Will dealers buy as much PMs as someone is willing to sell?

This is just a hypothetical question since I’ve never really sold “large” amounts of precious metals.

But like if a dealer is paying 95% of spot for gold and someone walked into the shop with say 10 kilograms of gold would the dealer buy all of it at the same 95% spot price he’s offering for smaller amounts?

Or is there some sort of limit where you can only sell up to a maximum amount per day/month?

 

Log in or Sign up to hide this ad.

You're right it does amount to roughly half a million dollars worth of gold.

But I'm sure there are ALOT of people who bought gold from the 1950s-1960s to 2020s in which case they weren't paying nearly as much back then as it costs now.

Ah I didn't know they had lines of credit. I thought maybe they had a certain amount of cash on hand and had to decide what to buy with the money they had.

I've just noticed I have never seen a dealer flat out refuse to buy gold or silver at any price. Sometimes they offer a bit low but I've never heard of a dealer refusing to make an offer at all. At least not on gold & silver.

 

We never had a problem moving any amount of PMs. We would tell the customer they could get a cashier's check the next day. We would lock in a sale and have payment wired to us and ship or drop ship for them.

 

Oh wow that’s so cool!

The main reason I asked is because I have been stacking gold & silver (mostly American Eagles) for a few years and I’m hoping one day in a couple years I will have enough money for a 20% down payment on a home.

It’s a lot easier for me to save my money when it’s in PMs than cash sitting in my account.

I wasn’t sure if it was possible to save up like $60,000 in gold & silver and then when I need the cash for the down payment selling it all at once to a dealer for a cashier’s check to be used for the down payment.

But from what you’re telling me it sounds like a dealer would have no real problem buying a monster box of 500 Silver Eagles and a tube of 20 1oz Gold Eagles all at once so I am going to keep stacking for that day.

 

Oh so they give you the check and ask you to deposit it in a week?

Or do they ask you to come back in a week with your gold coin and sell it then?

 

I've got to ask you a couple of personal questions. Please feel free to tell me to butt out and not answer the question.

Reading the above scenario you're 'planning' for has generated a plethora of questions, but I'll narrow it down to just a couple.

1- Where are you getting your investment advice from?

2- Based on the statement, "The main reason I asked is because I have been stacking gold & silver (mostly American Eagles) for a few years and I’m hoping one day in a couple years I will have enough money for a 20% down payment on a home.", it leads me to believe you're putting all of your house fund into PM's. Do you have additional invested funds outside PM's for this home purchase?

 

There’s the other side of this: the dealers I sell gold to require a minimum of $1,000. No problem for gold, but it could affect those who want to sell silver.

 

1). I get my investment advice from my financial advisor and from my family members who have done well with investing.

2). Yes I have about 85% of my money invested in stocks (Amazon, Google, Apple, Microsoft etc.,). I have about 10% in precious metals and about 5% in cash.

I just don’t want to sell my stocks for my down payment since I would lose the dividends and growth and I don’t like having a lot of cash on hand since I’m one of those people who tends to spend more money when I have a bunch of cash. But at least I recognize that about myself.

When I have that money in PMs I tend to really consider purchases more since I have that extra necessary step of having to go sell my PMs to get the money. Because of that sometimes I reconsider and decide not to buy.

But I’m also worried about the inflation that many (including Warren Buffet) are expecting to happen due to the government printing trillions of dollars of fiat money.

I also like that my PMs have had much better returns than the 2% yearly maximum that a money market account provides. Even less for savings accounts these days with the current Fed policy of quantitive easing and almost 0% fed interest rates.

Banks don’t pay much on savings accounts when they can get money easily at a very low rate.

 

Oh dang that’s like 2 full tubes of Silver Eagles.

 

This.

Its all about the dealer's free cash at the moment, his arrangements he has made, collateral he can put up. I have financed a couple of times a large purchase for a local dealer. He didn't have the cash at the time to buy the whole collection, but I knew it was worth it. I financed it, he sold off parts of it to pay me back, I made a few bucks.

 

Just as you likely "dollar cost averaged" going into your bullion, it may make sense to dollar cost going out of bullion as you do your house hunting. Do some research as to which dealers pay the most for your gold and silver; you will hopefully find someone who deals in quantity at low margins and uses hedging programs to lock in their profit as you make a deal with them. The hedging program allows them to pay top dollar without having to think, "what if gold/silver drop 3% tomorrow?"

 

I’ll do that when the day comes. I’m still only about 30% of the way.

But I wasn’t sure if I would have to go to a very large retailer (like APMEX/JM Bullion).

Believe it or not I’ve gotten better offers from APMEX than I have from some local dealers for my gold coins.

Like they offered me $1,004 for a $10 Indian Head Gold Eagle MS63 whereas the local shops offered $750-$850.

 

I wouldn't dream of buying PMs while still having a mortgage or even worse, renting

 

I don't have a mortgage and I'm not renting.

 

Can't dealers use the inventory itself as collateral?

For example: Let's say someone brought in a monster box of 500x 1oz American Gold Eagles with a total value of $900,000 and it's estimated they will all sell for $1 million netting the dealer a $100,000 profit.

The Bank loans them $900,000 to buy the monster box with the Gold Eagles themselves as collateral.

Either the dealer sells them and repays the loan OR the bank takes possession of the Gold Eagles and sells them at auction to recoup the money they loaned.

Does it work like that?

I know alot of businesses take out loans on inventory.

 

so it's either jail or mom's basement?

 

But what if the gold is fake? What if the market tanks and he can only sell for $700k? Without other assets, no bank will lend $900k to buy that gold in your example. Now, also pledge the building the coin shop is in, and maybe the dealers house, and then he could possibly get a loan for the $900k.

Think about it. If the only collateral was the coins, then the bank would want the money from every transaction, and the bank would have to release their mortgage interest every single time he wanted to sell one. Buyers would not put up with this.