Buying Precious Metals by Mule Train

Aug 2, 2020 · 4 min read
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20 MULE TEAM BORAX HAULING — DEATH VALLEY c. 1899 canvas print by Daniel Hagerman

I just had to write about my experience with Kitco Metals. Most people know them from and a lot of very bearish gold bug investment advice. I am probably somewhat sympathetic with this point of view and often lurk upon the site. I never actually bought anything from them though. I just read the analysis and watched metals prices.

As I have been watching the evolution of cryptocurrency, I have thought the risk of holding Bitcoin was not making as much sense as it used to. I have also become a bit concerned about the growth of quantum computing making the Bitcoin value proposition obsolete. I started to think the thing to do was to convert some of the Bitcoin into physical precious metal. Kitco actually has a huge marketplace where precious metals of all types are sold, so I thought I would finally give them a try.

I went to their site and filled up my shopping cart. I went to pay but there were not as many options as I expected. A credit card charge was prohibitive and certain things would not even be sold to you with plastic. It was a wire transfer or a check. I had expected a Bitcoin option but it was not there. I got on chat with a customer service representative. I was informed they would not take Bitcoin any longer. He further informed me this had only changed a couple of weeks earlier.

This revelation along with a timeline coincident with my own concerns made me more determined to complete the transaction. I did not want to use the credit card. It made things annoyingly more expensive. The customer service representative informed me a wire transfer was most efficient, but they also still took checks. As long as I mailed in a piece of paper(also known as a check) with my name, my signature, an amount and my bank account number written on it and it got there within 72 hours they would honor the transaction…after the check cleared.

I just did not feel like going through the process of setting up a wire transfer so I opted for the check. I put a check in the mail immediately. I was informed via email in about 60 hours the piece of paper had arrived in New York. Kitco then informed me the check would have to clear. I was surprised to learn this might take more than 200 hours but I just shrugged. I started wondering about how much the price of metals was fluctuating as the days went by. Would Kitco really be honoring these original prices I had paid weeks ago?

I found out in another couple of weeks. I received several packages from different couriers. Every item I had purchased weeks before was in these packages. Prices had actually gone down a little during this period but I did not really care if Kitco made a little over this time. I was buying for the long term. It did not matter.

Still I wondered if I bought when prices were parabolic would these packages still arrive or would something happen en route to trip things up. I actively speculated to my wife as I told her about the process of purchasing and how I had used a check. She found it amusing when I described it as if “..the merchandise had been delivered by mule train.”

I decided to buy some silver from them in July as gold and silver went upwards as an experiment. I felt certain this time Kitco was going to lose because by the time the mule train arrived I would have already made money. I went blithely forward anyway. I found the whole process a pleasant anachronism which I wanted to test. If it is a REAL anachronism Kitco will eat the price and the mule train will arrive at some time.

Prices have been going up quickly and I begin to wonder. Will the US mail fail to make it 3000 miles to New York in 72 hours? Will the piece of paper with my name and bank account number on it be deemed “credible” by the financial institution listed upon it? As the price goes up and we enter August will a mule break its leg on the trail? Will the delivery to be canceled due sick mules? I am wondering.

Will the mule train really get here? Prices have gone up at least 10% in the weeks since I made the purchase. They are really going to honor this transaction? However, Kitco just sent me an email telling me the mule train is right on schedule and sometime this week they will drop off a package which I must be present to accept. Cliffhanger.

Dollars and Sense

Making Sense Out of Dollar Chaos

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