Can someone explain this? Like right now Silver shows bid $17.97 and ask $18.03 plus I have seen a few sights give a bid and ask price for silver coins such as 90% halves. Can someone explain this to me? It seems like "bid" would be the buy price and "ask" would be the sell price but that does not makes sense as it would mean I should buy silver for $17.97 and sell it for $18.03 today which means $0.06 for my time and trouble.... Forgive my ignorance. Erin
that's means if you buy today. the price is $18.03. and if you sell it to them during that moment when the bid and ask were the same. you gonna lost $0.06. cause their buying price is $17.97.
Not exactly. Bid - that is what a buyer is offering to pay right at the moment for a given amount of gold or silver Ask - that is what a seller is saying he wants to be paid right at the moment for a given amount of gold or silver. Any market, whether it be for precious metals, stocks, corn, wheat - whatever, has a bid/ask. And the bid/ask will stay exactly same until somebody agrees to pay or accept one of them. The listed bid is always the highest offered at any given moment. There may be 100 other buyers out there who also have bids, but their bids are lower than the one currently listed. And the listed ask is always the lowest at any given moment. There may be a 100 other sellers out there who also have an ask. But their ask is always higher than the one listed at any given moment. And nothing will happen, nothing will be sold until and unless one of the buyers raises his bid to meet that of one of the sellers, or one of the sellers lowers his ask to meet that of one of the buyers. It's a case of the first one who blinks loses. And that's all bid/ask is.
Thanks, that is a good explanation. And similarly coin shops use the same terminology correct? For example, the may have a bid price for 90% silver coins and an ask price. The bid would then be what they want to buy it from the customer for and the ask would be what they are selling it to customers at? The difference basically tells you what % profit they are shooting for and your room for haggling? I know this is super simplified but the idea works right? Erin
"Not exactly. Bid - that is what a buyer is offering to pay right at the moment for a given amount of gold or silver Ask - that is what a seller is saying he wants to be paid right at the moment for a given amount of gold or silver. Any market, whether it be for precious metals, stocks, corn, wheat - whatever, has a bid/ask. And the bid/ask will stay exactly same until somebody agrees to pay or accept one of them. The listed bid is always the highest offered at any given moment. There may be 100 other buyers out there who also have bids, but their bids are lower than the one currently listed. And the listed ask is always the lowest at any given moment. There may be a 100 other sellers out there who also have an ask. But their ask is always higher than the one listed at any given moment. And nothing will happen, nothing will be sold until and unless one of the buyers raises his bid to meet that of one of the sellers, or one of the sellers lowers his ask to meet that of one of the buyers. It's a case of the first one who blinks loses. And that's all bid/ask is." Read more: http://www.cointalk.com/t121778/#ixzz0vDX7TZfl" Well spoken. Now I know why you are the administrator.
No, not at all. Again, in any market the difference between bid and ask is only a few percentage points at most and often much less than that. Sometimes even less than 1%. But the difference between what a dealer purchased a coin for and what that same dealer offers to sell the coin for will usually be between 20-40%, and sometimes much more. On some items that difference will be 100% - meaning the dealer is asking double what he paid for a given item, or more. And if a dealer was able to cherrypick a particular item his selling price may be several hundred percent more than what he paid for it.
In terms of the CDN, Ask usually represents Dealer to Dealer Wholesale. Bid is the starting point of a wholesale offer. A dealer my offer a certain percentage below bid. It usually takes a gross margin of 40% to make it in the coin business. Many dealers in the business (based on Ads in CW and NN) price their material at 30 - 50% above CDN Bid. Consequently, Bid IMO is both a basis for markup or a standard inventory valuation parameter. For example, if someone offers me a numismatic coin at my table at a show say a PCGS MS 65 Texas Half which Bids $225 and I believe I can sell it on the Bay for $250, I will probably offer $150 for it. Of course on Bullion Coins this is different, I may offer 95% of melt with the idea of blowing it out at or slightly above melt at some time in the future. I recently purchased a group of NGC 69 Unc and PF Buffalos at 97% of melt. Some I blew out at CDN Ask, others I have put away for investment. In this scary economy, I am generally not a buyer on numismatic coins like the 1936-S Texas Half shown below above 60% of what I think I can sell it for as I have more than enough material to fill up my cases at shows.
So if you were to buy, from a reputable dealer, 20 Silver Liberty rounds - you would not just pay the "ask" price - but in fact you would pay the "ask" price plus a commission of 2 or 3 dollars for each of the coins? Isn't that correct? Also - what is a typical commission price?
It seems to me that there is not enough spread between bid and ask for that to be the only profit for the dealer. If I remember correctly, I think I was paying an extra 2 dollars per Silver Eagle. Was I getting a bad deal? Thanks for your reply.
Typical markup for dealers on bullion is about 10%, some do more and some do less even. So if silver was at about $20 (spot price) then $2 more is about right.
One of the problem is a mixing of market terminology and business terminology. The great explanation already given involves the operation in a commodities market. They work on huge volumes and the markets have a preset price structure for licensing the brokers. This permits the brokers to seek transactions without the encumbrance of margins for profit which they get from their clients. They charge the clients an agreed amount and terms are flexible. A business, on the other hand, must make a margin from the operation of the business. They BUY (not Bid) for a price which permits them SELL (not ask) to cover expenses plus a PROFIT. Some businesses want to pretend they're a market and mix up the terminology. Now the use of bid sheets just further mixes up the terminology because it is used to convey both wholesale and resale pricing information. You can't buy at bid and then sell at bid, even wholesale. So a wholesale price is usually just a little above Bid and a retail price can usually be done a little below ask. Both permit a dealer to turn a coin quicker and thus permit them to sell at the reduced margin. 10 sales at half the margin is just as good as 5 sales at full margin and both are better than no sales at all.
OK guys, thanks for the explanations. I knew I was paying more than the "ask" price and I think you have explained it for me.
