Can someone help me understand the ASE economics?

Discussion in 'Bullion Investing' started by ottybak, Nov 27, 2018.

  1. ottybak

    ottybak New Member

    Okay, I am looking on eBay right now and there is a seller who is selling monster boxes of ASEs for $8082.50 each (today's price). He sells a couple dozen a day.

    But $8082.50/500=$16.16 per coin.

    That is about $2 over spot. Now I see that Authorized US Mint Purchasers can buy ASEs for $2 over spot.

    How is this person making money? eBay charges $250 final value fee (capped if they have a store), shipping certified mail this size is probably $30-40.

    I know some dealers will send off entire monster boxes to be rated, sell the 70s and 69s, and the offload the rest... but is it possible this is happening in this case? Especially since the boxes are sold as mint sealed? And what of all the other sellers selling ASEs only $100-$200 more than this?

    I don't know how anyone can make even a nickel profit at these prices. Is there some secret wholesale price certain dealers get?
     
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  3. Dave M

    Dave M Francophiliac

    Volume
     
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  4. ottybak

    ottybak New Member

    But if you're losing a few bucks per box, you only lose more with volume, you don't make it up.
     
  5. green18

    green18 Sweet on Commemorative Coins Supporter

  6. But after all is said and done, the capital tied up at risk waiting all the time involved how much is the profit made at the end of the day? You would the mint would charge less due to the large volumes and the design never changes on the coin other than the last 2 digits of the year. At least the Canadian Mint made some enhancements to reduce counterfit product over the years
     
    Last edited: Nov 27, 2018
  7. Dave M

    Dave M Francophiliac

    It's an old joke - "we're losing money on each sale, but we make it up in volume".

    I don't know what they're doing, sorry :)
     
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  8. Randy Abercrombie

    Randy Abercrombie Supporter! Supporter

    I do.... Sorta..... More from my own perspective running a business for years. Early on in business I had the mistaken notion that high volume/low margin was a pathway to business victory. Boy was I wrong. Glad I figured it out before it killed me..... And in that vein, I too sometimes wonder how these business models do succeed..... Or more to the point.... I’m curious....
     
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  9. desertgem

    desertgem MODERATOR Senior Errer Collecktor Moderator

    I thought there were a few "whales" that could purchase multiple monsters to resell to the public at very close to melt. Maybe not so, but it would make sense to have distributors to help.
     
  10. baseball21

    baseball21 Well-Known Member

    You can count on your fingers the places that can purchase directly from the mint. As long as they supply them to everyone else as well and not hog them they can also sell right to the public if they want. The ones with that kind of capital and ability would also be paying very different eBay fees than what is advertised

    All of that said there's no way to answer his vague question. They may be blowing something out they have to much of, they may be older years that they're making money on because they bought them cheaper, they may be the grading rejects, they may have gotten all they wanted for the graded and are just selling the rest now ect.
     
  11. TheFinn

    TheFinn Well-Known Member

    I think they are known as a "loss leader". The big buyers have to order something like $5,000,000.00 of ASEs to be able to keep buying them. Many will dump the coins at the end of the year to free up cash for the next year's coins come January. They already made all of their profit on the 2018's when they came out in January. These are the leftovers, so if they can recoup some money, it helps for the first of the year.
     
  12. myownprivy

    myownprivy Well-Known Member

    You know, this is such an important point. And I think some people (myself in the past) get so impatient to buy the new issues, that they overpay during the first half of the year. If they'd only wait until the fall and winter, they'd save significant money.
     
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  13. Clawcoins

    Clawcoins Well-Known Member

    This is precisely the answer.

    The OPs question /theory does not take into account the process for the seller, but only the single monster box sale.

    The seller probably kept some boxes to profit from a potential metals price rise, hopefully. When that doesn’t happen they sell to free up cash to start the process all over again.

    Also at what point does this particular dealer think that silver spot will rise versus flat or fall. Sometimes it’s best to sell at a loss rather than potentially later at more of a loss. Preserve as much cash as possible while converting the silver asset to cash which is far more useful for buying other stuff and having money to conduct business. You can’t pay the electric bill with silver last time I checked.
     
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  14. TheFinn

    TheFinn Well-Known Member

    The pieces sold early in the year have a pretty high margin build into them, because everyone wants to get the new Eagles for the year. If they do have some left over, and the price of silver has dropped below what they paid for them, they don't really care, because the price on the new 2019's will be lower too. So selling the old ones at $2 over spot, and paying $2 over spot for the new ones is a wash.
     
  15. Does it really cost the Mint 2 dollars a coin to produce them?
     
  16. Clawcoins

    Clawcoins Well-Known Member

    The whole gist of it for the OP is do not think of it as a single, standalone Monster Box.

    Think of the "entire process" a Dealer does from one year to the next to keep revenue and inventory moving and "fresh".
     
  17. Bman33

    Bman33 Well-Known Member

    I think sometimes dealers just need cash so they do something like this. They could be worried silver will drop even lower too.
     
  18. baseball21

    baseball21 Well-Known Member

    No. They charge 2 dollars extra a coin as their fee, their cost is less as they're making a profit
     
  19. TheFinn

    TheFinn Well-Known Member

    Probably pretty close with all of the special handling, and buying the blanks from Sunshine Mint. I couldn't do it for $2 a pop - too much overhead and headache.
     
  20. TheFinn

    TheFinn Well-Known Member

    I worked at a bullion mint, and just the opposite is true of what people think - you make more money when silver goes down, then when it goes up. If it goes up, you need to pay more to replace what you just sold. If it goes down, then you can replace what you just sold for less than what you sold it for.
     
    Randy Abercrombie likes this.
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