Need advice buying at local coin shop in Canada

Discussion in 'Silver' started by Calendyr, Jan 22, 2020.

  1. Calendyr

    Calendyr Member

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    Hey stackers!

    I am thinking about buying canadian constitutional silver (not sure they are called this here), so dimes, quarters, half dollars and dollars from 1967 or older.

    These coins have 80% silver content and from what I understand you get 0.6 troy ounce of pure silver per 1$ of face value (please confirm).

    So I went to a LCS tonight to look at what they were offering, knowing that at spot, I could pay 14.10$ per dollar. The guy was selling the 1$ coins for 20$ which is a 25% premium. He was also selling dimes at 75 cents per gram, that comes to a premium of 60%.... obviously I did not buy anything.

    What I want to know is: is that normal? Should I try to haggle to try to get a reasonable price? My thinking is that 8% over spot would be the max I would be willing to spend. How flexible are coin dealers usually?

    Any advice welcome.
     
  2. minimilled

    minimilled Member

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    Normal is whatever is the middle of the road at the time. As you know, the goal posts move quite a bit. So, normal is not a worthy reference point.

    I would say the premiums offered to you might be “normal” for the vendor’s point of view with circulated coins, but whether that means a bad deal depends on what the market looks like now, historically and where the trend looks to be headed.

    In Australia the 1966 round 50 cent is the only 80% circulated item. There were I think 14 million of them minted and then the silver price went so high that the metal content was worth well more than the 50 cent face value, so they were hoarded.

    So at that time you could say “normal” was for a massive premium.

    Then the silver price collapsed in the 1980s, with slow recovery from the late 90s or so.

    Back in 2009-2010, these sold at the spot price. Then, all the way up the spike and a long way down, they sold at a silly premium. Then at the low a few years ago, then again were on this site in bulk for spot price and sometimes went without a buyer.

    Now, they sell at a small premium. I think quite recent successful transactions ranged from 9-9.5 AUD a piece, when the underlying spot was about 25-26.

    As there are about 3 to an ounce, the current “normal” premium is 2-2.5 dollars over spot or around 7.5-10%

    25% premium for circulated widely available native currency is a bit hard to swallow. You should look at the trading premiums if possible for every year for the last 10, maybe in 6 month blocks. A bit of leg work, but that is free and gives you some perspective.

    The premium of 60% is BS...at least at first glance. Are these BU and of a certain year that justifies the premium?

    If not, I would not buy “junk silver” from a retail Aussie dealer for the same reason. I am still holding 2 kg of florins from 2016 underwater. Just had to have them at the time. Since then I’ve collected 20 times that in predecimal at spot and all in profit because the trend went up.

    A lesson you don’t need to learn for yourself is buying at a high premium, unless there is clear justification eg scarcity or numismatic factors. Even then, shop around and be patient.
     
    Last edited: Jan 22, 2020
  3. minimilled

    minimilled Member

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    http://coinapps.com/silver/coin/canadian/calculator/
     
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  4. STKR

    STKR Well-Known Member

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    Most things in life are negotiable. When I was buying last year I established a good relationship with my local coin dealer and was able to buy at a small premium over spot for all my coins, even high premium varieties.

    One easy method to understanding your local dealers needs is to ask questions. A simple:

    "What price could you do if I bought 100?"
    Or
    "What price per dollar could you do if I bought all of them?"
    Can go a long way...

    Whatever you do, don't ask closed questions which request a YES or NO answer, let them help you understand their needs by asking open questions which command open answers.

    If they are happy to reduce for bulk purchase and you are happy with the price reduction, you can then make an offer.

    I like to approach the situation like this:

    "Look, I'm not trying to insult you, I understand you're a business and need to make profits, but the premiums on these coins are a bit too high for me. If you'd consider doing them for $X, or at X% over spot, I would be a regular buyer at that price."

    Your approach is critical in achieving a desired outcome. Showing that you understand the other parties needs will greatly increase your chances of making a mutually beneficial deal.

    The fact is, most dealers can let their product go at close to spot and still profit. They can and will reduce the price if they feel that it will benefit them in the short and long-term.
    This was the case with my local dealer and may be the case with yours.

    Best of luck with your acquisitions. I hope that what I've written is helpful.
     
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  5. Calendyr

    Calendyr Member

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    Thanks guys. Ok, will have a chat with him an see if we can come to a deal.

    My goal would be to have a relationship with a LCS so that when it comes time to sell, it would be one more place I could do it.

    I asked him about doing ratio trades from silver to gold and he did not seems too interested. I explained to him that dealers who do it make more premium on silver than gold, so that is why it is beneficial to them even if they don't make a profit directly on the trade itself. Do you guys do trades likes that with your own LCS? I saw that in one of the youtube video I was watching. The guy traded 85 ounce of silver for 1 ounce of gold. I thought that was a great way to get gold, but I personally would wait for a better exchange rate (like 55:1) .
     
  6. STKR

    STKR Well-Known Member

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    If I were a Bullion dealer, the only time I'd trade gold for silver would be if gold demand is low and silver demand is high. Businesses will typically do what they feel is best for business. That's why you need to propose a deal to that meets their needs, and the best way to understand needs is to ask questions.

    Asking "Will you ratio trade silver for gold?" Will reveal if they will or won't. But following up with "Under what circumstances would you trade silver for gold at the current ratio?"
    Or "at what ratio would a silver/gold trade benefit you"
    Will reveal a lot more. Open questions = more information.

    You can do the maths on what they buy silver at vs what they sell gold at and figure out the ratio. They can indirectly offer ratio trades through buying and selling, but at a much higher rate - say 100:1 or more.
    Once you know their buying/selling ratio, you can negotiate from there and meet somewhere in the middle.

    My local coin store doesn't believe silver is rare by any measure. They think the 80:1 ratio is a natural one because of how much silver was available to purchase in the last major bull run. They said that people were coming in droves to sell their round 50cents, coins, bars and silverware. I doubt they would trade silver for gold at the current ratio, but I've never asked.
     
  7. minimilled

    minimilled Member

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    Silver isn’t rare. Osmium is. Holmium perhaps. These are items that might go wild in a squeeze, but most probably end in the gutter with the rest in a market slump. That includes silver AND gold. That’s what happened in 2007-8 despite all the pundits in chorus saying how high both would go. Dead wrong with the timing.

    A rough eyeball of the GSR for the last 20 years puts the average around 65, with the silver bull run GSR in the low 30s at its zenith
    https://www.macrotrends.net/1441/gold-to-silver-ratio

    If you look at the big picture, the 100 year graph, it rarely is as high is as it is now.

    Off topic, there is a nice little summary of what is deemed a supply risk here. (British Geological Survey, 2015)
    https://cdn.shopify.com/s/files/1/0291/5505/files/RiskList2015.pdf?8518533898950182075
     
  8. Calendyr

    Calendyr Member

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  9. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

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    Every coin shop can be wildly different in prices too. Some are rediculous and some just want to move products and are very fair.
    You might have to shop around and get a feel.
    I've been to some crazy high priced coin shops before and they wont negotiate.
     
  10. Calendyr

    Calendyr Member

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    Went to a different one today.

    Guy had a bunch of junk silver he was willing to get rid of at spot price. Then he told me that silver bellow 90% purity was taxable... we agreed to spot -5% + taxes (15.025%) so about 10% over spot. That is a little more expensive than the premium I usually pay on 10 oz bars but lower than 1 oz bars or bullions.

    Funny thing is he did not want to let me choose which coins I wanted from the stack... according to him at that price it's just for the weight so no choosing. I did not really mind but found it funny.

    So I purchased 150$ worth of coins. Gonna have a look at it in a few minutes ;)
     
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  11. Slimey

    Slimey Active Member

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    I had a similar experience with a coin dealer as well. I found it really weird when he limited my purchase of junk silver coins. It was as if they were precious jewels. I adopted a new tactic the next time I saw him. I first asked the price and then asked how many I could have.
    I suppose its not easy being a coin dealer.
     
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  12. Calendyr

    Calendyr Member

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    I could understand if the store was busy and he did not want to waste time. But I was the only one there.

    Next time, if there is one, I will try what you did. Ask if he has any junk silver he wants to get rid of, select a few coins and negotiate.

    Since junk is not really affordable because of the taxes, I doubt I will buy more. The idea was to get it at spot price...
    but you never know, I might want to add some more for reasons I cannot think of right now.
     
  13. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

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    You had to pay taxes to buy money? That's weird.
     
  14. Calendyr

    Calendyr Member

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    Ya, I agree. Anything under 90% purity is taxable. Our junk silver is 80% silver so.... thcha ching for the government.
     
  15. mostly_broncos

    mostly_broncos New Member

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    buy canadian junk from the US , I see it here for spot usually. We can buy dollars at spot there is no premium for most of the 1960's dollars aside from 67.

    Totem poles , newfoundland etc are generally over spot for sure. I've bought 1939 dollars at spot . Most local places here keep the foreign junk segregated by % . My favorite store has a huge 80-90% bag full of canada stuff , I look at it once a month but I tend to buy other countries first. I have a weakness for maria theresa thalers so I'll grab them then 1 and 2 franc LMU stuff and if I have leftover budget I'll go through and pick out canadian dollars or halfs , wolves first then some odd dates that have possible premiums .

    He has been scrapping sterling as fast as it comes in even though I tell him to hold sterling coins for me. Not Olympic garbage but I love newfie coins or sterling from Australia and Britain .

    Heck I'd post some on ebay for you but after covering fees and shipping it would be well over spot .

    Ebay does give you a wide selection though and you don't need to burn gas looking
    .
     
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  16. Slimey

    Slimey Active Member

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    Don't worry about Olympic garbage...I think I picked up most of it....hey it looked exotic at the time!!!!
     
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  17. mostly_broncos

    mostly_broncos New Member

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    the 1988 calgary olympic stuff wasn't bad the montreal stuff is like a virus no one wants it :rolleyes:
     
  18. Slimey

    Slimey Active Member

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    I got it below spot when spot was a lot lower so as far as a virus goes, i am not hurting too bad. Hey, I realised a just made a joke...virus..spot. I am just as bad a comedian as I am an investor.
     
  19. mostly_broncos

    mostly_broncos New Member

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    I went to that same coin shop today and spent $150 US dollars on the 80% bag! not too much canadian a totem pole dollar a 67 howlin wolf half and a 1936 dime.

    I grabbed all the french silver first about a dozen francs a dozen 50 cent and 4 2 franc coins. 9 bolivars of Venezuela , 3 belgian francs, 70 centavos from Portugal , 3 un pesetas and a maria Theresa a few 80% 10 centavos from mexico and a worn coin with a lion on it that might be from iran i need to get a better look at it.

    The upshot is I reminded him again I want sterling and his wife says we have some its in with the canadian tokens!

    I was out of money but I looked and sure enough some rolls of silver 5 cent 10 cent and 25 cent coins a few newfie 20 cents and a big pile of copper. I never even knew there was a bag of that so I picked out8 coppers and he is going to look them up and give me a price.

    I find if I buy slow to move stuff like copper tokens I will get a better price on the silver down the road.

    This is important when dealing with shops , take some stuff off their hands and it buys good will if you do it right. I like the tokens but I don't need them , he will quote a price too high I'll haggle a few bucks off and take them next week. Then maybe dump them on ebay. I might lose a few bucks but getting access to all these early 1900's francs and whatnot a tick over melt is worth it to me over the long haul
     

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