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eBay selling 2011 gold eagle below APMEX's buy price?
revoldlog
Posts: 459
I was always wondering. How does he make money by selling gold eagle at below APMEX's buy price??
This seller sells rolls of gold eagle for years (sold several rolls in the last couple days), and all of them are pre-sell, usually ship in 45 days.
I really don't know how can he make money. I brought one from him before and it is real gold eagle.
Curious mind want to know!
Link to completed auction
This seller sells rolls of gold eagle for years (sold several rolls in the last couple days), and all of them are pre-sell, usually ship in 45 days.
I really don't know how can he make money. I brought one from him before and it is real gold eagle.
Curious mind want to know!
Link to completed auction
BST reference: wondercoin, cone10, fivecents, jmdm1194, goldman86
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CEA Section 2(c)(2)(D)
‘‘(D) RETAIL COMMODITY TRANSACTIONS.—
‘‘(i) APPLICABILITY.—Except as provided in clause (ii), this subparagraph shall apply to any agreement, contract, or transaction in any commodity that is—
‘‘(I) entered into with, or offered to (even if not entered into with), a person that is not an eligible contract participant or eligible commercial entity; and
‘‘(II) entered into, or offered (even if not entered into), on a leveraged or margined basis, or financed by the offeror, the counterparty, or a person acting in concert with the offeror or counterparty on a similar basis.
‘‘(ii) EXCEPTIONS.—This subparagraph shall not apply to—
‘‘(I) an agreement, contract, or transaction described in paragraph (1) or subparagraphs (A), (B), or (C), including any agreement, contract, or transaction specifically excluded from subparagraph (A), (B), or (C);
‘‘(II) any security;
‘‘(III) a contract of sale that—
‘‘(aa) results in actual delivery within 28 days or such other longer period as the Commission may determine by rule or regulation based upon the typical commercial practice in cash or spot markets for the commodity involved; or
‘‘(bb) creates an enforceable obligation to deliver between a seller and a buyer that have the ability to deliver and accept delivery, respectively, in connection with the line of business of the seller and buyer; or
‘‘(IV) an agreement, contract, or transaction that is listed on a national securities exchange registered under section 6(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78f(a)); or
‘‘(V) an identified banking product, as defined in section 402(b) of the Legal Certainty for Bank Products Act of 2000 (7 U.S.C.27(b)).
‘‘(iii) ENFORCEMENT.—Sections 4(a), 4(b), and 4b apply to any agreement, contract, or transaction described in clause (i), as if the agreement, contract, or transaction was a contract of sale of a commodity for future delivery.
‘‘(iv) ELIGIBLE COMMERCIAL ENTITY.—For purposes of this subparagraph, an agricultural producer, packer, or handler shall be considered to be an eligible commercial entity for any agreement, contract, or transaction for a commodity in connection with the line of business of the agricultural producer, packer, or handler.’’.
It's an easy bet. Like all bets, it can lose. And you got no recourse when the company folds.
It was easier back in those days as the interest on cash was running 15% or so and that helped cushion the risk ..... a bit.
Today, there is no cushion other than just keeping the money and disappearing.
<< <i>Why does no one seem to be assuming he is hedging w/futures or ETF's?
Mostly because to do so to hedge single coin sales would be a nightmare of bookkeeping. If he's pre-ordering from B&M dealers at a set price, he's in an area of very stupid coin shops.
Let's calculate this scenario:
Spot price at the time he list his BIN: $1,790
Buy-It-Now price : $1,820
Net proceeds after fees : $1,722 (assume 20% ebay discount and 1.9% paypal fee )
Assume his cost : $1,790 (Even the big APs have to pay spot + small % to buy from the Mint directly)
----------------------------------------------------------------------------------------------------------------------------------------
Net Profit/Loss : ($68) Net loss (not counted the extra cost for shipping)
In order to cover his loss and make a return, he need to use ebay proceed to generate a return within the presell period (say 2 months)
===> Required annual return = (68 * 12 /2)/1,722 ~ 23% (it is impossible to have such return consistently for the last few years)
derryb: What do you mean by: "He presells and as long as gold keeps its bull trend he is OK"?
I don't think he is running the same scheme topstuf mentions, as he would have been wiped out long time ago as taxmad suggests.
As taxmad suggests that he might be acting as a hedge for a B&M, but I think it is too good of a deal for him get ~$70+ below spot for GAE??
Will some kind of option play works??
Looking through his completed listings, he sold quite a few when we were hitting the $1900 level, so he will do well on those (I would fill those orders ASAP). We just haven't had enough good pullbacks in a 30 day period for the model to work (as we attempt to understand it). But like I said, I have bought from him several times over the years so he is doing something right!
maybe it is a situation like "Brewster's Millions" - just with a longer time-frame!
<< <i>Thanks for all the reply. Now I have some clues. However, I still cannot work out the math.
Let's calculate this scenario:
Spot price at the time he list his BIN: $1,790
Buy-It-Now price : $1,820
Net proceeds after fees : $1,722 (assume 20% ebay discount and 1.9% paypal fee )
Assume his cost : $1,790 (Even the big APs have to pay spot + small % to buy from the Mint directly)
----------------------------------------------------------------------------------------------------------------------------------------
Net Profit/Loss : ($68) Net loss (not counted the extra cost for shipping)
In order to cover his loss and make a return, he need to use ebay proceed to generate a return within the presell period (say 2 months)
===> Required annual return = (68 * 12 /2)/1,722 ~ 23% (it is impossible to have such return consistently for the last few years)
derryb: What do you mean by: "He presells and as long as gold keeps its bull trend he is OK"?
I don't think he is running the same scheme topstuf mentions, as he would have been wiped out long time ago as taxmad suggests.
As taxmad suggests that he might be acting as a hedge for a B&M, but I think it is too good of a deal for him get ~$70+ below spot for GAE??
Will some kind of option play works??
The money could be used as equity in a margin account to write out of the money naked calls against the GLD ETF. This way the trader is using your purchase of the coin as an interest free loan and can use the preimum from writing the call to cover any exposure he has to rising gold prices, while leveraging the returns from a downside move by waiting to purchase your coin until the option expires.
In a sense, the seller in this example is using the presale of the coin as an almost free way to write calls against the GLD. As it would require owning 100 shares of GLD (almost 18,000 dollars) to write covered calls against the GLD vs. the margin requirement for writing naked calls, which at etrade is 2000 dollars in your account.
I'm not saying that is what this seller is doing, or that this is the only option strategy that would work. Just something I thought up after reading this thread yesterday.
>>
The money could be used as equity in a margin account to write out of the money naked calls against the GLD ETF. This way the trader is using your purchase of the coin as an interest free loan and can use the preimum from writing the call to cover any exposure he has to rising gold prices, while leveraging the returns from a downside move by waiting to purchase your coin until the option expires.
In a sense, the seller in this example is using the presale of the coin as an almost free way to write calls against the GLD. As it would require owning 100 shares of GLD (almost 18,000 dollars) to write covered calls against the GLD vs. the margin requirement for writing naked calls, which at etrade is 2000 dollars in your account.
I'm not saying that is what this seller is doing, or that this is the only option strategy that would work. Just something I thought up after reading this thread yesterday. >>
I don't think he could be using current month options, time decay would kill him unless his is "in the money".
This is good question for Wingrule and RedTiger.
In God We Trust.... all others pay in Gold and Silver!
The seller defaulted and ripped off many many buyers.
Just filed a claim with ebay. Lesson Learnt: When it sounds too good to be true......
<< <i>Because he buys at today's price and sells at next month's price. I've bought from him, slow delivery as promised, but he delivered. He presells and as long as gold keeps its bull trend he is OK. Personally I think he is playing with fire and will eventually get caught with his pants down, most presellers do. Depending on interpretation of Section 742(a) of the recently enacted Dodd-Frank Act he could be in trouble with the feds by not making physical delivery within 28 days. Also ebay rules require delivery within 30 days of sale. >>
Like I said, he is playing with fire and will eventually get caught with his pants down, most presellers do.
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Why hasn't eBay NARU's this thief?
<< <i>If it's to good to be true....
Why hasn't eBay NARU's this thief? >>
Probably waiting to resolve claims. I see he no longer has listings, most likely ebay is preventing him from selling.
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>
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so guy buys early and sells later.
if he was selling at $1800++ then he bought under $1800. I don't see why he coudn't deliver on the $1800++ sales prices.
what is the popular theory behind the assumption he bought in advance, but that he could not deliver 30-45 days out?
Also, he had all these people's money, why couldn't he just purchase later (sub-$1800 again) and continue the "pre-sell wait" ???
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Did you ever get resolution on this issue? Did ebay step up or step out?
<< <i>revoldlog:
Did you ever get resolution on this issue? Did ebay step up or step out? >>
I purchased a total of 10 coins from 6 transactions.
I filed 3 dispute on ebay and 3 on paypal. All my money are refunded without any problem.
I can now pay less to buy the coins back from Apmex
<< <i>I am glad this worked out for you. Hopefuly they got the money from the seller, not the shareholders / insurance company. >>
They will get it from the remaining sellers.
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