About us / Trading Guide

About us / Trading Guide

Summit Metals is one of the most trusted precious metals companies in the United States. We operate an online precious metals business with offices in Wyoming and Utah.

Buying precious metals for the first time can be an intimidating and sometimes frustrating experience. Hopefully, this blog will dispel your anxieties. Our intent is to expound on the buying process and to answer common questions collected from years of interactions with clients. The good news is that the process is not much different than buying any other product online. It all begins by establishing a plan. We will help you devise that plan by first addressing some general questions.

Are precious metals a good investment?

You will hear many precious metals companies extolling the upside “investment” opportunities of gold, or silver. In our view, gold and silver are less of an investment and more of an insurance policy. Investments tend to be income-generating, whereas gold and silver are “dead” assets. In other words, they act as stores of wealth but not producers of wealth. Partly for this reason, precious metals might be better classified as an alternate currency. If gold rises from $1,000 per ounce to $5,000 per ounce, the owner is not necessarily any wealthier. Gold’s true value is not measured in nominal (dollar) terms, but in relation to other assets. In other words, if gold becomes 5x more expensive in dollar terms, while cars, homes, food, the stock market, etc., also become 5x more expensive, you have simply retained purchasing power, not grown it.

Investing in gold becomes interesting when gold’s nominal price compared to other assets is perceived to be low. If all asset classes crash by 50%, but gold maintains its nominal value, your purchasing power has increased by a factor of two even though, on paper, the gold price has not moved in dollar terms at all. Gold is relational.

Further on we will explore the differences between gold and silver.


The Decision Process

How many dollars should I convert into precious metals?

If you are seeking to convert a (relatively) small sum of money into metals, you may be inclined to purchase metals with smaller denominations. The advantage is flexibility. Smaller coins will afford you the opportunity to sell portions of your holdings, or usethose smaller denominations for trade. Popular coins for this purpose might be 1-ounce silver coins, junk silver, or fractional denominations of gold. The disadvantage to smaller denominations is that, as a rule, the smaller the denomination the higher the premium on a percentage basis. (It is more expensive to mint 10 of the 1/10th-ounce coins than a single 1-ounce coin.) However, with current prices at the time of writing gold hit an all time high of $2,600 it is more affordable to get into gold with fractionals. See this blog article for more in depth details.

For larger investors, the higher premium costs with smaller denominations can become prohibitive, so it is common for larger orders to veer toward 1-ounce and 10-ounce denominations of gold and 100-ounce denominations of silver.

Should I purchase gold, silver, or a combination?

Generally speaking, gold is more “conservative” than silver because the price is less volatile. The silver market is much smaller than gold and tends to be a more speculative trade influenced by industrial demand (90% of all mined silver is used in industrial applications). The twoprecious metals often move similarly up or down in price, so it is less common that gold and silver will move in opposite directions. Whenprecious metals prices increase, silver tends to increase much faster than gold on a percentage basis. Similarly, when prices decrease, silver tendsto decrease much faster.

The decision to purchase gold or silver is heavily predicated on purpose and risk tolerance. For those approaching retirement age or thoseseeking insurance for a portfolio or currency hedge, gold tends to be a more popular option. For those with greater speculative appetite, silver offers (in the opinion of some) higher upside potential. Additionally, for “preppers” concerned with systemic risk or an apocalyptic shock, silvertends to be valued as a solution for bartering in smaller quantities.


Some precious metals enthusiasts monitor closely the gold-to-silver ratio, which represents the number of ounces of silver needed to equal an ounce of gold. Historically, this relationship has floated anywhere between 10:1 and 20:1, although the ratio has been much larger in recent decades.

A final consideration is size. A$100,000 order of silver could weigh 300 pounds, while a comparable gold order would weigh only 5 or 6 pounds (depending on price). When accounting for the stark per ounce price differential, it is important to note that silver is significantly bulkier than gold.

I want to buy gold. Should I buy gold bars or gold coins? Which gold coins should I purchase and why?

There are three main considerations for gold product selection: premium cost, country of origin, and sell-side tax.

Generally, non-legal tender gold bars are cheaper than legal tender coins by a few dollars per ounce. Clients seeking to purchase gold for the leastpossible price favor gold bars. The larger the bar, the lower the premium per ounce. Gold bars issued from government mints are IRA eligible. The downside is that the IRS requires precious metals dealers to file a 1099-B form when repurchasing gold bars in increments exceeding 32 ounces per transaction. (See: https://summitmetals.com/pages/sell-to-us)

Clients purchasing gold coins may choose among several sovereign mints. The premiums on these coins vary depending on the level of government bureaucracy and taxation.

Like gold bars, the Canadian Gold Maple Leaf, the South African Gold Krugerrand, and the Mexican Onza are subject to 1099-B reporting requirements when selling in increments of 25 ounces or more per transaction. All other coins are exempt from 1099-B reporting.

For those wishing to purchase gold in coin form for the lowest possible premium and without 1099-B reporting, the Summit Metals offers other coins on our website such as the American Gold Eagles.

I want to buy silver. Should I buy silver bars, silver coins, silver rounds, or junk silver?

Just as with gold, there are three main considerations for silver product selection: premium cost, country of origin,and sell-side tax. An additional consideration is form factor.

For clients seeking the largest quantity of silver for the least cost (i.e. the best bang for the buck), 100-ounce and 10-ounce bars are a common solution, along with 1-ounce silver bars and silver rounds, such as the Texas Silver Round. For institutional investors, 1,000-ounce bars are also an option, although not generally preferable for retail investors.

The difference between a “round” and a “coin” is important to understand. A round is a privately minted non-legal tender medallion in the size and shape of a coin. A coin is a product minted by a sovereign mint with legal-tender face value.Both options offer the same silver weight, form factor, and purity (ranging from .999 to .9999 pure depending onproduct). The round, however, tends to sell at a lower premium because private mints are not subject to the samefinancial burdens — and taxation — as sovereign mints.

Some clients prefer the “official” designation of a sovereign coin, while others prefer to acquire silver in their desired form factor at the lowest cost. It is a matter of personal preference.

“Junk” silver is an industry term for pre-1965 U.S. dimes, quarters, half-dollars, and dollars. These coins are composed of 90% silver. Sincethey were at one time in common circulation, they generally have significant wear when compared to “brilliant uncirculated” coins orrounds. Certain clients are attracted to junk silver because these coins represent the smallest form factor available for silver products, and the premiums tend to be comparable to 1-ounce silver coins on a per ounce basis. In other words, there is generally no significant increase in premium despite the smaller size. It is worth noting, however, that these premiums tend to fluctuate more than newly minted products due to finite supplies. The US Mint no longer produces these coins. Hence, there are acute supply/demand sensitivities in the junk silvermarket that can lead to higher premiums during times of market volatility.

For silver, there are 1099-B reporting requirements when selling bars in increments of 1000 ounces or more per transaction, or junk silver coins in increments of $1000 face value or more per transaction. All other coins or rounds are exempt from 1099-B reporting.





OTHER COMMON QUESTIONS

Are precious metals purchases subject to sales tax?

On June 21, 2018, the United States Supreme Court announced a decision in favor of South Dakota in South Dakota v. Wayfair Inc, where thestate argued it was losing out on local sales taxes with an increasing number of consumers shopping online rather than in brick-and-mortar stores.

Since 2018, online retailers such as Summit Metals have been forced to adapt to the varying state sales tax rules and regulations across the United States. Sales taxes are calculated and charged based on the address where the order is delivered.

EXAMPLES:

1.   A client residing in Arkansas places an order for $1,000 worth of silver. They would be charged an additional $65.00 in sales tax in compliancewith Arkansas sales tax laws as they apply to bullion.

2.   A client residing in Arkansas orders $1,000 of silver to be delivered to a Summit Metals Depository. In this case, the client would only pay $1,000 to Summit Metals with no sales tax, because Texas has no state sales tax on gold and silver bullion coins or bars.

When it comes time to sell my precious metals, will the sale be subject to capital gains tax?

Long and short term capital gains tax questions fall under the class of topics for which you should consult an authorized tax professional. It is generally understood that profits derived from the sale of precious metals are subject to a capital gains tax of 28%. The reporting of those gains issubject to United States law and the conscience of each individual.

When I buy from Summit Metals, does Summit Metals report the sale to the US government?

Unlike the banking industry, the precious metals industry is unregulated (for now). Therefore, the sale of precious metals is a non-reportable event, provided you are not paying for your purchase with cash (physical dollars) in excess of $10,000, which warrants the filing of Form 8300, or deemed to be involved in suspicious activity (SARS report).

The government is satisfied that the funds originating from your bank via personal check or bank wire have been pre-screened for suspicious activity because of the mandates presently enforced on banks. In other words, the government is convinced that your bank knows the origin of your funds and is conducting the proper due diligence on its clients. Consequently, precious metals dealers are not subject to additional reporting restrictions, no matter the size of the purchase.

Nevertheless, in our technological age, it would be naïve to assume that the government cannot easily track the activity of any person of interest viathe communications channels (phone, internet, etc.) leading to the purchase. The world is interconnected. Obviously, it is much more difficult for thegovernment to track the whereabouts of the metal once purchased or the line of ownership once it is gifted, traded, lost, stolen, or otherwise dispensed of.


How do I know my metal is real

How do I know my metal is real?

The precious metals we sell originate from two sources: mints or third party sellers such as clients or other dealers.

More than 95% of all the metal we sell originates from the sovereign or private mint producing the coin or bar. The mint guarantees the weight and purity of these products, and we sell them to our clients in the exact condition we receive them from the mint. We open sealed monster boxes or coin tubes only when orders of uneven increments oblige us to do so.

For orders originating from third party sellers (clients or other dealers) we verify the weight and purity of every shipment entering our vaulted warehouse, no matter how large or small, using a combination of methods such as density testing, specific gravity testing, electromagnetic throughput, and other machine protocols.

For those seeking further assurance, a device such as the Sigma Metalyzer (sigmametalytics.com) can be purchased for less than $1,000.

I have heard that the government may confiscate gold again like they did in 1933. Is this true?

It is impossible to know whether or not the government will confiscate precious metals at a future time. However, there are threeconsiderations for those anxious about the prospect:

1. The government can confiscate whatever it wants, whenever it wants, and has been known to seize land and other assets from citizens. In fact, the government presently confiscates a percentage of individual income through various taxes, which can rise at any time.Gold is certainly not immune to governmental oversight and regulation.

2. It is worth noting that, in 1933, the government did reimburse citizens for their gold, albeit at a significantly discounted rate. This formof “confiscation” was therefore different than an airport toiletry confiscation by the TSA, for which there is no reimbursement.

3. Lastly, and perhaps most importantly, it is worth highlighting that the emphasis placed on the 1933 gold confiscation by some precious metals dealers is not without incentive. Certain dealers incentivize their sales force to drive profits, and since collectible coins offer highermargins, these opportunistic salesmen emphasize that the 1933 legislation exempted collectible coins. However, many of the products classified as collectibles today were, in 1933, standard bullion coins, so the coins being promoted today were, in fact, non- exempt at thetime of legislation. In the event of future legislation, it is impossible to know what stipulations the government will place on the citizenry.

Is it better to purchase collectible coins or bullion coins?

Purchasing collectible coins is like purchasing a piece of art. Generally, the value resides not in the metal content, but in the rarity, artistry, or desirability of the coin. So, in evaluating collectible coins, it is critically important to recognize that there are hefty premiums on these coins that sometimes far exceed the metallic value. If you desire collectible coins, ensure that your motivation is not for currency-like fungibility (i.e. easily and quickly convertible into an instrument of equal value).

How do I know I can trust Summit Metals?

Summit Metals is a subsidary of Summit Metals Holdings Inc. Summit Metals has processed more than $100 million in client transactions and over 50,000 orders shipped to all 50 states. In total, this represents over thousands of ounces of gold and hundred thousand ounces of silver. In 2024, Summit Metals was recognized as by Duns & Bradstreet as a business that fulfills financial obligations with clients.

No product is more closely associated with Summit Metals than the Scottsdale Silver Vortex Bar. As of 2024, there are more than 1 million Scottsdale Vortex silver bars in circulation.

We encourage first-time precious metals buyers to thoroughly research our company and others before purchasing. Read online reviews, assess Better Business Bureau complaints, or make a site visit to the company’s facility, if feasible. The precious metals industry attracts the unscrupulous, so it is important to be diligent! We are partnered with some of the most trusted metal industry influencers such as 2is1Gold and BaldGuyMoney.

Thank you


Expert Thoughts

We are happy you got to this point of the blog - it was over 5,000 words, but at the end we believe you will be as educated as anyone else in this industry. Reach out support@summitmetals.com for any additional information.

- Summit Metals Team -