrand is very popular but they sell as smaller premiums.
Gold bars are very popular for investment because they have lower premiums than gold coins.
Gold bars are sold as 1-oz, 10-oz, kilo, or100-gram bars. They are all 99.99 pure. Until recently, only 1-oz and 10-oz bars were available. Today kilo bars are commonly bought by large investors.
Normally, smaller gold bars carry larger mark-ups over the spot.
Products and Fees
CMIGS trades in gold, silver, platinum, and palladium. It should be noted that platinum and palladium are not regarded as precious metals. They are meant primarily for industrial use.
Also, trading in platinum and palladium entails special considerations. Unless an investor has advanced experience and knowledge of platinum and palladium trading, we recommend that they focus on gold and silver trades.
The normal fees for performing gold and silver trades can vary depending on the gold or silver form and transaction particulars. But they are consistent with standard industry practices.
The Professional Numismatists Guild reports that the average retail commission for one-ounce American Eagle or Maple Leaf gold coins is about five to six percent.
CMI Gold & Silver also offers Gold IRA’s which we'll discuss below. Their fees are competitive with industry standards. They consist of an annual administrative fee, annual storage fee, setup fee, and transaction fee.
These fees are elaborated below in the discussion of Gold IRAs.
CMIGS’s Self Directed IRA
In 1974, Congress enacted the Individual Retirement Arrangement (IRA) law. Subject to limitations on annual contribution, a qualified IRA accumulates income tax-free.
Now, for “Traditional IRAs”, contributions to the IRA are deductible and earnings are not taxable. Withdrawals are taxed but they usually do not occur until retirement when tax rates are normally lower.
The present annual limit on contributions is $6,000. Taxpayers over 50 and ½ years old are entitled to contribute an additional $1,000.
With traditional IRAs, the owner leaves it to the IRA custodian to make investment decisions as long as they are within the group of qualified low-risk investments. Custodians were happy to so restrict their investments because they are relatively simple to administer.
However, custodians are not required by law to make investment decisions. Sometimes, an IRA owner knows more than the custodian about his desired investment policies and objectives for his IRA. So the self-directed IRA was created but self-directed investment decisions are still subject to the veto of the fiduciary custodian.
With a self-directed IRA, the IRA owner is authorized to direct how IRA funds will be invested. They can direct that funds be invested where independent custodians with fiduciary responsibilities might be hesitant to go.
The laws for IRA’s have evolved over the years, including the creation of the self-directed IRA. Since their inception, the law requires that IRA assets be held by independent third-party custodians.
As a fiduciary, the custodian is usually restricted to investing in low-risk bonds, stocks, and money market accounts.
In 1997, the law was changed and certain IRAs are allowed to invest in certain precious metals initially limited to US gold and silver coins, and later expanded to gold, silver, platinum, palladium bullion. Such Gold IRAs are set up as self-directed IRAs.
IRA Eligible Precious Metals
The expanded list of eligible precious metals for IRAs was limited to only select metals and forms of bullion that meet certain levels of purity.
Gold IRAs can invest in one, one-half, one-quarter, or one-tenth ounce U.S. gold coins, or one-ounce silver coins created by the United States Treasury Department. American Gold Eagles are specifically approved for IRAs.
To be eligible for IRA investments, other gold coins must be at least 99.5% pure. Krugerrands are not eligible. The premiums on gold bars are normally smaller than premiums on gold coins.
IRS regulations require bars to have a minimum purity of 95.5%. Most gold bars easily beat that minimum.
GoldStar Trust Company Precious Metals IRAs
Since the inception of IRAs, the law requires that IRA assets be held by an independent third-party custodian. That custodian is a fiduciary who can invest only in a diverse portfolio of stocks, bonds, and money market accounts.
Also, eligible custodians include banks, federally insured credit unions, savings and loan associations, or entities that are approved by the IRS.
GoldStar Trust Company is an affiliate of CMI and is an IRS-approved custodian of Gold IRAs sponsored by CMI. GoldStar must act following its fiduciary duties but it will act solely for the interests of CMI customers, the IRA owners.
Normally, CMIGS performs the buy/sell trades while GoldStar Trust Company serves as the custodian.
GoldStar Trust Company charges the following fees:
Precious metal physical ownership for investment purposes can produce excellent gains. Precious metals are thought to be a good portfolio diversifier and hedge against inflation.
In periods of instability, gold is often turned to as a safe store of value. When equities, bonds, and real estate experience declining rates of return, gold prices trend the other way.
However, the precious metals market can be volatile. CMI is sensitive to the risks and dangers, as well as the upsides, of precious metals investment.
CMI counsels its clients and customers on these considerations in the context of their particular investment goals and circumstances.
CMI Gold & Silver is not a bad company, but we do not recommend them. They are not a scam, but they aren't the best choice for gold investments and certainly not IRA's, like other companies we have written about on this website.
You can get a Free Gold Investors Guide from our top gold and precious metals company recommendation by clicking the link above or you can read our article of the top companies we reviewed this year:
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