CMI Gold & Silver Review

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CMI is a professional dealer in precious metals based in Phoenix. They are among the first dealers in precious metals in the country.

In the first part of the 1970s, Arizona was ranked fifth in the country in silver production.

In 1973, CMI was created by Bill Haynes to trade the shrinking supply of silver.

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Who is CMI Gold and Silver?

cmigas homepage

In 1974, citizens of the U.S. regained the right to own gold. Americans could buy and sell gold as an investment. Because CMI had already established a brokerage business for silver in the previous year, CMI became one of the first traders of gold bullion.

The company remains a family-owned enterprise today with Bill's two sons managing the business.

From day one, CMI has advised countless clients in the purchase and sale of precious metals. They have always conducted their business with honesty, objectivity, and the highest level of professionalism.

They believe in transparency. They want their clients to be educated investors and are very open about both the risks and benefits of investing in precious metals.

History of Gold Confiscation in 1933

The Great Depression prompted President Roosevelt to sign an executive order in 1933 which forbade Americans from hoarding gold coins, bullion, and certificates. During that time, people hung on to their gold products because the economy was unstable. 

Because there was an insufficient supply of gold in the reserves, the Federal Reserve could not increase the supply of money which was needed to stimulate a depressed economy.

When the executive order went into effect, President Roosevelt suspended the gold standard.

The restriction on owning gold continued until 1974 when President Ford repealed the executive order and legalized the private ownership of gold.

A lot of dishonest dealers in precious metals, mostly phone solicitors, try to drum up fears that the restriction on gold ownership is going to be reinstated. Their con game is to try to manipulate gold and precious metal prices.

It is best not to engage in any dealings with these types of individuals.

Online Reviews of CMI

There are many reviews on CMI on the web. The company has earned the highest marks from its customers. It has an A+ rating from the Better Business Bureau.

A Gold Buyer's Guide

CMIGAS IRA info

You can invest in precious metals indirectly by buying stocks of a mining company, gold certificates, and mutual funds.

You can also directly invest and own the actual metal. This is what CMI specializes in - the buying and selling of precious metals in physical form. On the company's website, there is a helpful Buyer's Guide on investing in precious metals.

The most common way for investors to own physical gold is by buying gold bullion. This is available in two forms, bullion bars, and bullion coins.

Gold coins are created by government mints of different countries. These include the United States Mint, the Royal Mint of Canada, the Perth Mint of Australia, and the Austrian Mint.

Mints around the world produce gold bars. Bars weighing 1 ounce are the most common.

When you invest in precious metal, you should buy the physical gold that has the lowest premiums, and which is straightforward to sell. Premiums are the gold seller's mark-ups on the precious metal's actual value or the spot price.

The gold coins that are the easiest to sell and buy in the U.S. are the American Gold Eagle coins and Krugerrands. However, gold coins carry a higher premium than gold bars.

If the market of precious metals is strong, silver usually has the highest percentage gains than what gold produces. However, silver is heavier than gold. So, the physical handling and storage of silver require more work than the same for gold.

The one-ounce Silver Eagle coin produced by the U.S. Mint is the most common one-ounce silver coin issued by the government. These coins have a face value of $1, but the price has a premium added to the value.

The premium of the coins is higher than the premium on standard silver bullion products.

There are four major precious metals on the trading market. These are gold, silver, palladium, and platinum. These are commodities that are considered rare because the supply in the market is limited.

It is not renewable like agricultural commodities such as sugar and grains. The value of the precious metals does not rely on anything else but their intrinsic values.

Coins for Gold Investment

Coins for gold investment can be a hedge against fluctuations in currency. However, beware of brokers pushing coins that are rare or are collectibles at a high premium from the base value of the gold content.

Stick with gold coins that come with low premiums because these make the smartest gold investment choices.

Globally, the American Gold Eagle coins are the best investment in terms of gold bullion coins. The popular Krugerrands sell at a lower premium.

Gold Bars

Gold bars carry a smaller premium than gold coins, thus making them a popular investment.

Gold bars can be sold in 1-ounce, 10-ounce, 100-gram, or 1-kilogram bars They are 99.99% pure. Only the 1-ounce and 10-ounce bars were available until recent years. Nowadays, kilo bars are popular with big investors.

Generally, gold bars that are smaller carry a bigger mark-up over the spot price.

Products and Associated Fees

CMI Gold and Silver deals with gold, silver, platinum, and palladium. Platinum and palladium are used in industrial applications and are not treated like precious metals.

In addition, trading palladium and platinum requires special considerations. These metals are suitable only for investors who have a lot of knowledge and experience trading these metals.

As such, it is recommended that the average investor stick with trading gold and silver.

The fees in trading gold and silver are determined by the physical form of the gold and silver and any other considerations with the transaction. They are fairly consistent with the industry standards.

According to the Professional Numismatists Guild, investors can expect to pay an average retail commission of five to six percent when trading the 1-oz. American Eagle or Maple Leaf coin.

Another investment product that CMI deals in is the Gold IRA. Their fees are competitive by industry standards. The fees cover annual administrative costs, storage, setup, and transactions. Details on these fees will be described in the description of Gold IRAs.

The Self-Directed IRA from CMI

Congress passed the law on the Individual Retirement Arrangement, or IRA, in 1974. This allows a person to save money tax-free. Annual contributions are limited to a certain amount.

In a traditional IRA, contributions are tax-deductible, and earnings are tax-deferred. Withdrawals during retirement are taxed at the current tax rate that year.

Currently, the annual contribution limit is $6,000. People over 50 1/2 years old can contribute up to $7,000.

In traditional IRAs, the account owner lets the IRA custodian decide what exactly to invest in as long as the investment is in a group of qualified low-risk investments. Custodians like these restrictions because they make account administration much easier.

However, custodians are not legally required to decide on what to invest. There are times when the IRA owner has more knowledge than the custodian in a particular investment that he desires and how that plays into his retirement account's objectives.

That led to the creation of the self-directed IRA. With that said, investment decisions can be vetoed by the custodian.

A self-directed IRA lets the owner choose the investment products of his IRA. They can choose from a range of non-traditional investments, products that a custodian with fiduciary obligations may be leery about.

Gold IRAs

Over the years, laws that govern IRAs have evolved. This includes the birth of the self-directed IRA (SDIRA).

IRA rules require IRA assets to be held by a third-party custodian. The custodian is a fiduciary, and they are limited to investing in stocks, low-risk bonds, and money market funds.

Rules changed in 1997 to allow certain types of IRAs to invest in precious metals. In the beginning, these were limited to American gold and silver coins. Later, it expanded to include bullion in gold, silver, platinum, and palladium.

Gold IRAs were set up as SDIRAs to invest in these precious metals.

Precious Metals that are IRA Eligible

Precious metals that are eligible for IRAs are restricted to certain forms of bullion that meet certain requirements of purity. Eligible products are minted by the U.S. Treasury and include gold coins in 1-oz., 1/2-oz., 1/4 oz., and 1/10 oz. Silver coins include the 1-oz.

The American Gold Eagle is specifically approved for SDIRAs. For other gold coins, they must have a minimum level of purity of 99.5%. Krugerrands are not approved for IRAs.

Gold bars carry a lower premium than gold coins. The IRS rules require gold bars to contain a purity of no less than 95.5%. Most gold bars do not have a problem surpassing that minimum requirement.

Precious Metal IRAs from Goldstar Trust Company

IRA laws require assets to be held by a third-party, independent fiduciary custodian. The custodian can only invest in stocks, bonds, and money market funds. The custodian can be a bank, savings, and loan, a credit union, or an IRS-approved entity.

Goldstar Trust Company is a CMI affiliate and is approved by the IRS to serve as custodian of CMI's gold IRAs. Goldstar is required to carry out its fiduciary obligations and act in the best interest of the IRA owners, who are CMI clients.

In general, Goldstar Trust Company performs the custodial duties while CMIGS executes the trades.

Here is the fee schedule of GoldStar Trust Company:

  • Account Setup Fee: $25 (one-time charge)
  • Transaction Fee: $40 for each buy or sell transaction, in or out of the account.
  • Annual Administrative Fee: .08% of the account's total fair market value, with a minimum of $50 and a maximum of $250.
  • Annual Storage Fee: 1% of the account's total fair market value.

Benefits of Gold Investment

  • Preservation of Wealth

The key benefit to investing in gold is that over the centuries, it has been a stable option for preserving wealth. This is important in today's economy where the environment can become unstable. Currencies that are backed by paper do not offer such stability.

  • Hedge Against Inflation

In an economy where investors often face impacts of inflation and a weakening dollar, gold is an attractive haven for wealth. In the past, gold has been an effective hedge against these economic scenarios.

During inflationary periods, the price of gold increases. When investors see that the weakening dollar is eroding the value of their paper investments, they turn to solid assets that hold their value.

This can be seen in the 1970s when gold prices rose dramatically while the country was experiencing inflation.

  • Diversification

Gold is not related to stocks, bonds, or real estate. So, just from the perspective of diversification, gold is a good choice. The added advantage is that gold is not affected by inflation or a weak dollar, unlike other traditional investments.

Owning gold can protect a portion of your account's value when the economy experiences a downturn.

IRA Advantages

IRAs in general are simple to set up. Anyone who earns a taxable income can open a traditional IRA and contribute funds to it regularly. For a Roth IRA, there is no age limit for opening an account or funding it.

However, your contributions may be limited by your modified adjusted gross income and your tax filing status.

You can have an investment advisor guide your approach to investing or make investment decisions on your own.

The main benefit of a traditional IRA is that you can have tax-deferred growth. You can fund the account with money that will not be taxable for that tax year. Your contributions and growth will be taxable only when you take your money out.

When you reach the age of 72, you are required to start withdrawing your funds. When saving for retirement, you invest more than what you might invest in with a regular brokerage account.

As you build up your IRA investments, you will have that much more funds to use during your retirement.

Conclusion

Investing in physical precious metals is a good way to diversify your investment portfolio. The long-term gains can be excellent as they can be a hedge against inflation.

During times of an unstable economy, gold is a haven for your money. The value of stocks, bonds, and real estate can erode during this time and returns can decrease, but the price of gold goes in the opposite direction and gains value.

However, the precious metals market can experience volatility as well. CMI believes in educating their clients about precious metals investments, so they are aware of the advantages and disadvantages.

Then, the clients can make an informed decision on whether or not these investments fit into their retirement investment goals.

CMI Gold & Silver is a decent company, but we do not recommend them.  They are not the best option for gold purchases and definitely not the best for investors that want to protect their assets with a precious metals IRA, there are much better options we recommend.

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