Do Dealers Want PM’s When Prices Are Inflated?

I used to spend afternoons at my local dealers place and many times watched him roll his eyes when folks brought in gold. The message was clear to me. Gold tied up a lot of his cash and who knows how long he would have to hold it before a buyer showed up.

This was before the perfect storm that the virus created for PM’s. If I recall, prior to 2020, gold was holding around $1400-$1500 bucks (I may be wrong. Research ain’t my strong suit).

So I am wondering if that climate is different now that PM prices are so overinflated (in my mind)…. Are dealers anxious to purchase your PM’s in this climate?

 

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I'm not sure why you think PM's are over inflated.

 

Dealers live on the spread
The value of their stock goes up and down
Interest rates go up and down
Over time PMs increase in value. Harder to mine for many reasons. More people who have more money and want more as a store of value
And increased demand for electronics, solar, jewelry
It ain’t rocket science folks

 

It depends on the dealer. Many have contacts (companies or bigger dealers) that they can resell to right away. Those contacts have an active offer of say spot +25 on a gold Eagle. The dealer offers the person who comes into the shop spot and can make an instant profit (of course they may have a bigger spread or need it to be more than one coin in order to make it worthwhile to ship to the bigger dealers).

However, if it is someone that just sells locally, they might be more hesitant (or offer a lot under spot) if they don't believe they can resell in their shop before spot turns.

 

A dealer can go broke and end up out of business because of PM’s. Buying and selling are the keys. It’s been almost 7 months since I have seen my LCS due to Call that’s been happening, but I don’t think things have changed much. My LCS was having trouble buying PM’s and junk silver coins from his wholesaler so the only way he can buy them is from public sales. He’s never stopped buying.

 

Well, specifically I feel gold is hugely overinflated. Most of the gold that I hold has quadrupled in value since I picked it up more than twenty-five years ago. It feels very unrealistic to me anyway.

 

I understand what you are saying, but how much did a Snickers bar cost 25 years.ago?

 

I can’t remember but I know they were bigger.
When I was a kid I used to go to the corner store and buy a fountain drink, a comic book and a candy bar. The candy bar was larger than it is today. And I always got changed back, silver change, from my Quarter.

 

I did exactly the same thing.

 

No you didn’t….That would mean those three items only cost . 15 cents combined…..70-90 years ago those three items were at least 20 cents, the only silver you would have got back was a war nickel.

 

Comic book 2 or 5 cents I got snickers for a nickel the fountain drink I have no idea. this was 1960's . When you walked the alleys, all day looking for pop bottles for 2 cents apiece you remember the costs of candy.

 

And that’s what I received. I used to sell newspapers for ten cents at ball games. I was paid two cents for ever paper I sold. Things were a lot cheaper back them. I don’t think you were born at that time.

 

Don't take this the wrong way, I see this as a positive ROI.
I read this and can't help to think Randy is searching for a reason on how he did something right...am I wrong?
I should have bought more gold back then instead of eating out lunches, but that's in the past too

 

Sorry for my ignorance, by what is a “PM” besides the time of day?

As for gold being overvalued, the high retail price for a $20 gold piece when I was in high school was $75. Dealers sold beat up ones for slightly under $50.

When I finished grad school in 1980, they were about $135. I remember it getting to over $800 in the late 1970s. That was way too high for the time. I have an NGC certified $20 gold I bought for around $400 when I was a dealer, which I kept.

The U.S. dollar has turned into “lucky bucks.” Inflation is destroying its value, which is why gold is so high.

One thing I’ve noticed when gold was too and due for a significant correction. For brief periods, I have see dealers sell circulated $10 and $20 gold pieces for less than melt. It does not matter what the spot price of gold is, you can bet it’s coming down.

 

Well yeah…. I did get lucky. But I don’t want to be stuck with a valuable stack of PM’s that my wife can’t sell once I expire either. Water is invaluable to a man in the desert, but not so much to a drowning man sort of a thing.

 

PM=precious metals

 

My relative told me about a neighbor that inherited some reloading stuff and bullets from his father that passed.
Wanted to know if I was interested in buying the lot...I was in the middle of painting a boat trailer ( timing is everything )
The guy came by and had a trunk full of random stuff, 10 different calibers of what he said was reloaded ammo and some older reloading supplies.
I asked about the guns his father reloaded for?? but he said he didn't know anything about any guns and this is what the family told him to get rid of.
His wife said she didn't want Any of it in the house.
The guy wanted $500 I told him I probably wasn't your guy then...asked him again about the reloaded ammo and he didn't have a clue.
I offered $100, he asked if I could do any better...but honestly I'd have to take everything back apart and inspect the lot and I'm not near ready to reload anything myself.
I was pressed for time so I told him to think about it and let me know (I was in the middle of painting a boat trailer)
He said he had to split it with the wife so he really wanted $200.
I said it's probably worth that to someone, but again I'm not that guy and I'm in the middle of painting.
He waited and watched me paint for another 15 minutes and then said go get your money.
Someday I might do something with all that stuff, I figured reloading stuff and ammo is a relatively liquid asset.

 

Dealers make money no matter what the
value is of PM,s they simple ly adjust
the premium to make there bucks !

 

1961 comics went from 10 cent to 12 cents, this is common knowledge amongst comic book collectors…..they were 10 cents all the way back into the 1920 and were considered a lose leader the whole time.

 

As long as they are not stuck with a lot of inventory when the prices go down.