IdahoCopper wrote:Engineer wrote:IMHO, the strategy should be more a question of how you can ensure a win win scenario rather than trying to time the market. Following Christostock's business model would be a good place to start, since he does well in both rising and falling markets. Scrapman has a nice business model, too.
+2
I always appreciate Engineer's advice. Thank you.
Now all we need is for Christostock to write a pamphlet describing his business model. (not really Chris)
Chris has developed a reverse distribution network (through a LOT of hard work, salesmanship, phone calls, and constant driving) in which he has quite a number of sources (coin dealers, pawn shops, his own craigslist purchases, and other craigslist buyers) for silver and gold, all of whom he has persuaded that it is much easier for them to do wholesale buys at below market prices and then sell to him, after extracting a small yet still significant quick profit, which he then retails to us while maintaining barely below broad market (online dealers/significantly below ebay) pricing. Thus, he has a rather steady supply of precious metals funneled from a region with a population base probably in excess of ten million people, from which he can pluck small, irregular profits that channel into his money stream.
As long as prices go sideways or up, this plan works well... IF he can maintain a very large wallet, always ready to make immediate purchases. In that event, he can make consistent small profits (likely less than three or four percent mark-up) on the deals he labors so hard to develop. There are two problems with this business plan in manipulated markets. When the price is suppressed into a continuously downtrending channel, any inventory he can't sell quickly must be held (hopefully not indefinitely) until it can again be sold for a profit. So I'd have to guess he has various boxes of silver and gold that were purchased at $21/$1350, $20/$1300, $19/$1250, $18/1225, $17/1200, etc, that hold contents he was unable to offload quickly when markets dropped precipitously thanks to the bastards that push prices around. Sure, the boxes might only hold small remnants of larger buys (that he will again offer for sale when they can show a small profit) but meanwhile... they represent a loss of operating capital for him, constraining his ability to make further very large purchases. The second problem is... this plan is contingent upon sourcing steady supplies of precious metals at ever lower prices (when the markets continue as they have been)... and yet sellers may feel that they are not receiving enough value for their coins while buyers become wary, feeling that they could just wait and make purchases in another week or month at even greater discounts. Invariably, supply dries up and the market grinds to a halt during the bottoming process (how long does that take?
). This is why you see premiums increase as the markets drop.
I'm not a mindreader of course, but this is the process I would envision if I had deep pockets myself and the supply chain that I can imagine Chris has built up. I surely don't have the time or capital to pursue this line of work myself. I imagine this is similar to what those with individual brick and mortar LCS face as well. Remember all those times that member's have complained that customers flood shops only to find a few limited, scattered coins in the display cases? Of course dealers have coins in their safes... but they aren't idiots. No one can force them to sell their prior purchases at a loss, yet several threads here at realcent accuse them of sheer gall when they refrain from doing so. Or they accuse them of price-gouging when they only offer 50 or 70% of melt and then turn and flip it for 102 to 110%. WTF? Are these members implying that those dealers are thieves? Or that they have NO right to extract a profit? If so, then prepare to say goodbye to your local coin shop, because no one can remain in business if they constantly sell at lower margins just to please a few demanding customers.
We are lucky to have individuals like Chris (there are others, but on a much smaller, intermittent basis) who either have their own LCS or a network of suppliers, who will subsequently offer their wares to our online community of penny-pinching members at savory enough prices to get us to part with a bit of our hard-earned cash.
So... what's the take-away on this?
Don't kill the goose that laid the golden egg! Don't look a gift horse in the mouth! For Gawd's Sake don't try and nickle and dime Chris with insulting counter-offers to the already excellent pricing he offers. If it gets to the point where he can't make a reliable $30 or $50 from a couple of hours of work... then he might just grow disgusted and throw in the towel. And there would go our incredible opportunity that we share for picking up further below market priced silver and gold. Please realize that, for instance, while a purchase of say $150 face of mixed 90% for $1900 shipped might strain your purse strings (and thus induce you to hope you could wangle a $25 discount)... that from the other side of the equation Chris might only have marked the lot up $50 himself. Thus, you would be asking him to take a fifty percent cut from his expected (and well-deserved) potential profit. I guess if he decides that gas is free, and his time is worth little, then he could honor your request...
and occasionally, for his best customers, he actually
will shave a bit from his profit margin... but don't expect it if you have little or no transaction history with him. It should be sufficient that he will allow you (a nuisance for him) to hold purchases over several weeks so that you can combine multiple lots for discounted shipping.
And that's why I buy from him!
Moral of the story: buy your precious metals from christostock. He is trustworthy, they will be safely and securely packaged and shipped, and you are extremely unlikely to find better prices... anywhere
ok now, where's my commission? 
