I notice this morning that Apmex is selling an AGE for $1830 even though the current spot price of gold is $1660. This is a $170 premium on a ounce of gold. Gold is on the rise again but goodness. I'm not sure if this is a definite sign that gold is quickly going to go back up, there is a real physical shortage of bullion coins, or they are simply unwilling to take a bit of a haircut. Gonna be a bit of work to find some deals based on this dip.
I suspect it's the last option...they were caught by a declining price and aren't about to lose money. There is no shortage as I just read a while back in Coin World that generic gold has saturated the market. Of course, I'd be willing to bet there are plenty of people who buy into gold fever enough to pay that much, and a lot more, over spot. Guy
This happened in the early 80's as well. I have posted numerous times how the physical market is "sticky", meaning you cannot buy and sell at market prices, especially in times of movement. All through the early 80's dealers simply refused to sell at market price, saying. "silver is undervalued, it will go back up". Basically they did not want to take an accounting loss, so they refused to sell at market. Only after a few years of having this inventory on hand, and more silver coming onto the market and being sold at market price, did this old stock get sold at reasonable prices. Even if PM went down and stayed down, I have said it would be a couple of years before all of the dealers would give in and sell at reasonable premiums again. However, try to SELL gold to APMEX today. I bet you they will quote you the market!
If the dealers thought about it a bit more, they would realize that as long as they sold the inventory above their replacement cost, they would be running the business at a positive cash flow even if they sold particular items at a price below their cash cost.
Yes sir, but its just like gas stations. They like to make cash on the way up and down. I am not trying to besmirch dealers, I know they have costs, but I always thought it funny how on both ends they wish to protect their margins.
Most smart businesses do. That's why they exist. Everyone with a business is a dealer in something. When they give people a deal it is to encourage more business. And that would be more business on the way up and on the way down.
