Flea market test on silver liquidity

tydye

We have quite a few flea markets near us that my wife and I frequent often. One recent morning my wife and I decide to head over to look for some bargains. Short on cash I decide to bring about 20 pieces of silver (999 1 oz bars) to sell to the resident coin dealer. Well he was on vacation. Well out of curiousity I decide to see if I could do some bartering with the silver. Mind you this is a flea/farmers market. I tried to purchase 5 different items with the silver including a $250 art deco light fixture. No takers. I was offering the silver at spot (and not discounting their merchandise). Most of the vendors knew me but just were not interested in the silver they wanted cash. None were coin dealers but one did have some coins at his booth

roadrunner

This is interesting as silver is the next step to cash after FRN's and checks. I would imagine that the majority of those fleabaggers don't realize how liquid silver bars and coins are though it can be a pain to wrap it up and ship out for the best price. The art Deco light fixture might have been pushing it. For one it might be hard to convince them the fixture is indeed silver plus it's a lot less liquid and understandable than bars/coins. Even someone peddling 100 oz bars might have a plugged specimen. So I guess I'm not too surprised at your results. The same test conducted most anywhere other than coin and pawn shops would probably get similar results.

This is another bullet point that the general public is still quite unaware of precious metals other than they do exist and have a price associated with them. To them fiat is a far safer place to be.

Edit: oops, my mistake on the silver art deco item. I just naturally assumed it was something one would be trying to sell.

roadrunner

tydye

Clarification - I was trying to purchase the art deco light fixture with the silver bars. It was the only item I tried to buy over $50

tydye

Also I did mention to a few of the vendors that the local coin guy would more than likely purchase the silver once he was back if they wanted to convert the silver to cash.

I agree on the 100oz bars. 1-10 oz are my favorite size

I have purchased coins with silver and gold from many coin dealers with no problems.

fc

i think your results are quite normal and i found your post very interesting. thanks for sharing it.

MoneyLA

I also think that the reaction of the vendors is a normal reaction. Silver bars or silver coins (above face value) are going to be a hard "sell" as far as currency goes.

You and I know the value of the metal, but the public sees a once ounce round as a novelty item and have no idea its value; and silver coins like quarters and half dollars are face value only.

I would have been curious to find out their reaction to Morgan and Peace dollars, which I think the public understands has a value above face.

the "coin of the realm" is not silver and gold bullion... not by a longshot.

Weiss

Not surprising. If you'd tried to barter apples, ammo, or crates of toilet paper, the result probably would have been the same.

They weren't looking for barter. They were there specifically for cash.

I suspect if the coin dealer had been there, he would have given you cash and you could have made your transactions.

But nobody would have bought your apples, ammo, or TP.

cohodk

There is no emergency. Greenbacks are perfectly acceptable. If they antique dealer wants to buy something then he has to convert the silver into greenbacks. Why would he want to jump through hoops to do so. Personally I would have accepted the silver in trade, but at a 50% discount to spot to account for my inconvience in having to convert and the risk to hold.

mkman123

tydye, try the same with gold and report back. I'm guessing they will refuse the gold and want cash.

roadrunner

Personally I would have accepted the silver in trade, but at a 50% discount to spot to account for my inconvience in having to convert and the risk to hold.

I hope you're not serious. This would put you right up there with the $Cash4Gold schemers and most Pawn shops that pay whatever they feel like after sizing up the potential "mark." If silver has the risk potential to drop 50% overnight then certainly so does the greenback. Why shouldn't every vendor and retailer on the country ask for 2X the posted value when taking cash since it could fall in value so quickly?

Try the same game with US Savings Bonds, stock certificates, TBond, Yen, pounds sterling, Swiss Francs, Pesos, Euros, old US bank notes-silver and gold certificates ($500 bills), etc. No one or most would not touch them with a 10 ft. pole. You'd probably have better luck with US gold and silver coins (ie real money like Saints, Morgans and Walkers). It's sad to say but most sheeple don't know real money when they see it.

roadrunner

jmski52

There is no emergency. Greenbacks are perfectly acceptable. If they antique dealer wants to buy something then he has to convert the silver into greenbacks. Why would he want to jump through hoops to do so.

I agree. This is still the case. The public has no real incentive to want silver at this point. The only emergency is in government.

tydye

My thinking was that I would be able to barter some away as it is more liquid than say an art deco lamp. Also 2 of the vendors offered to give me credit and pay them next week rather than take the silver. (At this point my wife just went to the mac machine and got cash)

cohodk

<< <i>Personally I would have accepted the silver in trade, but at a 50% discount to spot to account for my inconvience in having to convert and the risk to hold.

I hope you're not serious. This would put you right up there with the $Cash4Gold schemers and most Pawn shops that pay whatever they feel like after sizing up the potential "mark." If silver has the risk potential to drop 50% overnight then certainly so does the greenback. Why shouldn't every vendor and retailer on the country ask for 2X the posted value when taking cash since it could fall in value so quickly?

roadrunner >>



I am 100% serious. If you want my lamp and want to dictate the form of currency then I will set the exchange rate. I am only a "schemer" if you decide to accept my rate. In a SHTF scenerio, you had better darn well expect the same.


My thinking was that I would be able to barter some away as it is more liquid than say an art deco lamp

Your thinking is right on target, but in a SHTF scenerio, the bulb inside that lamp will be worth infinately more than the lamp itself.

roadrunner

I didn't realize that a weekend flea market was a SHTF scenario that necessitated usurious exchange rates that would make bankers and credit card companies blush. Though I've been to a number of automotive swap meets over the years and have seen fights nearly break out over "who saw what merchandise" first. Those flea markets & swap meets can become a fierce battle zone.

In a true SHTF scenario your electric company would either be shutdown or charging you 10X the rate they did before (assuming you paid with gold/silver/barter up front). That light bulb won't be worth much. Better to have candles/matches, oil and gas lamps, rechargeable solar batteries/flashlights, etc. The lamp fixture as silver would certainly come in handy - whether as a PM or for tossing it at the first intruder that tries to break into your home.

roadrunner

fc

well it would take a person accepting 100 dollars in silver.. probably an hour or two to convert
it to cash... and if you figure their time is worth 20 bucks or so an hour (just throwing it out there)...
one has to ask for an exchange rate below spot to make it worth it to the seller.

Otherwise.. let the buyer convert it and bring cash... placing the burden on the seller with no benefit
seems silly?

jmski52

In a SHTF scenario, you will have a difficult time distinguishing the charlatans from the honest brokers. The charlatans will want to rip you, and the honest brokers won't really want to take a chance without good information. Kinda like real life.

cohodk

<< <i>I didn't realize that a weekend flea market was a SHTF scenario that necessitated usurious exchange rates that would make bankers and credit card companies blush.

roadrunner >>



If you want to dictate the terms of payment, then I will set the payment schedule. If YOU want something I have, then be prepared to pay the price I set. If you are not happy with my price then you are free to look elsewhere. This is exactly what happens in our world today and thats how business is transacted.

My scenerio is strictly business, dont take it personally.



Better to have candles/matches, oil and gas lamps

Probably right. So if I have the candles and matches, how much should I charge you? 1oz of silver, 10 oz, 100oz? I can guarantee you it wont be some "market" rate. Because when I take your silver and need to buy firewood, how much is that guy gonna charge me?

roadrunner

well it would take a person accepting 100 dollars in silver.. probably an hour or two to convert it to cash... and if you figure their time is worth 20 bucks or so an hour (just throwing it out there)...
one has to ask for an exchange rate below spot to make it worth it to the seller.

A small % below spot seems fair, but 50%? (ie Nov 2008 levels). At that level it would just be good business to tell the people where to go with their silver to get top dollar and come back with cash. With a small down payment you'll hold the item for "X" number of days...or whatever arrangements you would be comfortable with. Better this than for a potential customer to find out down the road that you paid them squat for their silver. What's the difference if a coin dealer offers 50%? The difference is that they'll get ripped a new one on the Open Forum and be called crooks. I guess I just hold those knowledgeable in a specific field to a higher standard of ethics/business practice than the typical charlatons or know-nothings.

Business conducted between experts (like coin dealers) and the general public who know nothing of what they have is not business imo. That's just opportunism. And certainly the vast majority of our public knows very little about PM's. So each of us with our own set of ethics and morals deals with it differently. We've seen some shining examples on the Open Forum where our members refused to take advantage of someone and showed them a better place to go with their coins. And then we've seen those who were happy to try and buy them at 10c on the dollar. When I start to see enough silver transactions occuring at 50% of spot then I might see your point of view.

To Bernard Madoff, Alan Stanford, Charles Ponzi, Bernie Ebbers, Kenneth Lay and others, it was just business......nothing personal.

roadrunner

cohodk

At that level it would just be good business to tell the people where to go with their silver to get top dollar and come back with cash. With a small down payment you'll hold the item for "X" number of days...or whatever arrangements you would be comfortable with

A good business owner may very well tell the buyer "where to go". He is not running a bank. After "X" number of days the buyer comes back and says he no longer wants the item. He wants his deposit back. You gonna give it alll back to him? If not, then you just discounted his "money". No difference. If you gave it all back to him then you probably wont be in business long.


Business conducted between experts (like coin dealers) and the general public who know nothing of what they have is not business imo. That's just opportunism

How does the OP know that $250 lamp is really only worth $125. If he accepts $250 "worth" of silver, did he not just discount silver 50%?

Norseman88

<< <i>There is no emergency. Greenbacks are perfectly acceptable. If they antique dealer wants to buy something then he has to convert the silver into greenbacks. Why would he want to jump through hoops to do so. Personally I would have accepted the silver in trade, but at a 50% discount to spot to account for my inconvience in having to convert and the risk to hold. >>



I'll do everyone here a favor and offer to barter your Silver at only a 40% discount to melt.

COINB0Y

To me, the test was flawed due to the Silver Bars being offered.

Just as cohodk said, it's "the inconvience in having to convert and the risk to hold"


Do the same test only this time use 1 oz. $1 American Silver Eagles

tydye

I think it would of been less of an inconvenience for the buyers especially the seller of the rather large art deco light for them accept the silver in exchange. I am quite sure that margins on antiques and flea market junk are wide. The seller of the art deco light is still probably lugging it around. I did not try to negotiate down any of the prices. On the light had I had cash 200 or even less would of been my offer. Silver is easily converted to cash - art deco lights not
Anyway it was a fun experiment. I may repeat it this spring. Perhaps Morgans this time

COINB0Y

Morgans! Great idea, now that would be fun!

calleocho

I have a feeling that your results would have been the same if you had tried bartering with japanese yens or even euros.

If things get really bad you would be surpised how quickly people will adapt, regardless of country, people will easily determine the value of most things through the barter system including gold and silver but also liquor, cigarettes, deodorant etc....the one thing nobody will want is currency.

dontippet

<< <i>To me, the test was flawed due to the Silver Bars being offered.

Just as cohodk said, it's "the inconvience in having to convert and the risk to hold"


Do the same test only this time use 1 oz. $1 American Silver Eagles >>



Most people don't have a clue about silver, it's value, or even that it is closely related to a certain price and is as good as cash. It'd be like somebody offering you pesos without you having a clue as to its conversion factor, if it's even legit, or how to convert it to cash.

gsa1fan

I frequent flea markets often. I find most vendors in my neck of the woods to be pretty smart on PM price's.

I'd be careful trying to barter with ASE's they do have ONE DOLLAR on reverse.

You might have a hard time explaining that your ONE DOLLAR coin is worth $2 over spot silver.

mkman123

I think it depends on the person your trying to barter with.

At the flea market I'm at, there are guys that will trade you for your silver bars. Then of course there are those that don't have a clue about PMs and only want cash.

Heck if that lamp was mine, I'd take your silver!

Baley

interesting discussion on the philosophy of barter under various scenarios...

I agree with those not surprised that the silver was spurned, as no doubt almost always anything except cash will be, for the reasons mentioned, liquidity.

I'm reminded of the pawn shop scene in "Trading Places" where Dan Akroyd is selling a fancy watch that has all these functions and retails for high 4 figures, and the pawnbroker says, "well, in Philadelphia, it's worth fifty bucks" and Dan says, "just give me the money", followed by, "how much for the gun?"

try to trade goods instead of pay cash money (or paper or plastic equivalents), prior to TS hitting TF, and folks will look at you like your're nuts unless they make a market in the specific good or have a fast buyer already lined up (unlikely)