Dealers wary about buying gold at the Santa Clara show.

truthteller

I talked to several dealers today at the Santa Clara show who were hesitant about buying large quantities of bullion or US gold at the show. One very, very large dealer did not want to handle any US gold and was there strictly to buy numismatic material. Some dealers are discounting their purchases of smaller gold bullion pieces by as much as 7% under spot with the explanation that their wholesalers don't want anything smaller than one ounce coins at full premiums at current levels.

On another note, a local dealer at his shop turned away $35K of bullion k-rands because the liquidity from his purchase to payment from the wholesaler was just too long.

On still another note, the Santa Clara show may be on it's last legs. They are cutting out Thursday from the bourse schedule. The amount of empty prime tables were at least 10-15. The show was not busy and deals were to be had. There were even some very nicely colored minor US coinage for reasonable prices, some of which I snagged. Plan on going Friday since dealers are getting hungry and need to sell in order to eat.


TRUTH

ChrisRx

Nice report.

notwilight

This one report seems contradictory to most of the other reports out there. I wonder if you spoke to some dealers who are just weak buyers of gold and their excuse changes daily--this is just the one you got today. -Jerry

WTCG

I don't know where you found the sentiment that dealers were wary about buying gold at Santa Clara. Gold coins were by far the best sellers on Wednesday and Thursday. I had to compete aggressively just to find gold available to buy and when they were located the quantities available were mostly small. Remember that demand for gold is very fickle and subject to volatility, and buying moods often change with very short notice.

One large dealer didn't want to purchase any more gold halfway through Thursday because they had purchased over 4 million dollars worth of it back at the office. That same company did buy five figures worth of gold from me on Wednesday, though. Despite that company's decision there are still at least five other dealers who were present today who were aggressively buying generic gold at the current levels.

Saying you couldn't sell your gold today is like saying you couldn't start a fire if you were given a can of gasoline, firewood and a lighter. Provided you paid reasonable prices, opportunities to turn a profit were basically served to you on a silver platter.

Regarding the scheduling changes for the show, the changes are for the better and almost universally the dealers approve of the changes. The show will now run from Friday to Sunday for the public, with setup on Thursday afternoon. The show currently runs from Thursday through Saturday with setup beginning at 4pm on Wednesday.

I will agree that the number of visible empty tables is a problem that the show operators need to promptly deal with.

Dealers needing to sell low to eat? To the real dealers who know what they're doing that notion doesn't apply.

Type2

Maybe the Dealers are not selling gold any more ?

Unknown

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WTCG

<< <i>

<< <i>I don't know where you found the sentiment that dealers were wary about buying gold at Santa Clara. Gold coins were by far the best sellers on Wednesday and Thursday. I had to compete aggressively just to find gold available to buy and when they were located the quantities available were mostly small. Remember that demand for gold is very fickle and subject to volatility, and buying moods often change with very short notice.

One large dealer didn't want to purchase any more gold halfway through Thursday because they had purchased over 4 million dollars worth of it back at the office. That same company did buy five figures worth of gold from me on Wednesday, though. Despite that company's decision there are still at least five other dealers who were present today who were aggressively buying generic gold at the current levels.

Regarding the scheduling changes for the show, the changes are for the better and almost universally the dealers approve of the changes. The show will now run from Friday to Sunday for the public, with setup on Thursday afternoon. The show currently runs from Thursday through Saturday with setup beginning at 4pm on Wednesday. >>



I question your second paragraph, how would you know this to be true, it could be all talk. i need to have factual data to rely on and not what one dealer says to another, sorry but that is just how i think during these times. >>



Let's just say I trust that company because we have had a successful business relationship for nearly a decade and the person who is in charge of the gold division is trustworthy and credible. The buyer at their table is one of my favorite people in the business. If you wanted to purchase 4 million dollars worth of gold from them they would have it immediately available.

dogwood

Anecdotal evidence of nothing in particular, I waited for five minutes while a dealer finished a gold purchase of 11K so I could show him two dupe Barber Quarters of which he happily took possession for $260. It was a fun show. Lots of missing regular dealers though.

coasterfan

I was there looking for 2008-W gold buffalos to buy. There were none.

truthteller

The dealers I with whom I spoke were very specific. They would buy bullion, but at discounted levels or in trade for numismatic items. AT THIS SHOW today, they were hesitant about spending large sums of money on gold bullion. You could BUY all you wanted, there was plenty to go around. However, most dealers felt there was a correction on the price to be forthcoming and most did not want to get caught in a price swing.


As far as the US gold market, the two dealers I spoke to had filled their orders in Baltimore and did not want to pay premiums. They had enough. Of course, this could change at any time, and the premiums for MS64 and MS63 Saints could retreat.

When I see local shops turn away bullion business because the public is dumping gold, it presents a change from 6 months ago when you couldn't get any and the wait time was 2 weeks to fill an order. In addition, the buy and sell spreads are much closer now on AGE's and Maple Leafs. 6 months ago, the buy/sell spread was $100, now it's closer to $30.

Just relaying was was said to me by those doing the buying and selling.


TRUTH

291fifth

Very interesting report.

What does the shoeshine boy recommend?

MrEureka

On another note, a local dealer at his shop turned away $35K of bullion k-rands because the liquidity from his purchase to payment from the wholesaler was just too long.

BS! Certainly, any dealer can find someone to write an instant check for K-Rands. So I have to assume that this particular local dealer just made an excuse for passing on a deal he couldn't afford.

WTCG

<< <i>On another note, a local dealer at his shop turned away $35K of bullion k-rands because the liquidity from his purchase to payment from the wholesaler was just too long.

BS! Certainly, any dealer can find someone to write an instant check for K-Rands. So I have to assume that this particular local dealer just made an excuse for passing on a deal he couldn't afford. >>



I absolutely agree with Andy and I was thinking the same thing. Either the dealer invented the excuse to save face on a deal he couldn't afford or he didn't have the contacts to properly resell his potential purchase.

golfer72

Why would you sell gold now? To exchange it for clownbucks? You should be buying now.

jsf

I've been wary since it was at about $980. Boy, what a nimrod!

Loki

If they need to fill the empty dealer tables that badly they should just go around town, grab some unkempt homeless guys, give them a chair, a table, some cheap modern coins, and continously feed them sloppy burritos and tacos. They'll fit right in and voilà, problem solved!

keets

dealers will probably be more willing to trade in Gold over the weekend after the spot market closes this afternoon and they can "lock" both ends in, but this raises an intriguing line of thought.

as the price has gone up it has been getting more difficult to find Gold to buy while at the same time most are wary of getting stuck holding the bag if things change quickly. when the price was around $900 the markets seemed to operate much more smoothly on both ends of the equation. talk of price manipulation was often discounted then but the mood of many now, with the price and the attendant risk much higher, is one of a lack of confidence that what is happening with the price rise is genuine and not liable to a quick drop, ala Hunt Bro's. it puts many of the speculators in a difficult position because they've held for a certain price and now can have a hard time finding a buyer without having to lose some of their premium.

everyone is nervous.

i for one will be happy when things return to a much more normal state when money moves away from PM's and back into more of a Numismatic mindset. true, most of the PM money will move out of the hobby, but the end result is better times for pure collectors like myself.

ricko

Interesting... on some reports, dealers are buying all they can get (proof AGE's) at $14-1500/oz. Now a report of reluctance to buy... hmmmm.. based on the market, currency situation et al... I am tempted to go with Andy's conclusion. Cheers, RickO

BigRick

Guess the dealers that were hesitant don't believe in hedging in futures. Shame they lost opportunities due to fear borne out of ignorance.

I believe straight up hedges can be had in any increments of 10, 33.2 (i.e. Kilo), or 100 ounces (on major US exchanges) & even more options on foreign exchanges such as 10 ounces, 100 grams, etc. More complicated hedges could be constructed for amounts not in such increments. Seems like an account with Interactive Brokers would be in order.

While the weekend "lockin" might SEEM appealing, there is actually LESS risk (assuming you ARE hedging in futures) conducting business when futures exchanges are open.

(Over-)simplified scenario: buy 33 one ounce gold (& 2 tenth ounce) coins at a show for $1,100 average per ounce. Sell one e-mini 33.2 ounce front month future at $1,125 and lock in a profit of $25 per ounce REGARDLESS of where the price of gold goes. Where's the risk? Why not do it?

Employing this strategy when buying at 7% below spot and being able to sell the coins at 2% below spot would yield even higher profits (nearly double).

WTCG

It's Friday and most dealers are still buying gold.