You have seen these types (or 5% over or 10% over) of advertisements for gold. What does that mean? In my opinion nothing. 'Dealer Cost' means nothing, says nothing, dealer cost is whatever the 'dealer' says it is. So my question is what is a reasonable % over a current quoted market price for gold that would be paid to purchase gold bullion.
"Dealer's cost" should mean what it says, what the items actually and verifiably cost the dealer, it may include shipping on the invoice, so it is similar to what car dealers call "the tissue". If they are charging over the Apmex sell price or other large bullion dealer, obviously they are either lying or not competant in who they buy from. If they are lying, you could report them to the relevant authorities.
They are always come ons to me. "Dealer's cost" is unprovable, they can say almost any number is their "cost" using different justifications. Trust me, I am a CPA, and almost any number can be "proven" in cost accounting. Just ignore "puffery" like that and compare bottom line prices. Its usually the best answwer whenever you are buying and the products are interchangable. Chris
Good point. I don't care what it cost the dealer. I care what it costs ME! And I care what I can get when I go to resell it. There is where real puffery enters the picture.
The only way to get the lowest price is to go to a coin show and make a deal with cash, etc., or have a dealer you have a good business relationship with who will give you a good deal. It is really astonishing all the bullion dealers who have sprung up in the last few years through Glen Beck, Gordon Liddy and the rest. BUY GOLD!!! ITS REAL MONEY!!! Gold is just another commodity and is treated as such by the law and by the IRS. Not that they are very good at doing so.
Dealer cost. Wonder if he added the gas and milage on the car to get to the show. What about last nights hotel room and this mornings breakfest?????????? You want what for that?????????????
Many of those ads are loss leaders, designed to get new clients. Once the newbie fish are hooked, they get the hard sell on high margin products and that is where the money is made. It is an effective strategy as some firms that run those ads are the among the biggest dollar volume dealers in the country. The ads are sometimes legit as written, the coins are really being sold at cost. As to the other question, spreads will vary. Most big bullion dealers will give their buy/sell spreads to show clearly what they are making, often with volume discounts.
The larger the gold piece the smaller the premium, For example: a 1 ounce gold coin from the mint will have a smaller premium than a one/tenth of an ounce gold coin will.
Gold is not "just another commodity" in the eyes of the IRS, since gold can be included in some IRA accounts. http://www.blanchardonline.com/gold_as_investment/ira_add.php
Just my two cents. Dealer's cost is nothing more than a marketing tool and really means nothing at all. It's akin to First Strike on TPG labels. It means nothing at all, doesn't, and shouldn't, add any premium to the value.
Here is a quote from one of the regulars at www.quatloos.com: "Moneychanger is an over-educated obstreperous idiot. He thinks the various tax authorities is trying to collect a tax on gold and silver money. No, what the tax people are collecting a tax on is on the sale of merchandise, or for gains realized on a commodity. "What Moneychanger and other idiots like him fail, or refuse to recognize, is that while gold can be used as money, it is also merchandise and a commodity. It is all three. "Don't believe it? Go the the Chicago Mercantile Exchange, where commodities are traded ("...over there they are trading oil, over there cotton, and here FOJC, frozen orange juice concentrate."), including gold. Thus gold is a commodity, with futures, derivatives and such, just like any other less shiny commodity. "Also, you can go to any number of stores and buy physical gold, or even purchase it over the internet, just like a car part, camera, shoes, etc. That makes it merchandise, and like any other merchandise sold in a store, tax agencies want to collect a sales tax on it. Thus gold is merchandise. "And yes, you can use gold to buy goods and services, so it is money. "Ditto for silver, platinum, copper - all can be used as money, can be treated as a commodity, and as merchandise" http://www.quatloos.com/Q-Forum/viewtopic.php?f=11&t=7566
Owle, the post #13, seems rather far off of the original subject. The argument for the nature of any substance from wampum to gold as a commodity or money should be on the General Discussion forum, so lets all stay on subject. Thanks Jim
Last time I has at my local dealer (and I asked about silver) it was at something like 38.75 and he charged a 1.50 over spot. So it was about 4% over spot. I don't think I would pay 10% - even though it might be fair.
I have found locally that dealers pay a minimum of 7% under spot and sell at a maximum of 7% over spot on bullion sales. I get some low grade gold coins at spot +1%.
I was just responding to another poster who insisted that gold is money, and though the reference I gave may have been a tangent, it was aimed at Blanchard's assertions. It ultimately comes down to the law and definitions. One could spend a lifetime trying to debunk advertisers and their methods. And when it comes to a low profit area like bullion, which is used as a sales gimmick to shoe horn the buyer into buying Proof eagles for IRA benefits, you have a very large case of misinformation. Last I checked a major bullion advertiser who we all know was charging around $3000 an ounce for AEG proofs with box and papers. There are people who will buy that sales promotion, hook, line and sinker, but yours truly is not one of them, and I think we need to get the word out so that this trade remains an honest one where people can have confidence investing in the precious metals.
