LCS trading 40% halves for 90%

A.F., he is selling them at 13:1 and buying at 12.5:1. I.e., I can buy one 90% half for $6.50 or sell one to him for $6.25.

Does that affect any of the above (pertinent) discussion?

A valid point. He said nothing about quality, and he doesn't have them in hand yet (expecting some in the next week or so). I'm assuming I'll get whatever walks in the door, minus any gems he happens to see. He asked me what I preferred and I said Walkers, then Kens, then Bens. He said that was fine with him.

 

Log in or Sign up to hide this ad.

Maybe I'm just tired today, but the numbers seem a bit different from yesterday...

I wrote down that he would give me "in trade" $4.25-$4.50 for each dollar of 40% halves (so 2.125 per half) and exchange that for the proportional value of 90% halves. In my mind, I'd give him six (6) 40% halves, so:

6 * 2.125 = 12.75
2 * 6.50 = 13.00

So I'd owe him a quarter on top of the 6 halves.

Or, using a little bit of math, (52) 40% halves would convert equally to (17) 90% halves (conversion factor of 3.058 or so).

I could get almost $27 more by selling the 40%'ers to crazies on Craigslist at melt, but that's a hassle and somewhat of a concern.

 

If you acquired the 40%s roll searching, then you should do the deal with this seller and maximize the utility of a trusted dealer (I assume) versus potential CL nutters.

You'd still be way ahead if you got these at face.

 

It's a hassle because I'm trying to see the spread of 90% vs the spread of 40%. That gives me the spread of 90%, but I still do not know the spread on 40%.

The reason for me asking is this: If you traded 40% for 90% then 90% back to 40% and repeated rapidly, you would most likely lose money. Now I know you would not continually trade back and forth all day, but there is a reason I'm asking. Going which direction would lose the most money per transaction? That is the position you want to be opposite of. If you can trade 90% for 40% for a better value than if you traded 40% for 90%, then you want to be in 90% (because holding 40% to trade up loses the most money). However, you have the position of 40% already and thus should not trade back up as that is where you suffer the greatest shrinkage. Entering new dollars, you should purchase the position of 90% as it is the preferred position in this equation.

I know this is really confusing. It's relating opportunity costs, game theory, etc into something so simple as a trade... I should just stop.[/QUOTE]

 

He is not actively selling 40% halves. That doesn't help at all, I don't think.

Would love to hear more of your thoughts on game theory. Feel free to PM me.

 

Fish Fossil: Stop looking at it from the value garnered from the dealer. The transaction should be simply viewed as a vehicle.

If you're able to sell 40% coins for $2 to the dealer, that puts you 55-cents back of melt. Going rate on eBay seems to be slightly over melt ($55+ per roll). Now, if you go through eBay, you will "owe" $7-$10 in fees/shipping for a sold roll. Even with that, you're going to be slightly ahead of what your LCS is offering you.

The assumption is the LCS is selling 90%, regardless, for 13x face. Assuming the coins are better than AU53, that's not too bad of a price.

If your coins aren't culls, and you want 90%, why not sell the 40% on eBay and buy the 90% from the LCS?

 

It actually has absolutely nothing to do with what the dealer gains or does not gain. Instead, I'm viewing his offers as a way to calculate potential gains. The arbitrage in price per silver is an indicator that ties into game theory. This is because whichever has the smallest gain on his part is what he wants more. That is why he is willing to take a smaller margin. In order for him to accept something he does not want, he needs more incentive. Not a lot of folks are familiar with game theory and what it is really about, but if you have not studied it will be hard for you to understand.

It has nothing to do with actually making the trade.