Question regarding dealers
Bryan6736
Posts: 5 ✭
I am curious about a trend I have seen that does not make sense to me. I have contacted several dealers in NC to sell some gold coins and silver. All of them justify paying more or less because of the type of coin. My coins include some First Spouse .999 Gold, silver eagles, loose half dollars, some army gold commemorative coins, and a few America the Beautiful 5-ounce silver coins.
What I do not understand is why, if you are buying Gold or silver at bullion prices, the type of coin matters, provided the coins have the same purity. In my case, they are all American coins from the US Mint. Am I missing something here? Bullion is paid based on the weight and purity of the coin.
I guess what I am saying as an example is that if you pay $47 for an American Eagle "1oz", but then only offer $45 per ounce for the beautiful 5-ounce silver coin. They are buying bullion, not paying based on numismatic value, or so I thought. In which case, my First spouse graded coins, then they should be worth more than bullion. However, they are not as hot an item as the silver eagles.
I cannot help but think that it is a bs tactic to get things cheaper. Should I stay clear of dealers that try that tactic, or is that common and normal?
Comments
It matters because in some cases, certain coins can be wholesaled out for more or less. For example, BU Gold Eagles have a slight premium over spot at the current moment with some of the big wholesalers, whereas classic gold does not.
Silver Eagles have a premium over other products when it comes to buying and selling. The ATB 5-oz coins also have a premium. Other items from various mints do not have premiums.
Supply and demand rules. Some things are more popular with buyers than others.
I understand that, thank you for the posts. I guess in my mind, when they say bullion, they are sending it away to be melted. I did not think about them wanting to pay the bullion price, but I still consider the numismatic value for purchasing purposes.
Which, by the way, for the coins mentioned, I was offered across the board at a much lower price than spot. This is to be expected as the dealers have to make a living. But did not expect to be offered even less in exchange for an equal-quality coin.
Thanks for the education. I will keep things in perspective. Is there a good way to assess whether a dealer's offer is fair? In other words, a site that lists what a fair deal looks like from a dealer? Or maybe lists reputable dealers?
What you really have to remember about the current environment is that premiums are changing rapidly and certain products have huge premiums. If I have to go out and buy gold buffalos right now from a distributor they cost me $270 over spot. Where as a krugerand I can get for $15 over spot and far less on the sell side, only about 99%. Smaller dealers can't handle the volume of gold and have to protect themselves and buy far back of spot, the $250 dip the other day really brings this point home. My advice is always to buy the cheapest gold as premiums fluctuate and its very unlikely you'll ever get any premium back.
Russ Bega
COO
Harlan J Berk Ltd.
Even the melt price is not the same for fineness reasons, for example.
No one melts eagles, usually. They retail for over. $45 was probably the dealer melt price. $47 for the ASEs is probably because he's selling at $3 to $5 over.
All comments reflect the opinion of the author, even when irrefutably accurate.
Related: Why are any of these items being melted? Is it better to have a ten ounce bar than it is ten silver eagles?
Real question is what happens to Pre33 after all this melting. #stacking #curious
www.MyCoinWorX.com
Coin Inventory Software from Collector to Coin Shop
Comex 1000 ounce bars.
Institutions and end users of silver do not want coins.
All comments reflect the opinion of the author, even when irrefutably accurate.
That (sadly) makes sense.
Some pre 33 might be getting melted, but not as much as modern products. Dealer A buys way back of spot, sells to dealer B for a small profit, dealer B sells to dealer C for a small profit, this goes on until it is then sold to a retail customer at above spot. Then the cycle starts back over, rinse and repeat.
My Collection of Old Holders
Never a slave to one plastic brand will I ever be.
I don't know if it's sad or not. No matter what form they buy it in, they're going to melt it to make jewelry or put it in their evaporater, etc. It's an industrial metal.
Institutions could stack bags of coins, but they are less convenient than a single bar for large quantities. And COMEX doesn't want to be a coin exchange with dozens of different sovereign coins in stock.
All comments reflect the opinion of the author, even when irrefutably accurate.
Thanks to all for the information. I think I get it, but this certainly shows me how the game is stacked against the collectors selling. You buy bullion 2 dollars over spot monster box. You want to sell that monster box, but you're offered 7 dollars below spot due to volatility. Where was that volatility when I bought it? Then to add insult to injury, they want to pay less for 5-ounce American the beautiful coins because "there is no market for them," But, but, but you are buying all of these under spot at melt prices... So if you are paying melt prices, then the coin should not matter; the weight and purity should. Anyway, thanks to all for entertaining my question.
At least now I know that this is common practice.
You can't both buy and sell at melt. There has to be a margin.
Unless you bought it last week, the volatility now is much higher than at any time in maybe 15 years.
Physical silver has never been terribly efficient in coin form. They don't sell coin at melt to ANYONE. For efficiency, try 1000 ounce bars or futures contracts. With coin you MUST pay the Mint to coin it and the dealer to handle it
All comments reflect the opinion of the author, even when irrefutably accurate.
Wouldn’t all this confusion about markets, spreads, and the definition of bullion be better suited for the Precious Metals Forums?
30+ years coin shop experience (ret.) Coins, bullion, currency, scrap & interesting folks. Loved every minute!
jmlanzaf, I agree with you completely, great advice. Thank You!
Typekat, humm is all I can say about that. Posts evolve in unpredictable ways. So nice to have the benefit of hindsight to make such a recommendation.
Dealers are not a bank but a free enterprise sole business owner.
Their procurement can be based on dealer inventory needs, what they can sell it for, and what they think can get for a particular issue. In other instances Current Market Conditions, CDN bid, market demand for a particular issue comes into play.
Furthermore they are under the gun to move their inventory quickly to achieve a positive result after Opex. At shows they face fierce competition from other dealers plus the fixed show expenses. Not to mention their time, travel expense and the risks that go with travel.
Collectors don't have overhead, employees, health insurance premiums, and the need to make a living. So, if you look at it through that lens, of course it is stacked against them. But then try the shoe on the other foot and you'll see why there is a spread and margin.
One could argue if you hold long enough, you'll make a profit.........not sure how long that is, but if you are buying right now, it might be a while (crickets, crickets), or it might be next week (cha-ching!).
Surf
Ill chime in, Im in NC and will explain :
I have two places that I sell too when I cant sell otc. First is Pinehurst coins, and the second Heritage affiliate Both of these places are top knotch, and well respected, and treat me as well as any public individual I send to them fair IMO. Locally in shop anything 5 oz and over like bars, rounds, including ATB;s do not sell at all at this price point in shop. (ZERO) as silver approached 50. Only thing that sells for me currently is ASE, and some cases when I dont have any some will take 1 oz rounds if retail friendly, but many will not. As far first spouse gold, cant give em away, and that was when gold was 3k, much worse now, most places are way back on those , so in order to make even a percent & half or so, Im back farther. Lots of times instead of offering a lower price on stuff like that, I ll just pass or try to send them elsewhere. Not worth spending 20k to make 120 bucks IMO . If your end buyer is a refinery such as elemetal here in NC, it all melts same so wouldnt matter in that case what it looks like or how nice it is, they pay there percentage in relation to spot based on your account type and business you do with them.
I just got yelled at today on the phone becuase a guy called wanting to sell several 10 oz bars, I told him we be spot minus 3 bucks, and really didnt want them because they dont sell. He screamed and yelled at me. I finally just told him to check elsewhere, the two place we ship too, are not that far behind me (my price),(id make a buck or 1.25) and the other gold shop in area is spot minus 10.
That about sums it up.
Collectors think "silver and gold, buy all day". But the margins are so bad that the only reason anyone ever buys is because they are highly liquid. So, you can lock in your 1%: profit on an ounce of gold! Yay! Spend $4000 and make $50.
The fact is that coins are really a lousy retail business with the worst gross margins in the entire retail space. At various times, I considered going full time as a dealer. That's what stopped me.
All comments reflect the opinion of the author, even when irrefutably accurate.
I still do not think you get it. Precious metals is not meant to be day-traded by collectors or stackers. The market has changed drastically over the past two weeks. It has nothing to do with the dealer trying to "get one over on you". Compare the market now to the market in 2022 when people (including dealers and wholesalers) who were paying huge premiums over spot. The markets change in metals just as they do on the NYSE. As mentioned earlier in this thread, if you want to collect or stack, buy the cheapest metal. For gold, my LCS sells foreign gold (classic and modern) for $50 per ounce over spot (not per coin, but per ounce). You cannot get much cheaper than that. Generic silver rounds and bars are$1.00 over spot, roughly. And your local dealer is correct, no one wants those ATB 5-oz coins anymore. They were hot when they were new, just like state quarters were hot when they were new. No one wants those now. They want the next new thing.
Awesome responses, thank you for taking time out of your busy day to help me out!
If you pay $270 [about 2%] over spot for a gold buff that would mean that you might charge say the same $270 over your cost. Personally and no affront meant, I just can't fathom paying $540 over spot for a 1 ounce buff. Seems like it would take forever to break even. I would also add that if a dealer is willing to pay an AP like Jack Hunt 2% over for a gold buff then he should be willing to pay me the same 2% over if I walk in the door with one.
One thing is unless you intend to hold long term you should think very hard about how and where you intend to sell BEFORE you buy.
Honestly, I'm only charging $325 over. That's because I am a large volume dealer and can afford to make a smaller percentage. For a lot of other brick and mortars, they simply just can't keep the kind of margins I'm fortunate enough to be able to carry. I'm actually very much in agreement with you, I am telling people not to buy buffalos or eagles and trying to sell them something like maple leafs if they have to have pure or kruerrands. I believe in getting the most physical gold for your money and ignoring high premium widgets.
Russ Bega
COO
Harlan J Berk Ltd.
Not sure how many will buy 20+ coin at a time, but when one goes to sell, AGEs and buffs are exempt from 1099 reporting while K-rands and leafs are not.
Many coins are like buying a car. You pay full price when you buy it….but when you decide a year or two later that you’re ready to sell, unless you got a real winner you are most likely going to take a big hit. Always been that way unfortunately. Ag least in the coin bullion market there’s a CHANCE you may recover your money when spot prices jump….bug it may just take a long time for that to happen.
As a dealer , I’m not looking to buy bullion. It just came with the territory.
So keep in mind with such thin margins and metals at record high levels what your actual objectives in the coin world are. There are always pawn shops and specific “bullion” dealers who specify that bullion is their trade.
And the mint didn’t help matters selling hockey pucks with a premium. I’d rather melt those into small rectangular ingots.
``https://ebay.us/m/KxolR5
@Bryan6736 I’ve got no issue with your original question.
30+ years coin shop experience (ret.) Coins, bullion, currency, scrap & interesting folks. Loved every minute!
Best not to quit your day job.
Ones consideration into buying coins must include an awareness of all the angles.
The most recognizable coins (eagles) and the purest coins (maples) are worth a modest premium of a couple percent. Coins like Krugs sell at the lowest premium because they are ugly, foreign, and need additional refining to be converted into bars.
Coins like pandas are beautiful and often have large retail markups, but usually sell at or below maples once you walk into a dealership. It's too much trouble for a dealer to find a new "collector" who values them for beauty, so they are just .999 bullion on the way out the door.
Once you allow a couple percentage points difference for purity and recognizability, the best bet is to buy the coins with the smallest premium in the current market.
It should be said that these have been unprecedented times in the bullion markets.
During NORMAL market years, basically most of the last 40 years, buy/sell spreads are not so volatile. Spreads are published, stable and reliable.
Maybe I am taking your comment too literally, but where are spreads published? Please note I am referring to spreads, not premiums. Thx.
Jack Hunt is one AP/dealer that publishes their buy/sell prices for dealers AND retail customers. If you were to buy a monster box of AGES I expect that you could probably get dealer pricing.
Can't say that I've ever heard of a "beauty" premium.
Jack Hunt and Upstate, among 1000 others. Greysheet. Kitco.
All comments reflect the opinion of the author, even when irrefutably accurate.
In the real world ymmv.
Dealers usually refer to the CDN on making buy offers. From there they make a decision to buy or not.
Welcome to the Forum!
My YouTube Channel
Generally my best buy offer from my table at a show is 10-20 pct below CDN bid.
In Thailand, when a dealer in a fully licensed gold shop is selling the equivalent of an oz. of gold for let’s say $4,000/oz., the buy/sell spread is $4,000 for the gold shop to buy and $4,006 to sell. If gold was $4,400/oz, the spread would be $4,400 to buy and $4,406 to sell. These are 23 kt. .965 pure gold bars in all sizes with roughly a $6 spread per each ounce. The shops flourish and work off the concept of quick nickels are better than slow dollars. Many Thai people have nearly their entire life savings in these gold bars hidden in their homes that they easily cash in and out of at the mere $6/ounce spread (in lieu of bank accounts). I am a huge fan of seeing these gold dealers make an honest buck keeping the buy/sell spread on gold to well under 1/4 of 1%!!
Wondercoin.
I bet you don't buy much
All comments reflect the opinion of the author, even when irrefutably accurate.
That's insane. Are they only brokers? How would they not be wiped out during a sustained downward move like last week?
All comments reflect the opinion of the author, even when irrefutably accurate.
jmlanzaf: The most active (and often biggest) gold “shops” are in the bustling Chinatown area of Bangkok. They offer the $6 spread per ounce (everything converted from USD to Thai baht). People walk in and out of the shops often doing up to 50-100 oz transactions all in cash. In the roughly 16 years I have been aware of this, I have not heard any stories of any Thai people getting robbed on their way in and out of the shops, but I am sure it might happen from time to time. It is a way of life for many Thais as I said before. Not to mention Bangkok was the most visited city in the World in 2024 (32+ million visitors) with Istanbul coming in second.
My impression of where these gold shops make the most profit is not in the $6 spreads per ounce for the 23 kt gold bars. It’s in the buy/sell spread for 23 kt. gold jewelry. And 23 kt. Gold jewelry has a look of its own that is visually amazing as compared to 14 kt. or 18 kt. stuff. Many people prefer wearing their gold holdings especially at weddings and events. It’s a sign of great wealth. I believe the shops have a buy/sell spread on the jewelry of roughly $75-$100/oz. as opposed to $6 on gold bars. I personally “counsel” all my Thai friends to keep the spread low and take their gold in the bars and not the jewelry. But, I understand why some Thais might want the gold jewelry to pass along from generation to generation.
It’s a fairly similar debate as modern bullion vs. modern numismatic gold if you think about it.
Just my 2 cents
Wondercoin
I'm chargrined. My travels rarely take me further than the local Hy-vee grocery store.James
That $6 [if that] is about what you'd get for monthly interest in a local bank passbook account. A different mindset over there.
I haven't seen any gold on the shelves there.
FWIW, I refer to any coin whose price is determined MOSTLY by the price of bullion as “bullion”. But that’s really just shorthand for a long explanation that usually isn’t necessary. Most people usually just want to know “how much?”.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
If you own the gold with no debt, you won’t get wiped out. FWIW, I would guess that most of these dealers actually like owning gold, think in terms of gold and not so much in terms of baht and dollars, and are comfortable with the volatility of the markets. I’m that way with rare coins, so I’m not completely making this up.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
The problem isn't the $6. It's the ability to actually get $6. The price of gold fluctuates $6 multiple times per day.
All comments reflect the opinion of the author, even when irrefutably accurate.
I don't care if you own it or not. When gold drops $100 in a day, your $6 margin is now Negative $94. In the last couple of weeks, they would have all gone broke as gold dropped almost continuously.
The only way to make money on a $6 margin is if you DON'T own it.
All comments reflect the opinion of the author, even when irrefutably accurate.