Local B&M Refuses to Sell Silver!

Planchet

I shop at two local B&M shops. During the run up in the price of AU & AG, both have provided reasonable prices for in stock delivery. Today with silver at about $15.20 I was told by the owner of one of the shops that he has lots of silver but is not selling. He said that if he sold any, he would take a loss and he is not going to do so. Further, he plans to keep and hold anything he buys.

The owner of the second shop normally sells 90% silver at a multiple that places it slightly over spot and buys about 50 cents behind spot. Today he had a much larger premium, asking 12x face which comes out to $16.85 an ounce when spot was $15.20 or a premium over spot of 11%. For J&M 10 oz. bars he asked $1.75 per oz over spot or a premium of almost 12% over spot. He said he buys bars at $1 an oz. back of spot.

Why have two local B&M stores that have been very reasonable when metals were on the way up, suddenly become less than reasonable when the price drops? Is this common?

bstat1020

I stopped at my shop this afternoon and they are selling! He said that he is selling SAE at $22.00 because he bought them at a higher price several weeks ago. That makes more sense than just flat out refusing to sell.

I stacked on a 10oz Englehard Eagle bar for $165.00

Bstat

gecko109

<< <i>I stopped at my shop this afternoon and they are selling! He said that he is selling SAE at $22.00 because he bought them at a higher price several weeks ago. That makes more sense than just flat out refusing to sell.

I stacked on a 10oz Englehard Eagle bar for $165.00

Bstat >>





The problem is that if silver has a big run up in a week, you will NEVER hear them say "well, I bought this last week at $15, and now silver is $22, so you can have it at $18." I am NOT in the business of covering other people's financial poor timing.

RedTiger

This is very common. Price spreads widen when prices are moving quickly. Price premiums on completed auction transactions were often $5 an ounce for bars when silver dipped below $10 in fall 2008. No one, collector or dealer, likes to dump at a immediate loss. If the person can average down their cost with new purchases, they are often more willing to budge. If prices keep falling they might be more motivated, again, especially if they can get their average cost down.

Think of it this way, if prices are moving 10% a week, what kind of business can continue to make money if they only make a 10% or 12% profit (before any expenses)? Sooner rather than later their luck will run out and they will be holding the bag and not have banked enough profits.

Norseman88

The major bullion dealer I buy from locally hedges Gold, Silver and the PGM's on a daily basis. I would imagine other dealers could do the same thing unless they are to lazy to do this or simply old fashioned about the way they run their business.

jdimmick

I had a call today looking for gold and silver , stated didnt have any. Actually do, but placed it back in the safe. Not selling at a loss.

If i have any come in at todays level however, I would offer it at the new lower price

jim

AgBlox

I've been told that once at a BM when silver was around $9. The other shop just adds a $7 premium onto their prices.

OPA

<< <i>I had a call today looking for gold and silver , stated didnt have any. Actually do, but placed it back in the safe. Not selling at a loss.

If i have any come in at todays level however, I would offer it at the new lower price

jim >>



And that's why you are still in business, unlike the thousands of mom & pop coin shops that have gone under over the last 20 years.

keepdachange

<< <i>I had a call today looking for gold and silver , stated didnt have any. Actually do, but placed it back in the safe. Not selling at a loss.

If i have any come in at todays level however, I would offer it at the new lower price

jim >>



Dammit, I knew you were lying Jim

bstat1020

<< <i>

<< <i>I stopped at my shop this afternoon and they are selling! He said that he is selling SAE at $22.00 because he bought them at a higher price several weeks ago. That makes more sense than just flat out refusing to sell.

I stacked on a 10oz Englehard Eagle bar for $165.00

Bstat >>





The problem is that if silver has a big run up in a week, you will NEVER hear them say "well, I bought this last week at $15, and now silver is $22, so you can have it at $18." I am NOT in the business of covering other people's financial poor timing. >>



Me either, that is why I did not buy them and went for the 10ozer as stated.

ttown

Okay, you wouldn't buy mine either. Just like the last time it fell below 9 you couldn't touch the stuff for much under 12. Paper silver doesn't equal physical silver and never will.

gecko109

<< <i>

<< <i>I had a call today looking for gold and silver , stated didnt have any. Actually do, but placed it back in the safe. Not selling at a loss.

If i have any come in at todays level however, I would offer it at the new lower price

jim >>



And that's why you are still in business, unlike the thousands of mom & pop coin shops that have gone under over the last 20 years. >>





Apmex has actually LOWERED premiums on some of their silver within the past 48 hours. Gee, I wonder how they stay in business?

PerryHall

<< <i>Apmex has actually LOWERED premiums on some of their silver within the past 48 hours. Gee, I wonder how they stay in business? >>



They may lose money on every ASE that they sell but they make up for it by selling in volume.

HalfStrike

I would be very surprised if Apmex was not hedging all of the silver and gold they buy, this is why it makes little sense to pull items when prices fluctuate down.

ttown

From what I've seen with them is the off brand stuff they sell cheap since the market isn't there but you get the high reguarded stuff and they really aren't market leader but are right there if you don't live in Oklahoma as I do and must pay tax.

jmski52

I had a call today looking for gold and silver , stated didnt have any. Actually do, but placed it back in the safe. Not selling at a loss.

If i have any come in at todays level however, I would offer it at the new lower price

jim

Differentiating silver on the basis of cost does seem illogical to me, except from an accounting standpoint. Each ounce is worth the same as the next, whether it is bought high or low, isn't it?

OPA

<< <i>

<< <i>

<< <i>I had a call today looking for gold and silver , stated didnt have any. Actually do, but placed it back in the safe. Not selling at a loss.

If i have any come in at todays level however, I would offer it at the new lower price

jim >>



And that's why you are still in business, unlike the thousands of mom & pop coin shops that have gone under over the last 20 years. >>





Apmex has actually LOWERED premiums on some of their silver within the past 48 hours. Gee, I wonder how they stay in business? >>



Yeah, it's the stuff that's not moving & has been sitting on their shelves for a long time. In the long run APMEX is not going to take a loss on anything that they offer for sale. Hope this unconfuses you.

Norseman88

<< <i>

<< <i>

<< <i>I stopped at my shop this afternoon and they are selling! He said that he is selling SAE at $22.00 because he bought them at a higher price several weeks ago. That makes more sense than just flat out refusing to sell.

I stacked on a 10oz Englehard Eagle bar for $165.00

Bstat >>





The problem is that if silver has a big run up in a week, you will NEVER hear them say "well, I bought this last week at $15, and now silver is $22, so you can have it at $18." I am NOT in the business of covering other people's financial poor timing. >>



Me either, that is why I did not buy them and went for the 10ozer as stated. >>



There is no reason to purchase a Silver eagle for $22 when you can purchase Engelhard small size bars for $16.50 an oz.
You can usually buy generic stuff for close to spot but there are times when JM and Engelhard are priced way over spot like Eagles are so go with the cheap name brand stuff and you will do much better in the long run.

Norseman88

<< <i>I would be very surprised if Apmex was not hedging all of the silver and gold they buy, this is why it makes little sense to pull items when prices fluctuate down. >>



I am sure that APMEX hedges their Gold, Silver & PGM's as it would leave them in a precarious position to say the least if they left all of their bullion unhedged.

MrOrganic

<< <i>

<< <i>I would be very surprised if Apmex was not hedging all of the silver and gold they buy, this is why it makes little sense to pull items when prices fluctuate down. >>



I am sure that APMEX hedges their Gold, Silver & PGM's as it would leave them in a precarious position to say the least if they left all of their bullion unhedged. >>



In what way does APMEX "HEDGE"?

jdimmick

Back to my earlier comment, I had a guy come in saturday asking for silver, i explained to him that I infact did have 2 10 oz bars, but I was into them high due to the recent drop. I stated I normally sell them at spot plus .50 , but would just as soon holdem then a take a loss, I said Id sell em at 2.50 over spot "his quote exactly" i dont give a bleep how much they are, I just want to buy some" so I said okay.

cohodk

he would take a loss and he is not going to do so

The genius doesnt even realize he already has a loss.

I've seen more people go bankrupt by not taking losses than by taking them. Its really sad how this mentality has permeated through society.

Lets say the average B&M shop has 500k with which to buy silver. He buys at $18 thinking he can sell at $20. The price drops to $16 and he is now reluctant to sell. It further drops to $14 and he says no way am I gonna sell. Now it drops to $12 and one of his big customers wants out. He has 500k worth to sell. The B&M guy can no longer take advantage of this opportunity as he is illiquid. He turns away his customer--who is now gone forever. The price goes back to $16 and people come into his shop in droves to buy thinking the price will keep going. He doesnt sell any as he still owns at $18. He has now lost more customers.

Dont think this scenerio happens? Silver has dropped 25-35% each and every year.

jmski52

I've seen more people go bankrupt by not taking losses than by taking them. Its really sad how this mentality has permeated through society.

Winning at investing always involves a combination of money management, tax planning and opportunity cost. That's why no one can dispense reasonably good financial advice without knowing a client's "whole picture".

1) Money Management - don't get in deeper than you can afford so that you aren't forced to sell when you don't want to sell.

2) Tax Planning - sell an equal amount of stuff in which you show a gain as you sell stuff which has a loss - voila! No tax!

3) Opportunity Cost - if the next Bill Gates wants you to stick a few thou into his company, what are you doing buying bullion anyhow? Trouble is, you gotta be right.

If I need the money, hey - I'm selling, loss or not. Otherwise, I stack'em like an old-tyme savings account. It's pretty much a random walk, so why sweat it?

And if you only have gains when you liquidate, then you done good, son. You done good.

timcoin

Just bad business. Why not sell the silver, then take that money and buy some more. You know, hedge.... And, if the dealer is so sure it is going back up, then he should go long on silver. No wonder so many people are going to ETFs.