coaster
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| Buy or sell gold? |
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A couple days ago I came home to find a message on my answering machine from a numismatics dealer I'd purchased some coins from ten or more years ago. Now, I've gotten calls from coin dealers before, but this is the first call I've ever gotten from a dealer who was asking me if I wanted to sell my coins back to him. Then just this morning I saw an ad on TV from a local coin dealer who was offering to buy gold coins. These two events are so unusual -- I've NEVER had offers solely to buy back -- that I'm thinking there must be some meaning here. Question is: what is it?
Is there such a demand among the general public that dealers have a low inventory of coins and are offering to buy back from old customers in order to sell at a profit to new customers? Would this demand by the general public be a sign of a top in gold prices?
Are the coin and bullion dealers taking advantage of the recent dip in the price of gold to buy and build inventory because they're expecting this dip to be just a temporary correction in an ongoing rise in the price of gold?
Two totally different possible interpretations. Which one is it?
~Tim~
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Wed Oct 29, 2008 2:43 pm |
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Doro Ajani
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| Re: Buy or sell gold? |
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quote:
Originally posted by coaster
Is there such a demand among the general public that dealers have a low inventory of coins and are offering to buy back from old customers in order to sell at a profit to new customers?
I think that this is a distinct possibility.
quote:
Would this demand by the general public be a sign of a top in gold prices?
From what I've read recently, there are expectations that the price of gold should be higher right now. That said, many people are taking advantage of what they perceive artificially low prices and are attempting to buy accordingly.
quote:
Are the coin and bullion dealers taking advantage of the recent dip in the price of gold to buy and build inventory because they're expecting this dip to be just a temporary correction in an ongoing rise in the price of gold?
I don't see why not. Demand is rising, but the supply for some types of gold coins has become thin....
Doro Ajani
http://deepthoughtsov.com/
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Sun Nov 16, 2008 6:48 pm |
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Istok
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| Numismatic Dealers |
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I hate to be a bubble burster on my first post to this site but I read your post and had to chime in with my opinion about this topic.
The dealer may be legitimate but his intentions were probably not in your best financial interest. You could call the dealer and ask what he offering you for the gold. If it is 2-3% under market than, yes maybe he is in short supply of gold and that argument would stand. If he offers you 5-10 or even 15% under market I would see it as a excessive money making opportunity for the dealer which has no bearing on supply and demand. They make their money by buying low (3% I mentioned earlier) and selling high up to about 6% depending on what is in demand and market conditions. These are just spot figures and would probably vary again on market conditions.
I suspect he knows you bought 10 years ago (how else would he have your info) and without even knowing how much you paid per oz, I would not be too far off by guessing it was under $400. So he offers you $850 and you go:'wow let me rip my mattress open before he changes his mind' or head on over to the trusty S&L safety deposit box and sell these because you will be more than doubling your money. Well at today's prices $850 per troy oz would be a ripoff.
I do not know how this business works on the supply side but I can tell you it is a lot easier quality wise to get your product. It is gold need I say more. Now quantity wise I am sure dealers have a place (kind of like banks) where they go and purchase the gold at lets say 1% (under normal market conditions) over the spot price. Maybe during a gold rush such as is the case now or back in 2008 they might pay 3% above market price. Honestly I am just guessing hell it could be .5%. But I am sure you get my point that they do not just run out of product during the high demand periods and then go calling on people for a product to sell.
You posted in October so this is post the big runup on Gold when it was a bit (ok very very) weak compared to the $1000+ per oz price of early 2008. I am sure he had a slump in business because a lot of people bought at $900 per oz and above and are now not willing to sell so his business was impacted traffic wise.
I wonder what kind of response he would get from someone who bought in March '08 when it was $1000/oz?
Anyways just my 2 cents.
Good Luck!
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Fri Feb 06, 2009 4:44 pm |
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coaster
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Some decent observations; thanks for posting them; hope you'll continue to "chime in" as you see fit. I've bought bullion coins off and on for maybe 20 yrs or so and find your numbers credible. My average cost basis is well under $400. I've never done business with this dealer but been on his mailing list; he could have gotten info from another dealer.
Now there's a local jewelry dealer, who also buys and sells coins on the side, who's advertising on the radio to buy gold from the public. Neither the dealer cold calling to buy or the retailer advertising to buy are things I've EVER seen take place.
My read on the situation remains the same as when I posted: gold is going much higher. These guys are savvy enough to buy low and sell higher, or buy high and sell higher, as the case may be. I'm sittin' tight. 
~Tim~
Eye Candy : Why Whimsy
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Sat Feb 07, 2009 8:21 am |
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jtownes
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An extreme view, but these are extreme times: Eric Sprott sees no light at the end of our economic tunnel. What he sees, in fact, is a freight train heading straight for the world economy. The Toronto asset manager came to prominence last year when he predicted an imminent “systemic financial meltdown.” Now, writing on SeekingAlpha.com, he suggests that America can look forward to ever-worsening financial indicators leading to a failed U.S. Treasury auction and then the wholesale devaluation of the American dollar. This would likely send gold prices soaring above $2,000 an ounce, but gold bugs beware—Stott also thinks a desperate U.S. government could seize gold holdings, just as it did in 1933.
Via Stock Research Portal [url deleted]
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Mon Feb 09, 2009 7:19 pm |
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saihemanta
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I think Buy or sell gold is good, there are various reasons for this like asset protection, catching a good opportunity when the value of gold increases.
Infrastructure Development in India
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Wed Feb 25, 2009 6:37 am |
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JamesKim
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I've been watching Gold movement lately, and it doesn't make sense. Why?
Gold just passed the 1,000 mark and when the economy is bear, gold USUALLY doesn't perform well, and vise versa with a soar economy. As I was observing the movement gold.
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Fri Feb 27, 2009 3:10 pm |
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coaster
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The more significant disconnect is between the price of gold and the value of the US Dollar. The dollar has been soaring lately, and the price of gold as well. The normal relationship between the two is an inverse correlation.
~Tim~
Eye Candy : Why Whimsy
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Fri Feb 27, 2009 4:00 pm |
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jtownes
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There is some weird moves in precious metals stocks, as gold fluctuates and economic outlook gets worse pm equities fall. Gold may have fallen to $900 or so, but that’s still $200 more than November. Yet the price of gold mining stocks has risen at all. Why not? An article I read says four reasons, according to SeekingAlpha.com. (http://seekingalpha.com/article/122950-why-gold-miners-aren-t-glittering) 1. Gold could fall much lower. 2. Other metals are down. 3. Overall production is down. 4. The recession has led to less more for jewellery and gold generally. Via Stock Research Portal (http://www.stockresearchportal.com/stocknews.asp) Not sure what to make of this phenomenon, I'm willing to wait for gold but, I guess I'm growing a little impatient.
For Junior Gold Explorer and Producer Stock Research click here
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Wed Mar 04, 2009 8:29 pm |
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Zector
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Arghhhhh.... So do we buy gold or not? Its going to drop, or climb over 2k/oz? I wish I had my crystal ball out for this one.
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Thu Mar 05, 2009 2:18 pm |
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jtownes
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There are a number of options when looking for gold exposure, here’s an article I found; Gold, silver and other metals are rising in price, yet mining stocks are not. Is there an alternative? Yes, says Olivier Tischendorf. (http://seekingalpha.com/article/124556-five-metal-royalty-companies-to-consider) Royalty companies eschew capital costs yet still benefit from increased prices. Cream of the crop: Royal Gold, Franco-Nevada.
For Junior Gold Explorer and Producer Stock Research click here
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Mon Mar 09, 2009 5:48 pm |
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prasad581
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Is there such a demand among the general public that dealers have a low inventory of coins and are offering to buy back from old customers in order to sell at a profit to new customers?
may this could be the most possible reason
Debt Free
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Thu Apr 16, 2009 6:26 am |
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No-Brainer
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I'm betting that my years supply of food is going to be worth all the Gold you can find if things keep going in the same direction they are now.
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Thu Apr 16, 2009 5:53 pm |
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coaster
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Ya, you can't eat gold. 
I think about 15% of assets in gold and gold equities is a pretty decent allocation. Too much more than that and you start getting into the "gold bug" classification.
~Tim~
Eye Candy : Why Whimsy
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Fri Apr 17, 2009 1:09 am |
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jtownes
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Given the state of the economy and the price of the precious metal, that so many Americans are selling their old gold “doesn’t come as any great surprise” to the author of Stock Research Portal, who suspects that this, combined with falling sales of new gold jewelry, will result in a “net increase in gold supply” that “may dampen the gold price." -For how long is the real question.
For Junior Gold Explorer and Producer Stock Research click here
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Fri Apr 17, 2009 3:53 pm |
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