Cash flow/inventory for a small time silver seller?

[JerrySpringer]

For those here that sell regularly as part of supplemental income, what do you figure is a core amount of inventory to have and what kind of cash flow is required if you want to be able to sell through low prices and high prices territory. We have gotten a good rash of price swings the past 5 years. I remember a dealer telling me in 2008 they got stuck with the run-up in silver price at ~ $22 and overbought and were very non-negotiable in prices because of that. Not sure what spot was at when they told me that, but the idea is that a dealer can not be married to their inventory like that for long and still generate cash flow.

[CLINT-THE-GREAT]

I too would be very interested in learning this

-The Great

[TXBullion]

What is your strategy? What specific products will you be working in , Ie eagles graded Morgans old pour vintage bars , scrap

[JerrySpringer]

What is your strategy? What specific products will you be working in , Ie eagles graded Morgans old pour vintage bars , scrap

We are talking junk silver, generics, and ASEs and CMLs. I was thinking about it today and the question is better asked in terms of what kind of base amount of silver does one need per a dollar of cash flow and/or net gain? So, not alluding to what anyone has in their reserves, the calculation I am trying to get at is, say you want to net and additional $5,000 a year from flipping silver, based on what we see are the potentials and the disincentives to silver spot prices, what is a core amount of silver to keep on hand or be able to turn over given the climate of market we come up against or will come up against? Just a general calculation is what I am looking for.

[christostock]

You need to adjust your brain!!!!
This is a very difficult concept for most people.
Took me close to 4 years to finally get it. This is why i still have some ounces of gold with a $1900 price tag on them
FRN is not real money, silver and gold is REAL money.
Your wealth is now measured in ounces.
LCS has the luxury if being able to sell at full retail rather easily.
We (us lowlifes) do not.
The only way to recognize any profit in a down market is in ounces.
example: buy 100 ounces of ASE with spot at $25 for spot plus $1 = $26 you spent on each ounce. Next day spot moves to $23.
You sell for spot plus $3 (seems like no gain to me) but you buy them back in at spot plus $1.
You now have the same amount of silver at lower price. If spot is flat then you make money.
The idea here is to maintain a "position" of x ounces of silver. when more comes in you sell the equal amount of what just came in.
down market you just replace silver, flat market you make money and maintain your position, up market you make money easier.

Adopt this way of thinking and you won't care what you paid for an ounce of silver and will still be able to sell it no matter what the spot price is at the time.
However, RC buyers will almost never pay full retail

[Market Harmony]

It's not what you've paid for it, it's the cost of replacing it.

[beauanderos]

You need to adjust your brain!!!!
This is a very difficult concept for most people.
Took me close to 4 years to finally get it. This is why i still have some ounces of gold with a $1900 price tag on them
FRN is not real money, silver and gold is REAL money.
Your wealth is now measured in ounces.
LCS has the luxury if being able to sell at full retail rather easily.
We (us lowlifes) do not.
The only way to recognize any profit in a down market is in ounces.
example: buy 100 ounces of ASE with spot at $25 for spot plus $1 = $26 you spent on each ounce. Next day spot moves to $23.
You sell for spot plus $3 (seems like no gain to me) but you buy them back in at spot plus $1.
You now have the same amount of silver at lower price. If spot is flat then you make money.
The idea here is to maintain a "position" of x ounces of silver. when more comes in you sell the equal amount of what just came in.
down market you just replace silver, flat market you make money and maintain your position, up market you make money easier.

Adopt this way of thinking and you won't care what you paid for an ounce of silver and will still be able to sell it no matter what the spot price is at the time.
However, RC buyers will almost never pay full retail

I do the same thing as Chris but in reverse. I don't try to sell unless I've made a purchase, and then I only sell enough to cover the cost of the purchase. Sometimes I'll make a dollar or two on a ten dollar roll, but most of the time I just try to break even.

[TXBullion]

So you are solely looking at this how to generate an additional $5,000 per annum as supplemental income from the sale of junk silver, and lower premium rounds right? I understand what these guys are saying but you are not asking about extra ounces and your standard of measure is dollars not ounces. If I understand correctly, they are using their denomination in terms of ounces and not dollars but that is not what you are asking from how I am understanding it.

If I have things right, I would say its not possible from a strategical standpoint IF you are unhedged. Can you make the money? Absolutely but you are gambling (if you are unhedged). I think its a very difficult strategy because your competition can work on a smaller spread than you and is hedged or we have some sellers .

If you are trying to make money flipping system, I would personally target a niche in silver or work on something that has bigger margins. Ex, find under graded coins and regrade, find toners at bullion prices, sell at toner prices, find vintage bars at bullion prices, sell at numb prices, find scrap at 60% of melt, get it to the refiner for 95% of melt. You can go on and on. I think any of those would prove to have less risk and just as much potential and probably more for what you are trying to accomplish.

[christostock]

If you want to make more money per year, buy and sell scrap gold jewelry.
margins are much higher and you can still make money when you buy and spot goes down.
Buy at about 72-75% and sell at 92-95%.
be careful of fake stuff but you can still make money while you are learning and making mistakes.

[Recyclersteve]

So you are solely looking at this how to generate an additional $5,000 per annum as supplemental income from the sale of junk silver, and lower premium rounds right? I understand what these guys are saying but you are not asking about extra ounces and your standard of measure is dollars not ounces. If I understand correctly, they are using their denomination in terms of ounces and not dollars but that is not what you are asking from how I am understanding it.

If I have things right, I would say its not possible from a strategical standpoint IF you are unhedged. Can you make the money? Absolutely but you are gambling (if you are unhedged). I think its a very difficult strategy because your competition can work on a smaller spread than you and is hedged or we have some sellers .

If you are trying to make money flipping system, I would personally target a niche in silver or work on something that has bigger margins. Ex, find under graded coins and regrade, find toners at bullion prices, sell at toner prices, find vintage bars at bullion prices, sell at numb prices, find scrap at 60% of melt, get it to the refiner for 95% of melt. You can go on and on. I think any of those would prove to have less risk and just as much potential and probably more for what you are trying to accomplish.

I like the quote above and will also add that you can look for mistakes too. For instance, I've bought coins from dealers and the public where they didn't know, for instance, that the coin had a mintmark. This might sound elementary, but I even have a slabbed PCGS coin with the wrong date on the holder, so even the professionals make mistakes. I've had a few times where someone sold me a half dollar and thought it was a quarter (and the half dollar was far more valuable).

I like going to shows and looking at LOTS of stuff. Then you get a feel for what is truly difficult to find when you go a long time without seeing it.

I love it when a dealer gets creative and says "Have you ever thought about collecting this?" (and names something I'd never thought of before that looks really cool and that I think I could make money from in the future) I am not a fan of the dealers who have tons of MS-65 Morgan dollars (yawn- they're pretty coins, but LOTS of people have them)

[reddirtcoins]

For those here that sell regularly as part of supplemental income, what do you figure is a core amount of inventory to have and what kind of cash flow is required if you want to be able to sell through low prices and high prices territory. We have gotten a good rash of price swings the past 5 years. I remember a dealer telling me in 2008 they got stuck with the run-up in silver price at ~ $22 and overbought and were very non-negotiable in prices because of that. Not sure what spot was at when they told me that, but the idea is that a dealer can not be married to their inventory like that for long and still generate cash flow.

Other than your question another way to look at this is Gold-to-Silver "Ratio-Flipping". You can use some of your inventory to flip over time to generate ounces and then sell those ounces for currency. (cash flow). Things changed in 1971 so use that to your advantage.

[JerrySpringer]

Other than your question another way to look at this is Gold-to-Silver "Ratio-Flipping". You can use some of your inventory to flip over time to generate ounces and then sell those ounces for currency. (cash flow). Things changed in 1971 so use that to your advantage.

That sounds like a long(er) term proposition. I think the gist of it is that the ratio of gold and silver prices translates into , say, 63 ounces of silver to an ounce of gold. You find a dealer willing to do that exchange and then wait for gold to go higher and skew the ratio and then exchange that ounce of gold for, say, 65 ounces of silver. It is tempting to acquire an ounce of gold this way, as nothing is lost truly in my book, I simply converted one PM for another. I guess one could find a niche in this. Something not far from the guy who used one red paper clip, but in this case you use the ratio to slosh off bonus troy silver ounces from time to time and eventually maybe have enough to double your original amount. But I think this takes a lot of time and has a more narrowed set of participants. Do people here on RC do the GSR thing? At the recent highs of silver ca. spring 2011, what was the GSR?

edit: Found this chart:

http://www.macrotrends.net/1441/gold-to ... ical-chart

Interesting. I've known about the GSR for a while but always thought it was too technical of a thing. Seems simple in essence to understand if you purpose it for growing your stack.

[Engineer]

Do people here on RC do the GSR thing?

I try to keep equal dollar amounts of each, which is a modified version of trading the GSR. When premiums on 90% went through the roof this summer, it was a great time to trade in your ugly/worn 90% for BU gold at 55:1. Unfortunately many didn't see the opportunity because they were stuck on "I must buy cheap silver, and I'm only going to pay spot".

[JerrySpringer]

LOL:

http://www.ebay.com/itm/1-2-Kilo-JM-Joh ... 2c777d789b

Seller's name makes a statement.

[Numis Pam]

Interesting old thread. Bumping incase someone will add more info!

[goodcents]

I need a mentor when it comes to stacking silver. I know there is the silver to gold ratio and some of the techniques of replacing silver at a certain cost. I love silver and seem to be stuck on it. I've never bought one gram of gold. I guess my brain has not been taught that having a smaller amount of something is ok vs a big stack of silver. I like many am sitting on premium silver - Engelhard prospectors (Sealed strands and many BU rolls) as well as graded ASE's that were bought when silver was really high. My believe is I'll keep those in the long term stack and buy other more liquid generic items now as I can and keep adding. I still believe we are in a low right now and silver will jump in the near future. But maybe I'm not thinking right. I'd really love to talk to one of you on helping me develop a new way of thinking in order to maximize value of my holdings and a good system for buying/selling as needed moving forward. Any help or guidance would be appreciated. I've bought from many of you over the years and love this forum! A lot of knowledge.

[franklin]

I can't give you much guidance on your question but I recently became aware of the link below and the reportable items.
bb
http://www.jmbullion.com/reportable-bul ... fographic/

[blackrabbit]

I'd play the premiums. Sell your generic stuff and buy stuff that is basically the same price but has a good chance of increasing in premium. There have been great buys, in the past 6 months that is for sure. Privateers, Kooks, Lunar Monkeys, etc. If you got them close to spot you already could have made a nice profit. The first privateer one was a no-brainer for me. I did not really have money to spend on silver at the time but bought a few rolls anyway and sold a few things. Some of the things I sold I lost money on from where I bought them, however those products have decreased in premium while the privateers are still going up in premium so I am doing much better regardless of spot.

Another product with good premium play is poured bars of limited-micro mintage like Rodebaughs, but don't buy them because I am going to buy all that come out. Also I think the Mutiny Metals limited pours are going to do very well once people find out about them. Google them, all pirate themed with different stamps. They are available right now. I already have some but might buy more. With the mutiny metals stuff is more of a medium term play I think, you can't really flip them now, but once they sell out I am betting they will do well. If mutiny metals does a bigger run of the non-limited sizes and has provident or apmex sell them then the profits on the limited stuff will be very nice indeed. It is like a lot of the early Yeager's Poured Silver stuff which now is highly collectible.

[JadeDragon]

How to figure out what is higher premium bullion? I picked up some Silver pandas in Beijing back in 2009. They take up a lot of room hecause the plastic cases that are rounded and don't stack well. I've also got a sheet of Maples stamped with the Vancouver Olympic logo. Again, pretty but bulky. Maybe I should not worry about the amount of space my hoard takes... But I switched to gold because I felt diversification was in order and more value fits in way less space.

[pennypicker]

I play the "sales tax/craigslist" game. Here in my county we have a 9% sales tax that the LCS's charge along with very high premiums--$5 on ASE's and $30 for junk Peace dollars . So I buy my silver on ebay ONLY on the dips combined with an ebay "daily deal" (usually from Baypreciousmetals), wait for silver to bounce up a bit and then list on craigslist. Buyers are very happy to save on high LCS premiums and pay no sales tax. Of course meeting strangers in public for such transactions is very risky and this is why I only meet at the parking lot of our city police dept. Most of the time however I get repeat buyers who I'm familiar with.

[Market Harmony]

I need a mentor when it comes to stacking silver. I know there is the silver to gold ratio and some of the techniques of replacing silver at a certain cost. I love silver and seem to be stuck on it. I've never bought one gram of gold. I guess my brain has not been taught that having a smaller amount of something is ok vs a big stack of silver. I like many am sitting on premium silver - Engelhard prospectors (Sealed strands and many BU rolls) as well as graded ASE's that were bought when silver was really high. My believe is I'll keep those in the long term stack and buy other more liquid generic items now as I can and keep adding. I still believe we are in a low right now and silver will jump in the near future. But maybe I'm not thinking right. I'd really love to talk to one of you on helping me develop a new way of thinking in order to maximize value of my holdings and a good system for buying/selling as needed moving forward. Any help or guidance would be appreciated. I've bought from many of you over the years and love this forum! A lot of knowledge.

Are you trying to buy and sell to profit? Silver or gold will never love you back. Take the emotion out of your trading and become a strategist. It's fine if you want to speculate and just buy and hold for the long term based on your convictions. If you want to trade, then you need a new mindset.