Is it unethical for a coin shop to pay 80% of melt for scrap gold?
MrEureka
Posts: 24,194 ✭✭✭✭✭
After all, it's instantly salable at 98-99% of melt to a refiner.
Andy Lustig
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
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Comments
I say it's fair. Perhaps it's a bit low if they could instantly turn it for a profit of 18-19% of the melt value, but since I don't think that's the case, and since that percentage isn't even unheard of, I think it's fine.
San Diego, CA
U.S., I dunno.
1/2 Cents
U.S. Revenue Stamps
<< <i>NO Shop owner pays the assay fees, shipping and takes the risk that it may be stolen.. I think 80% in generous. >>
The local shop I used to work for pays 70% of melt, and there is nobody local who even comes close to paying as much as he does. The law requires us to hold the stuff 10 days before we can resell, so we are left exposed to the fluctuations in metal prices over that time period. Not to mention the overhead, etc of the business.
-Paul
<< <i>Not uncommon at all, at least for foreign gold/silver. Most places will only pay 80-85% of Spot for non-U.S. bullion.
U.S., I dunno. >>
The question was concerning scrap gold and not gold bullion.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
The coin store I go to pays like 70% and has quite a bit of people sell to them.
Many members on this forum that now it cannot fit in my signature. Please ask for entire list.
<< <i>How much does it cost to ship it to the refiner? How much do they need to have before they can even send it to the refiner? In the time it takes to reach that amount, how much might gold go down?
I say it's fair. Perhaps it's a bit low if they could instantly turn it for a profit of 18-19% of the melt value, but since I don't think that's the case, and since that percentage isn't even unheard of, I think it's fine. >>
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
So sell futures to protect yourselves, standard practice when dealing with commodities.
(Just think of city streets clogged with a hundred thousand horses each generating 15 lbs of manure every day...)
"so we are left exposed to the fluctuations in metal prices over that time period."
So sell futures to protect yourselves, standard practice when dealing with commodities.
And if you choose not to hedge, you're just as likely to benefit as to lose from the market fluctuations.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Jon - I don't deal in scrap, but that doesn't mean I wouldn't. To answer your question, 50-97%, depending on the deal.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Banks pay 1% on money and loan it at 20% and then want trillions to balance their
books. Lobbying is one of the fastest growing businesses in the country.
They add chemicals to our food for the sole purpose of making it absorb more water.
Fish now has far more in common with a wet sponge than with something that once
swam in the water.
It's everyone's job to get it while they can.
What do the TV hucksters pay for gold? 50%? They're allowed to claim they pay the
highest price but then bait and switch and false advertising are par for the course now
days. Stores are even allowed to put something on sale and only sell one or two items.
People get killed trampling down the doors but anything that makes sales is OK.
<< <i>There's no such thing as ethics any longer. Government doesn't recognize the concept.
Banks pay 1% on money and loan it at 20% and then want trillions to balance their
books. Lobbying is one of the fastest growing businesses in the country.
They add chemicals to our food for the sole purpose of making it absorb more water.
Fish now has far more in common with a wet sponge than with something that once
swam in the water.
It's everyone's job to get it while they can.
What do the TV hucksters pay for gold? 50%? They're allowed to claim they pay the
highest price but then bait and switch and false advertising are par for the course now
days. Stores are even allowed to put something on sale and only sell one or two items.
People get killed trampling down the doors but anything that makes sales is OK. >>
I don't see an ethics question here.
I quickly found myself driving from South Jersey, to Basking Ridge NJ, over to Brooklyn, back down to South Jersey ( Tom's River ), and did that sometimes TWICE in a day. Several "we buy it all " places scrapped out to me. At one point I had everybody from the Mafia to local jewelers trying to shove money into my hands just for a piece of the action.
Oh those were the days my friend, we thought they'd never end,
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Camelot
<< <i>After all, it's instantly salable at 98-99% of melt to a refiner. >>
Not true. We have a 30 day holding period here.
How much did metals drop in the 30 days after the January, 1980 peak?
Also, we do not ship everything the first day the 30-day period is up. We have to accumulate a large enough group to justify the assay fees. So, we probably hold most stuff an average of 40-45 days before we can lock in a spot with the refiner.
TD
The London close for Feb. 18, 1980 was $665.
What's that? About a 22% drop within the 30-day holding period?
TD
80% sounds fair.
HE>I
<< <i>How much does it cost to ship it to the refiner? How much do they need to have before they can even send it to the refiner? In the time it takes to reach that amount, how much might gold go down? >>
Not sure why the seller shud take a hit because a buyer can't get his act together.
<< <i>
<< <i>How much does it cost to ship it to the refiner? How much do they need to have before they can even send it to the refiner? In the time it takes to reach that amount, how much might gold go down? >>
Not sure why the seller shud take a hit because a buyer can't get his act together. >>
The seller is welcome to look in the yellow pages under "REFINERIES" and inquire about assay fees and minimum quantities.
Knock yourself out!
<< <i>There's no such thing as ethics any longer. Government doesn't recognize the concept.
Banks pay 1% on money and loan it at 20% and then want trillions to balance their
books. Lobbying is one of the fastest growing businesses in the country.
They add chemicals to our food for the sole purpose of making it absorb more water.
Fish now has far more in common with a wet sponge than with something that once
swam in the water. >>
I don't think the government or banks chemically alter our food.
It's not he governments job to set an ethical price to buy scrap gold. A coin shop should be able to buy scrap at what ever prices they want. And the customer should be able to accept or reject that price.
Cash4Gold, or whatever its called seem to give about 20% so 80 is a lot better. What is the risk for gold going negative down (ie, rises!). I don't buy that the companies need protection for the downside unless they are giving coverage for the rises too.
Well, just Love coins, period.
<< <i>I believe that these shops should be required to post a sign or advertisement stating what percentage of spot they pay based on 24kt, 14kt, 10kt gold, .999 purity, .925 sterling and .900 coin silver. Also current spot prices (from the day before) should also be posted. >>
If you want that info, all you generally have to do is ask. How hard is that?
<< <i>I believe that these shops should be required to post a sign or advertisement stating what percentage of spot they pay based on 24kt, 14kt, 10kt gold, .999 purity, .925 sterling and .900 coin silver. Also current spot prices (from the day before) should also be posted. >>
To get the number of the refiner nearest you, dial 555-1212.
Operators are standing by.
I think 80% is extremely fair for scrap gold and silver.
What I want to know is how I can get some of that Saudi gasoline for 30 cents a gallon? cut out the local gas station. LOL
I can't believe what they charge for lobster? (I mean it's free all you gotta do is catch it).
Time for my meds.
Most consistent scrap buyers have probably made a killing thus far and add to their gains weekly. One day isn't going to put them out of business.
From the posts above I get the feeling that many think that scrap sales should pay the shop overhead. And in another post paying 50% on US coins will be justified since "all" of that pays for the overhead. And so on. Hey, at some point the overhead gets paid. At one of the busier local shops the yearly overhead is more than paid just on scrap dealings alone. And they pay more than 80%. Fwiw some local vest pocket dealers pays 90-94% for clean scrap (sell for 98%) and get a lot of business the local shops can't/won't compete with. Diamondman, if you're willing to ship overnight express anyone can get 94% too. And if the stuff is mismarked or screwed with you'll only end up with 94% of what it was really worth to begin with. So the 10K vs. 18K thing holds no water. Pros buying scrap know excactly what they have and can subsist on a "meager" 4% profit margin when they are doing large volume such as MrEarlygold aludes to.
A very prominent CT jewelry store that advertises across the state offered to pay $700 each for 1 0z AGE's when 10 of them walked into their store last week. The elderly owner was saavy enough to walk out and sell them for closer to spot value. Now that's a lot closer to unethical than the spot example offered. However, I would use a word much different than unethical. That's like paying out 63c in change for every dollar bill received.
roadrunner
There is a 30-day holding period in my state and in many others. Due to the time risk of of having to hold the material, as well as accumulating enough to make minimums for the refiner, most dealers in my area that are fair and handle scrap gold are around 70%. The TV mailers and 3-day traveling road shows that blow in and out with the wind are well below that in the 30-40% range.
Considering the associated risks, including stolen items which may have to be turned over (also another reason for holding periods cited in those states that have them) 70% seems to be a pretty fair number, especially when you take a look at some of the low ballers out there.
Website-Americana Rare Coin Inc
<< <i>
<< <i>I believe that these shops should be required to post a sign or advertisement stating what percentage of spot they pay based on 24kt, 14kt, 10kt gold, .999 purity, .925 sterling and .900 coin silver. Also current spot prices (from the day before) should also be posted. >>
To get the number of the refiner nearest you, dial 555-1212.
Operators are standing by. >>
I think you need an area code there.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
<< <i>
<< <i>
<< <i>How much does it cost to ship it to the refiner? How much do they need to have before they can even send it to the refiner? In the time it takes to reach that amount, how much might gold go down? >>
Not sure why the seller shud take a hit because a buyer can't get his act together. >>
The seller is welcome to look in the yellow pages under "REFINERIES" and inquire about assay fees and minimum quantities.
Knock yourself out!
Well you never know if the buyer is blowin smoke up yer butt or not. If it is a valid biz cost, I'd have no issue with it. Then again, one is free to shop around. If the law said I had to hold it for 30 days, I don't think I'd be in the business.
Manufacturing facilities like to have a 4X mark up to account for everything plus a profit. That's not to say that I am suggesting paying 25% of spot for gold.
<< <i>After all, it's instantly salable at 98-99% of melt to a refiner. >>
"Instantly" after a 30 day waiting period...and the after police go through and pick out
nice pieces which "appear to match reported stolen items" which they take without
payment and you never hear back about it again...
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
Almost only bad things can happen to eat into that 18% spread
The coin shop IS the middleman/broker in this scenerio and is providing a service
A resourseful person could find a refiner, ship it, hope for the best and wait for a check
Up to them on what's more important
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>
<< <i>
<< <i>
<< <i>How much does it cost to ship it to the refiner? How much do they need to have before they can even send it to the refiner? In the time it takes to reach that amount, how much might gold go down? >>
Not sure why the seller shud take a hit because a buyer can't get his act together. >>
The seller is welcome to look in the yellow pages under "REFINERIES" and inquire about assay fees and minimum quantities.
Knock yourself out!
Well you never know if the buyer is blowin smoke up yer butt or not. If it is a valid biz cost, I'd have no issue with it. Then again, one is free to shop around. If the law said I had to hold it for 30 days, I don't think I'd be in the business. >>
It's law in Washington. I heard a talk from a dealer a few weeks ago who discussed gold buying. Everything they get has to be held 30 days, and I think they need something like 100oz or more to be able to send it to a refinery. It's not the buyer not getting his act together, but in fact a legit concern. If they don't get the minimum, they can't sell. If it hasn't been 30 days on all parts of the 100oz, they can't sell. And if in whatever time period it actually is for the gold to be shipped out, the price goes down, there's nothing the buyer can do about it.
HE>I
Jon - I don't deal in scrap, but that doesn't mean I wouldn't. To answer your question, 50-97%, depending on the deal.
Andy, you didnt have to answer me.... I was just teasing you with that question!
Jon
But I think you are all off base..... lets look at some other Mark ups!
If you make coffee at home, it costs between 25 and 50 cents a cup, depending on the quality of your beans. That same cup will cost you well over $3 at Starbucks
The biggest retail markups in the produce aisle belong to those bags of pre-cut fruits and vegetables. When you buy a bag of pre-cut apple slices, you're paying about 75 cents more per apple for the luxury of not having to pick up a knife!
One of the biggest beverage markup of them all belongs to wine in restaurants. The average retail markup on a bottle of wine in a restaurant is 300 percent
Jeans are prime targets for markups, whether they're cheap or expensive. For example, $21.99 pair of jeans from Kohl's still has a 112 percent markup from wholesale, while a $300 pair of designer jeans from True Religion can boast a markup as steep as 300 percent over cost
Popcorn is brisk business. If you set up a popcorn cart in a well-trafficked neighborhood park, you can mark up your salty treat as much as 500 percent a bag. At the movie theater, people grumblingly pay popcorn premiums of 1,300 percent!
Food For Thought!!!
So, a coin shop should just be a pass-through and make nothing?
I don't know much about market making- are MMs required to pay a certain percentage of "melt" (is "melt" the same as "spot" ?)
Unethical would be telling your investors you only make 10% when infact you are making 20%.
Let's look a little closer to home. Very roughly...
Slabbed coins typically retail at about 20% over the wholesale market cost.
Bullion retails at about 5% over the wholesale market cost.
And if you think those spreads are unusually low, consider that equities can usually be purchased by a retail buyer at a fraction of a percent more than the highest bid in the market.
Where should scrap gold fit into the continuum? If I knew, I wouldn't have asked the question in the OP.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
<< <i>Ethics are for those that wish to finish in last place. >>
I would disagree.
<< <i>How many locals require a 30 day holding period for scrap gold? Not many I imagine. >>
In Ca. we have pawn broker laws, but they do not apply to coins or bullion (there are no serial numbers on coins, so they can't be worked with in a stolen property data base)