never sell your bullion to a dealer for under spot!

I actually have dealers tell me that they were offering a good price when they offered a dollar fifty or more under spot. They must think people are idiots when there so many other resources out there and you can make more money than that. what is your guys opinion about dealers and them offering under spot prices?

 

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If they don't where is their profit margin? I sure would expect below spot for generic rounds and most bars.

 

I think a lot depends on the local market. There are markets that favor the buyer and markets that favor the seller. For example, if a local community is doing well, the residents are likely buying more bullion than they're selling. When that happens, local dealers will have to be prepared to offer a little more than average if they wants peoples' business. Conversely, if a local economy is depressed, then residents are probably selling more than they're buying, in which case dealers are able to offer less than average and still get all the inventory they need.

All that being said, the Internet does help even out these markets. It is possible to earn a fair profit even when buying very close to spot in buyers markets and selling for a small premium over spot in sellers markets.

 

Also, try to keep in mind what defines the spot price of a precious metal. Hint: It's not what a person should expect when they bring a one ounce bullion coin into a dealer to sell.

 

There are many outlets offering atleast spot, that's the profit margin you speak of. I know many dealers are charging $3 or more of a premium for their cost. So paying under spot in my opinion is greed and being dishonest to the seller.

 

The convenience has to be worth something to some people.

 

That is absolutely a factor with local dealers. There's a lot to be said for walking in with some bullion and walking out with cash monies. Or walking into a store during your lunch break with a little cash and walking out with bullion. There's other benefits as well, like being able to examine items in person and pick the one you want, or to ask the dealer questions, or being able to come back to the store and confront the owner if you have a problem.

Why shouldn't there be a cost associated with these benefits?

 

The dealer knows his situation at any given. If he is flush with silver, that dealer probably doesn't want it all, so his "Buy" price maybe well below spot. That same dealer may very well pay a dollar or more over spot 3 month's from now. So I don't think it is greed, just business. Now the cool think about being the customer is you can choose not to take his offer

 

Nothing dishonest about telling someone what you will pay and then doing what you said.

 

Think about it. If that dealer was holding that silver last weekend, how well has that purchase turned out for him?

Like others have said, a dealer is providing liquidity, (cash right now), and taking the risk of being able to resell higher. Don't like it? Take the risk, sell it yourself, and wait for payment. You ever think how much risk a dealer takes?

1. What if the PM is fake?
2. What if the customer pays in fake money or a bad check?
3. How much does it cost to attract customers to sell to?
4. WHat if the market tanks in the meantime?

All of those things, plus little things like a landlord wanting a rent check and those pesky power companies wanting money. All of these things have to be satisfied before the dealer sees a DIME.

So no, I do not view $1.50 under for bullion pieces, (especially in this market), to be unfair at all. If you can do better, and do not need the money right away, feel free to do so.

 

another funny thing is when you give them a call and ask them what the buy price is its like it's almost top secret or something they dont want to tell you over the phone

 

go on YouTube there are videos where there are dealers in road shows supposedly offering top money for your bullion. did you see how they tried to scam everyone? there are a lot of dishonest dealers out there. I'll post a video on that later.

 

True. No one said road shows were not ripoffs. I actually participated in a police sting when I was a teenager during the 1980 runup.

However, I still do not view in today's market environment $1.50 under spot for bullion a "ripoff". Just my opinion. Btw, you might be new to bullion, but I will tell you with confidence historically bullion rounds and bars were ALWAYS discounted by this much if you sold to a dealer. Heck, when silver was trading for $4 you were lucky if you could find a dealer paying $3 for junk 90% or rounds, and you NEVER paid a cent over spot for either of those two unless you were a sucker. For a few years I had an arrangement where a seller who was offered a fair price of 2.7 times face would sell to me for 3 times face. My purchase price, (at the same store who would buy his from him), was 3.3 times face, so we both benefitted. Its well documented the buy/sell spread is devastating to profitablity on PM. This is why I ONLY advocate buying pm as a hobby or a long term hold. If you wish to try to day trade pm, do it in paper.

 

the biggest rip-offs of them all are we buy gold. they offer anywhere from 3.50 or less under spot.

 

This rant makes little sense. People aren't going to make a living pay full retail then selling it at the same price. Just like when you buy a pack of Skittles at your local supermarket. The super market didn't pay $1.25 for the pack of skittles. They most likely paid $.50 a pack and they place the super market bought them from probably bought the pack for $.20 then the company that makes the Skittles puts in $.05 per pack. While this is a different industry, people need margins to make a living and when done right, thee is nothing unethical going on. They have overhead they need to pay for. While there are rip offs like Cash for Gold, you will be hard pressed to find a dealer paying above spot for generic rounds and bars.

 

I live in Philadelphia and a lot of dealers, good dealers have offered at least spot. my point is you have people who are trying to make up for lost profits from buying when silver was more expensive. I'm guessing that there are a few dealers on here who have replied to me. Why defend against what I am saying otherwise?

 

Just for clarity, I have never, am not, and probably will never be, a dealer. The only basis for my response has been from being a buyer of silver for 30+ years. The last 5-8 years in the pm market have not been normal, and unless you have a historical framework to understand what has been normal and traditional in this market, any assumptions based upon only a few years, (or less) experience simply are not valid all of the time, (or most of the time).

 

You shouldn't sell your stack period unless its to really help yourself. I've talked to so many stackers who have no cash available. They get in a bind and sell their stacks (losing money).

Precious metals should be long term.

I used my stack to pay off my debt and am now debt free, but that greatly helped me and it was worth it. If you're struggling paying bills, you shouldn't be putting all your eggs in one basket by buying precious metals.

Then again, buying precious metals also helps some save money rather than blowing it because they are saving something that is tangible rather than looking a random digits on a bank account.

 

In all honesty I do not follow you. The fact that some dealers in Philadelphia pay spot is a non sequitur. I have no idea what your last sentence means.

Bottom line, voluntary exchanges do not occur unless both parties feel they are better off making the deal. I understand lay people often have a poor grasp of the dynamics of the bullion market, but you are talking to people who know and deal in the market. All dealers in my area pay under spot for small quantities of bullion, what exactly would you like me to do if I decide to sell it?

 

I noticed that not once person noticed the part where I mention other sources to get at least spot price, not one person in all these responses has talked about that. Meaning Craigslist or ebay, or selling to a collector who will pay more then the typical dealer. Maybe I made it a little more clear for you now.