A question for Silver sellers and Coin dealers..

[Bigsarge]

I went to my first coin show yesterday. I was kind of looking for some Silver art bars or good deals on Moragans or Peace $'s. I suppose I was kind of surprised at the cost above spot on silver. The average seemed to be $2.00 above spot. I found one dealer that had junk rounds of .999 for 1.50 over.

I said thanks and was about to turn around, when he started on the whole "It's high because we have to pay state tax on this and to be honest with you, most of us are losing are asses on silver, since it went down" I pretty much said "yeah, I hear ya" and went on my way.

This got me to wondering: If you taking such a huge hit, then why are you selling it and not stacking it for the rebound? Also, By the sale of your other merchandise, are you not covering the loss on your silver? I know your not in buisness just to break even, but you have to be doing something right, or you wouldn't be there.

I guess his statement about justifying the price kind of irritated me, as I'm sure if he bought it low and silver went up, he wouldn't be "I got money falling out of my ass, I'll sell it to you at spot!"

Now, in defense of the dealers selling, I understand they need to put gas in thier car to get there and it all costs $$. I should also say that I may be spoiled, as my LCS sells 999 at a buck over and I've been buying at that for a while.

Do you folks sell silver at a huge loss, or is your average buy price factored in? I would like to see your thoughts on this. Thanks

[beauanderos]

I'm not a dealer, but it would seem to me that the small amount of silver trickling into brick and mortar coins shops... even if a dealer can pick it up at 16X and turn around and sell it for 24X face value... does little to meet the expenses of their monthly mortgages and other overhead. I'm thinking that if dealers are selling just a bit above melt, then they are taking a hit on those items, hoping that buyers will pick up something with a bit more premium in it for them to subsidize those sales. I would be willing to bet that, on a nationwide scale, more coin dealers are closing up shop than opening. Might be a dream of many to have a store that people would foolishly sell your their treasured coins at below market prices, but I imagine there's a lot of problems (taxes, regulations) involved that most never give any consideration to.

People at shows have to mark items up to pay for their tables, earn something for their time, etc. I think natsb88 just ran a table at a show recently. Maybe he'll chime in with his thoughts.

Coin shops don't stack, they flip. They make their money on the marginal difference between buy and sell. In a manipulated market with sustained periods of suppressed prices... they could really get burned holding inventory they paid more for and unable to sell it without sustaining a loss. They could sell fresh bullion purchases... but how much of that will there be when the price DROPS? Who wants to sell when prices are lower?

[pennypicker]

The local coin shop in my town of Eugene, Oregon does a tremendous amount of business. They are the only coin shop in a town of 160,000 and they always have 4 to 6 family members maning the counters and there seems to always be a line even with this much help. If you ask to see Peace dollars they will bring out a shoe boxed size wood box full of them. If you ask to see junk halves they will bring out a three gallon bucket full of them. They carry monster boxes of ASE's, $1000 face 90% bags, and 100oz silver bars up the yang.

Customers are constantly scrapping gold & silver jewelry or buying generic rounds, ASE's or 90%--you name it! They are so busy that they operate on a small buy/sell margin and they move it as fast as they buy it. Unbelieveable business and I always wonder how much they make in a given week.

I recently asked if they had any XF common date Walkers I could cherry pick through and they replied that they get so many of them in that they don't have time to piece them out (even at a premium). They simply bag the XF's up in lots of 100 and wholesale them out! Shortage of physical silver?--not here in Eugene!

[beauanderos]

The local coin shop in my town of Eugene, Oregon does a tremendous amount of business. They are the only coin shop in a town of 160,000 and they always have 4 to 6 family members maning the counters and there seems to always be a line even with this much help. If you ask to see Peace dollars they will bring out a shoe boxed size wood box full of them. If you ask to see junk halves they will bring out a three gallon bucket full of them. They carry monster boxes of ASE's, $1000 face 90% bags, and 100oz silver bars up the yang.

Customers are constantly scrapping gold & silver jewelry or buying generic rounds, ASE's or 90%--you name it! They are so busy that they operate on a small buy/sell margin and they move it as fast as they buy it. Unbelieveable business and I always wonder how much they make in a given week.

I recently asked if they had any XF common date Walkers I could cherry pick through and they replied that they get so many of them in that they don't have time to piece them out (even at a premium). They simply bag the XF's up in lots of 100 and wholesale them out! Shortage of physical silver?--not here in Eugene!

Well, then... I would bet that your LCS is the exception, not the rule. Certainly contrary to the findings on a national basis, according to those who track and report such things in the industry.

[SoFa]

I don't think selling for $1.50 or $2.00 over spot is high.
It's not even a 10% margin. How little profit are they supposed to make?

As to why a dealer wouldn't stack, it's because he is doing it as a business and you make a lot more doing it that way.
Let's say you make 10% each time you turn over your inventory. If you do that several times a year, you are way ahead of the guy who sits and hopes to sell higher someday (potentially a year or more down the road).

[pennypicker]

The local coin shop in my town of Eugene, Oregon does a tremendous amount of business. They are the only coin shop in a town of 160,000 and they always have 4 to 6 family members maning the counters and there seems to always be a line even with this much help. If you ask to see Peace dollars they will bring out a shoe boxed size wood box full of them. If you ask to see junk halves they will bring out a three gallon bucket full of them. They carry monster boxes of ASE's, $1000 face 90% bags, and 100oz silver bars up the yang.

Customers are constantly scrapping gold & silver jewelry or buying generic rounds, ASE's or 90%--you name it! They are so busy that they operate on a small buy/sell margin and they move it as fast as they buy it. Unbelieveable business and I always wonder how much they make in a given week.

I recently asked if they had any XF common date Walkers I could cherry pick through and they replied that they get so many of them in that they don't have time to piece them out (even at a premium). They simply bag the XF's up in lots of 100 and wholesale them out! Shortage of physical silver?--not here in Eugene!

Well, then... I would bet that your LCS is the exception, not the rule. Certainly contrary to the findings on a national basis, according to those who track and report such things in the industry.

Actually I think it might be an Oregon "happening" since there is no sales tax in Oregon. Previous to my moving to Eugene last year I lived in Medford, Oregon. And the coin shop there (Rogue Valley Coin & Jewelry) was even busier than the Eugene coin shop. The Medford store sometimes has 7 or 8 employees maning the counters. I was there on a friday once and even with 6 employees helping people at the counters I was still the 13th person waiting in line just to get to the counter!

Many times I would ask to see their average circulated Peace dollars and they would bring out a large box with as many as 500 to choose from. They told me that the Peace dollars come into their store much faster than they can sell them so similar to the Eugene store they will wait until they have 500 Peace dollars and they will wholesale them to other dealers.

This Medford shop does more business than any other coin shop I've visited over the last 40+ years. Because there is no sales tax in Oregon you have many local "flippers" who regularly visit the shop buying large amounts of bullion silver on the dips and later revisit the store selling on the highs. The same is occuring at the Eugene shop. Both stores seem to have an inexhaustable amount of silver bullion in all forms!

[Rosco]

+1 on Eugene Coin. But the other guy in Springfield still sells at a slightly higher margin I miss them as I've enjoyed the Sun in AZ an not had the same relation with a local buy Gold shop as last year. Plus less money available even before the new taxes .

Have not yet missed a Meal

[silverflake]

If my LCS sold for $1.5-2.00 over spot, I'd be selling everything I can that I didn't need in order to buy it up. That's good where I shop.

But keep stacking, no matter what the price (mostly).