Gouging on gold...

yeah, thanks dave...I am glad you do understand my frustration and where I am coming from on this matter...I am sure you can understand that there is little point in buying a bullion coin at those prices above spot...what I find interesting is that others do buy them at that these prices. If a coin has some form of historic or numismatic value and it is 100 over spot I can justify this but if its just a bullion coin being bought to hold onto long term, such prices above spot somewhat negate the reason for buying bullion.

I assume when you say you cant find Krugerrands, you mean you cant find them at the right price? because I found some, just at extremely high prices. I have SEEN krugerrands for sale both ounce and half (Apmex only has half ounce at high prices) so I know the sellers or suppliers have them and I know simply from reading about Krugerrands that there has always been more than the market could sell off thus I have always bought them, mostly at a low prices comparatively so you can understand my frustration when they are now about the same as any other...and quite high.

But thank for the explanation...because I use apmex for buying gold, apmex came out...and I will still say that I believe prices that high over spot, for me at least, negate the reason for buying bullion for investment and I am sure you can understand why I see such high premiums to be a bit of a gouge....I guess maybe the gouging is on all levels from supplier to sellers? If you dont have them and cant find them for the right price...thats understandable so you dont sell them...but I still dont see the need to have such high prices for the ones you have (unless you bought them way over spot as well which might be the case here)...and am a bit shocked people will even buy any at such prices...but I assume they do. I have been a big fan of apmex in the past and have recommended them often but and I will say I was disappointed to see that this time around, I wouldn't be able to business with you guys until prices go back down. So sorry if my post came off a bit harsh...a bit of frustration.

 

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I would add that in the absence of monopoly, gouging isn't possible. Demand for bullion is just extremely high, and the inelastic supply only confirms what bullion buyers have know for a long time.

 

Howdy all,

And thanks to Dave from Apmex for a bit of lucidity in pointing out the huge divergence between the paper price of bullion and the street price. Cloudsweeper talked about it on another thread - the paper price is derived from futures and COMEX stuff while the street price is what you and I have to pay to buy our Eagles or Krugs or Leafs. Huge divergence.

Now some will claim conspiracy, but I don't agree. I think there are a couple of reasons - huge is that the hedgies and institutional investors are being forced to raise capital and in the process having to sell the kitchen sink, their right arms, one kidney and their first born children. There is also manipulation going on and this is not a conspiracy - just human nature - by anyone that has a vested interest in the POG and has the ability to manipulate the market. Hell, if I could I would and so would everyone else.

What it shapes up to be is what I remember from Econ 101 with supply / demand curves and what happens when you have 'artificial' price controls - you end up with a lack of or severely restricted supply. In this case, the artificial price is the paper price and that's so far beneath the street price that no one is willing to sell.

just my humble opinion,

rono

 

well, I have been buying bullion for a bit and I cant say anything has been confirmed such as an 'inelastic supply' :lol:...Me thinks its more like...look at the rush of buyers...we can make some extra cash before they scuttle back to the stock market (all the way down to the end buyer, myself)...and any end buyer with half a brain will not pay such prices for bullion, it just doesnt make much sense to...I can go throw a hundred bucks away at any time. I have never said the prices have to jive perfectly but I find it hard to believe anyone would even think of buying bullion at such mark up.

"In this case, the artificial price is the paper price and that's so far beneath the street price that no one is willing to sell."

I tend to think its flipped...'street price' is inflated because of increased demand (I dont believe there is a shortage in supply at all, or any shortage is artificial) thus they ignore the paper price which is more realistic but not taking into consideration the increased demand that causes people to inflate prices... charge much more to make more...offset the fact that all the way down the line people are looking to make more to sell. Reminds me of the oil industry in which I work...where the price of gas expands more and more down the line and artificial elements cause price hikes that have little to do with the actual supply.

Also, I dont understand where you get that there must be a monopoly to be able to gouge...price gouging is simply to extort from, swindle, or overcharge. If all sellers buy from a small amount of suppliers and all their prices are the same...and it inflated...its just gouging...there is no mention of a monopoly...because it doesnt need to exist.

anyway..I'll wait it out. we'll see.

 

Hi Drusus - as I said, I really do understand. To address a few of your key points as noted

1. Even though the premium is high, many people still think bullion is the best place to store their wealth right now... I have seen some folks comparing prices over the last 100 years (adjusted for inflation, etc) who consistently say that silver and gold are actually at unheard of lows (even with the premiums) and compare it to a compressed spring... ready to expand rapidly and violently upwards.. That's what people smarter than me are saying about it. These folks also really take into account that the Spot Price is unreasonably low, because of the paper market manipulation that has happened. They often refer to Ebay prices (much higher most of the time BTW) as a "more realistic free market price" than the spot price.

2. Krugerrands - we have some and get some from time to time. Not in the volume that we did before, and as soon as we put them on the site - they are picked up really fast. The Krugs USED to be as you mentioned - but that time is gone - at least for now. One reason the market had "so many" was that investors were constantly shifting their postitions - keeping the Krug markets liquid...now though, people are hoarding and not shifting positions. You mentioned Sellers and Suppliers - that is the missing component right now.. which dicates, lower supply, high demand = higher prices.

3. The high premiums are not necessarily on all levels. As I mentioned, we recently paid $5 over for SAEs, then sold them at $6 - making $1, which is respectable and honest.

4. People are buying - like crazy in fact, despite the prices. I think this is a testament to how bad the "feeling" is about the stock market, despite the rhetoric.

5. No hard feelings Drusus. I know you are frustrated and needed to vent. I completely get it. I know that other people have some similar concerns. I'm just glad that in an open forum like this, we can discuss the issues, be open and honest and help everyone else out too.

 

Well, extortion involves force. Swindle implies you were cheated by not getting what you paid for. Overcharge means you ended up paying more than the original agreed upon price. I agree you shouldn't do business in that manner, but that isn't gouging. If there were a small number of sellers of gold then it might be possible for all sellers to fix the price. But considering the number of dealers plus Ebay, this just isn't the case.

 

I tend to agree with the dictionary definition of gouging which is what I posted.

'Overcharge means you ended up paying more than the original agreed upon price.'

Overcharging is defined as To charge (a party) an excessive price for something.

There is no need to have a previously agreed upon price (but certainly a standard) or a monopoly...its a bit subjective I know as 'too much' is often relative but it simply means charging more than what is considered reasonable. When you are talking gold bullion, I have always approached it as, buying the gold with a bit of a service charge...its not a bit any more. I believe that the premiums are excessive and I am far from the only one. But maybe, like was said above, they know something I dont know...To me paying something like 10 percent (give or take) on gold bullion is high.

When I buy gold I, of course, record what I bought it for and when and what spot was and I usually try to buy when its down. Spot seems to consistently averaging higher as time goes by. Nature of the beast I know but I do watch and try to catch it in a dip, those dips dont go as low..to be expected. I cant say that I agree that gold is at an all time low, but I DO understand why people are gold rushing...not at these prices though. How much of a percentage higher becomes gouging...dont know...

Without doubt, a whole industry can gouge.. or those who supply an industry can gouge which can cause gouging down the line. Sure there are many sellers but there are far less people supplying the sellers beside selling and buy from people like me. It doesn't mean people cant hike prices to a point that a consensus can be made that, as an industry, they are gouging. It happens all the time in my industry,oil and gas, as with other industries. I am constantly being told I am gouging, and I work in a service tool capacity!!

Is ampex gouging? I guess it matters if you think the price they are charging above market (or even above cost) is reasonable and why its so high, the factors that made it go so high. My main point is whether there is, indeed, not enough to meet demand or simple profiteering (I know, free market, their right to charge whatever they wish). Is apmex buying its gold at a much higher price now because their suppliers are selling to THEM higher? Or are they just jacking the price up because they know they can sell it at such a premium as evidenced by the rush to buy at any price above spot? Or is it a mix...suppliers selling less for more, apmex not getting as good of price AND hiking prices themselves because of the rush?

I understand apmex and all other sellers like them are a businesses and want to make profits, the question of gouging enters when they are windfall because of extremely inflated prices (and lets face it, the prices are far higher premiums across the board) It all matters why prices skyrocket...genuine or contrived. On that I am still less than clear.

As for the 'people in the know' or people who seem to know a lot about these things, certainly I hear from them quite often, there were a lot of people who would tell you they know what's going to happen next week with any given stock...what actually happens next week can not be predicted as evidence by them losing their shirts...So people who say they are in the know, might not know much at all sometimes and he might be the guy losing his shirt tomorrow. I AM interested in the point of view of Apmex and others like them, if it were an honest and transparent view, like how much they are paying and how much higher are profits because of it...

I believe at most times (those times I am in the market for some gold) apmex has a good supply at good prices. I have a good stash so I dont need to buy, just got a little more actively thinking about it as I saw gold going down after the last peak and noticed the change. I will probably wait and see...if gold is about to skyrocket then I might even sell off a few...at a little lower than what places like apmex are selling for If and when it settles a bit I might start buying again. Sorry, I started this thread just to ***** a bit

 

I don't think the dictionary contains an economically correct definition because the word "excessive" is subjective and imprecise, but if it makes you happy to believe you are being gouged, then all is well.

 

Well, I prefer not to make up definitions and none has stipulated monopoly...and I just dont think that is a requirement...so I agree with the definition.

Working in the oil industry I have certainly been told the oil industry gouges...there are many different suppliers of oil...but I do think there are times when the industry as a whole gouges...it is, indeed subjective but some words just are...an oil exec would never agree that he is gouging regardless of how much he is charging....words are a funny thing...but if you want to run with your opinion of what the word means, no problem.

Oh, and of course I wouldnt be 'happy' being gouged, or even just thinking I have been gouged...and I am not being gouged because I am not buying gold at that price. So it MAY or MAY NOT be an ATTEMPTED gouging.

 

Thanks for the further explanation, Dave. It makes a lot more sense coming from the inside, than trying to figure it out from the outside.
Guy~

 

Not a problem coleguy - just trying to help out where I can.

 

Since I'm an economist by education, I prefer accuracy in the use of language as it applies to economic issues rather than just being conventional. I agree that public oil companies don't gouge, particularly since the vast majority of production is controlled by national oil companies. Most people substitute opinion for reality, so feel free to do whatever makes you happy.

 

Maybe gold is finally getting the attention it always deserved...

 

Says the guy who uses his own personal opinions for definitions of words when the generally accepted one doesnt say what he thinks it should With such a practice, its no wonder you are never wrong!! Dont want to bicker with you about your opinions on what gouging is so I will let it be...thanks

 

over-charge v. 1) to charge more than a posted or advertised price.

From legal-dictionary.theonlinedictionary.com. But think what you want. Thanks.

 

I'm looking at the NY Spot Prices right now on a separate link (kitco) and I see the columns, bid, ask, change, low, high. Somebody explain each of those columns. Supposing somebody asked me what the NY Spot Price of gold is right now, what column do I give them? I'm guessing the bid column, but I'm not sure why...so, if somebody could explain that, too. Thanks.

 

Perfect! :thumb: Tell you the one that had me going the most, the "change." Just couldn't figger that one. :goofer:

 

Bullion coin

Looks like Eagles to day were bringing 900+ U.S. with 1/4 s a bit more. Some reach the 1K level . A bit back MS69 was about the same as an ungraded coin.
South Africa indicates capital expenditures have not kept pace with the depth they are working.
This looks like some consolidation shortly.
The disconnect from currency spot price + coin will probably drive gold over the next 18 months as a recession is expected to last through 2009.
If you are starting go slow , if your in, cost averaging could be a good friend.

My opinion
I speak for no others