Buying and selling - Rules of thumb

B

bull_bear

New Member
Silver Stacker
Seems to be constant talk around 'low ball' offers etc
So thought I'd start a "newbies guide" where we can add some general rules of thumb around silver bullion value. (if there is another one out there sorry I couldn't see it)

"Rules of thumb" are not a definitive guide, vary from individual to individual, do not replace negotiations and do not apply in all circumstances. Things like postage costs, seller reputation, volume discounts/ongoing business dealing, urgency of sale etc do need to be considered.

I'd like this thread to be used to share "Rules of thumb" or observations around possible values or generic silver and around specific coins/series (Sovereigns/Pandas / Kooks)
Please don't use this thread to point fingers, moan there are no buyers at your price or complain that you were only offered 5% of face value on your proof kilo gold Lunar Horse.

Ok, let's start it off with some of my basic rules of thumb:

Spot
Physical bullion is generally worth over spot (many threads cover why). If a seller offers you spot accept it as it's generally a good deal. But don't offer a seller spot They would be better off taking it to dealer (no counterparty/postage risk etc) *
*"Junk" silver is a possible exception


Silver available at a dealer
If the item is available at a dealer, that should be its maximum value in the second hand market. The seller needs to offer a discount on this price otherwise why should a buyer take on extra counter-party risk?
Rule of thumb would be the 2nd hand market value is around 70%-90% of the dealers margin
(eg. For a 1kg bar worth $730 at spot and selling for $790 at a dealer, 2nd hand market value is about $730 + 70%x$60 to 90%x$60 - In this example $770-$780)


Round 50's
WDavis.com.au is a good source for round 50 pricing.
Rule of thumb would be: If you are not from a capital city with easy access to dealers with this sort of pricing, market value is probably at the upper end (or over) his sell price. Otherwise, aim to pay around the WDavis mid-point.


Low premium 1oz
Generic "low premium" 1oz rounds are worth $2-$4 over spot.
At $2 expect milk spots and no capsule, at $4 the round might look new. Any more than that and buyers can look to buy a brand new ASE/Maple/Philly from a dealer.


EBay
Where it's possible to find previous sales, these are the best guide to value, However:
Ebay prices can't all be trusted. The ones that may be used as a guide are those where the item has already actually sold, is in the same country as the buyer/seller, and that pass the "sniff test"
i.e. don't appear to be too outlandishly high or low, the seller has a good reputation & the overall sale seems legit.

One sale does not make a market price. The more similar sales the more confident you can be in the value. Also consider the spot price when the auction was actually taking place.

When selling on this forum, Ebay prices should be adjusted downward to account for seller's costs (~10-12%) and the extra postage margin sometimes applied on Ebay.


Vintage/Rare
When buying vintage/rare items, beauty and value is in the eye of the beholder, but they are generally worth at least the current equivalent. But the rarer the item, the less relevant spot & past sales are even if sales are recent. Collector premiums are fickle, and if you want to sell your item for a big premium, be prepared for it to take time (weeks+ )


Modern Proofs
Modern proof coins do not generally trade well on this website. Don't be surprised if your one year old mint condition $100-from-the-Perth-Mint 1oz coin that sold out within 1 minute of going on sale is only considered to be worth a modest premium over spot here. Unless it's the current "hot" coin (right now it's the Zeus) this site is unlikely to be your target market for the best value when selling.
If you are going to sell here, accept that you won't get top dollar and put a price on the coin, An EOI might indicate to others that your expectations are too high.


WTB
If you put up a WTB thread for a rare item, expect to pay a premium for the privilege of buying. It's still worth doing to complete your set.
However, don't be afraid to put up a WTB for common items people are reluctant to advertise 1-2 ounce at a time, but there is probably someone around with a spare kook that you want and is happy to sell at a reasonable price.


Overall
The seller will generally know the market for that item better than the buyer, so do not unnecessarily waste their time.

If you do offer a price that is significantly lower than the offer price and/or fair value, be prepared to back it up with a reason. (e.g. link to current or past sales,)
The seller may otherwise (incorrectly) believe that you are low-balling, because they are not aware that you found a dealer offering the same product from a buyback cheaper than them, or that recent ebay sales show premiums have dropped etc

If you have what is perceived to be a high price on your item up front, you are more likely to low balled up front as part of the negotiations.


Finally from me, sometimes it's worth paying a little bit more for an item and building up relationships with sellers. Next time you might get a preferential deal on that special hard to find item!
 
bull_bear said:
Silver available at a dealer
If the item is available at a dealer, that should be its maximum value in the second hand market. The seller needs to offer a discount on this price otherwise why should a buyer take on extra counter-party risk?
Rule of thumb would be the 2nd hand market value is around 70%-90% of the dealers margin
(eg. For a 1kg bar worth $730 at spot and selling for $790 at a dealer, 2nd hand market value is about $730 + 70%x$60 to 90%x$60 - In this example $770-$780)
Click to expand...

Just be cautious on the above statement.

It needs to be understood that each private seller here has a different entry price.

A genuine question: If a private seller bought his/her bars (e.g. 1KG PAMP silver bars) at spot $30+ back then, should the seller sells them below the current dealer's price to coup more further losses just because the items are available at the dealer?

In regards to delivery, I believe each private seller takes a very careful approach how a parcel gets delivered. With bulk purchase (e.g. over $4-5k worth), generally f2f transaction will be taken in place; or arrange a courier delivery with the agreed terms and costs with a buyer.

Dont underestimate buyers and crucify sellers.

[LD]
 
Lunardragon said:
each private seller here has a different entry price.

A genuine question: If a private seller bought his/her bars (e.g. 1KG PAMP silver bars) at spot $30+ back then, should the seller sells them below the current dealer's price to coup more further losses just because the items are available at the dealer?
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The sellers entry price is irrelevant to the buyer, it may anchor the seller to an asking price, but at the end of the day, the seller will need to meet the market if they want to sell, regardless of their buy price.
If that market includes a dealer, then a private seller may need to factor that in.

The seller needs to offer a discount on this price otherwise why should a buyer take on extra counter-party risk?
Click to expand...
Should have said the seller probably needs to offer a discount.
If the buyer has the option to purchase an item from a dealer, that is generally the lowest risk option.
Sure, if you can do a f2f the postage risk is mitigated, and if you are buying from a respected seller the risk of receiving a non-genuine product is low.
But in general, there is a slightly bigger chance of something going wrong with a private deal, so a buyer might factor that in. (of course a buyer wont always know a dealer has a product on hand - and price isn't everything)
 
bloomst said:
Is this your thumb?
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11242_thumb1.png
 
End of the day, money talks, bull dust walks.

the seller is the owner of the goods, they can sell it for as high or low as they like.
buyers have no say in the matter, previous sales mean nothing, availability from elsewhere means nothing.

dealers price lists mean nothing either, those things are easily manipulated, when your out of stock you lower the sell price,
which lowers your buy price, customer wants it, sorry just sold out, customer wants to sell it, no problem, sell at the low manipulated price.
back in stock and prices go up.
 
Depends if it's a buyers or sellers market at the time of the sale for the particular product.
 
miniroo said:
the seller is the owner of the goods, they can sell it for as high or low as they like.
buyers have no say in the matter, previous sales mean nothing, availability from elsewhere means nothing.
.
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Yes and No. They can try to sell it for as high as they like, but I think the point was if they are actually hoping to sell it, then aiming for lower than a dealer price makes sense. I agree with the rest of what you said though, so common sense still needs to be used. I do also think however, that if someone is asking too much for an item, their sales thread is not the place to point that out.
 
Bad, bad, bad.
My rule of thumb when I first started buying silver was spot was too much and I bought a lot without paying spot and without lowball offers and without haggling. I have no place in the market now as my rule of thumb does not work anymore.
That is the market. Trying to put order into something you have absolutely no control of is foolhardy.
There are buyers and sellers and prices are not written in stone. When silver was over forty bucks, an offer in the thirties would be deemed as rude but now would be a godsend.
This is the same path governments go down trying to control markets etc believing they can smooth out the lumps. It never works and all too often creates bigger problems. It is all done with the best intentions of course but fails nonetheless.
 
tolly_67 said:
Bad, bad, bad.
My rule of thumb when I first started buying silver was spot was too much and I bought a lot without paying spot and without lowball offers and without haggling. I have no place in the market now as my rule of thumb does not work anymore.
That is the market. Trying to put order into something you have absolutely no control of is foolhardy.
There are buyers and sellers and prices are not written in stone. When silver was over forty bucks, an offer in the thirties would be deemed as rude but now would be a godsend.
This is the same path governments go down trying to control markets etc believing they can smooth out the lumps. It never works and all too often creates bigger problems. It is all done with the best intentions of course but fails nonetheless
Click to expand...

I think you missed the point... he's simply trying to establish guidelines to help new members buying/selling on the forum, not try and control markets :/ Order has already been established amongst older members due to their observations of how trades are run and it helps the process if everyone is on the same proverbial page. I think every member would agree with that.

As per your example of offering $30 when silver was $40, it is no different from offering $12 now that it's $22. Bull_Bear is simply highlighting that fact for the newer folk to save everyone some time. His first line is a succinct disclaimer that none of what he has written is applicable to every situation.

Out of interest, how did you frequently obtain silver for less than spot without lowballing or haggling?
 
tolly_67 said:
Bad, bad, bad.
My rule of thumb when I first started buying silver was spot was too much and I bought a lot without paying spot and without lowball offers and without haggling. I have no place in the market now as my rule of thumb does not work anymore.
That is the market. Trying to put order into something you have absolutely no control of is foolhardy.
There are buyers and sellers and prices are not written in stone. When silver was over forty bucks, an offer in the thirties would be deemed as rude but now would be a godsend.
This is the same path governments go down trying to control markets etc believing they can smooth out the lumps. It never works and all too often creates bigger problems. It is all done with the best intentions of course but fails nonetheless.
Click to expand...

I'm not sure how you conducted business in the past (e.g. probrably owned one of those "sell your gold/silver" stalls at the shopping centres)

Anyhow, Yes, we have no control over the market prices, it is controlled supply and demand. (economics 101). How supply and demand are created is another discussion. Anyhow, yes, we don't know the "spot" price of silver for future. But @ currently, the wholesale silver market is buying/selling on the market around spot. (a bid and a sell price).
And with no information, that's the price you rely on to trade.

Now you don't appear to understand the concept of mark up and/or market prices. Yes, an offer in the $30s would be rude when spot price is $40.
That's like house said $12 @ the current $22.

It doesn't matter if your entry price was high or low. If you are currently trading, the only price that matters is the market price. The historical price only influences your predictions and forecast, but if you want to buy silver, you trade @ the market price. That's like pretty much every market.
You don't go to the bank nowdays and expect 7% on a Term Deposit. Nor should you expect to pay 23% on a mortgage.

Markets move. You need to stay with them.

I think many people forget that this is a traded commodity they invest in, and as such prices move constantly, you may take a loss buying silver. Deal with it.
 
I bought most of mine on ebay and at the time it was very unusual to pay even spot. Others will back me on this one regarding prices 9 years ago.
As for market price, you only have to consider a stock market crash to see that market price can collapse in a day. You can apply fundamentals all you like but at the end of the day, a potato is worth more than a Ferrari when you are starving.
 
tolly_67 said:
I bought most of mine on ebay and at the time it was very unusual to pay even spot. Others will back me on this one regarding prices 9 years ago.
As for market price, you only have to consider a stock market crash to see that market price can collapse in a day. You can apply fundamentals all you like but at the end of the day, a potato is worth more than a Ferrari when you are starving.
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Yes.
But in a market crash, just say, 50% of value is wiped off the board.
How does this happen?
Everyone is trying to sell and not as many buyers as sellers. Supply outstrips demand.
In this case, just say I want to buy shares in woolworths and half their value has just been wiped off, what do I pay?
Market price... (50% of yesterdays price, but today's market price nevertheless)
 
I agree with Tolly, these suggested guidelines are an attempted intervention upon the secondary market, based on one persons perception. They are in no way an acceptable baseline to run off.

In the secondary market, the only acceptable price is the one that the buyer and seller agrees to. There are plenty of people who will pay high prices and those who will not.

I think this forum is presently dominated by a group whom have set a paradigm of high pricing and expect that everyone else will accept this to validate their 'valuing' of items. I think this type of 'guideline' also attempts to validate high prices.

Fact is silver is an item that has been in steady decline since May 2011...thats almost 3 years now and you'd have to be a goober to pay a high price for a second hand good that is still in decline. As stated by Htu08 buying silver...will loose you moneys.

So I reject your guide and say let the goobers decide the price themselves !


Mr.G
 
Mr.G said:
I agree with Tolly, these suggested guidelines are an attempted intervention upon the secondary market, based on one persons perception. They are in no way an acceptable baseline to run off.

In the secondary market, the only acceptable price is the one that the buyer and seller agrees to. There are plenty of people who will pay high prices and those who will not.

I think this forum is presently dominated by a group whom have set a paradigm of high pricing and expect that everyone else will accept this to validate their 'valuing' of items. I think this type of 'guideline' also attempts to validate high prices.

Fact is silver is an item that has been in steady decline since May 2011...thats almost 3 years now and you'd have to be a goober to pay a high price for a second hand good that is still in decline. As stated by Htu08 buying silver...will loose you moneys.

So I reject your guide and say let the goobers decide the price themselves !


Mr.G
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See, nothing wrong with a well structured and thought out post like that.

On the other hand, saying something like,

There are buyers and sellers and prices are not written in stone. When silver was over forty bucks, an offer in the thirties would be deemed as rude but now would be a godsend.
Click to expand...

Is totally different.

If you believe that silver in the secondary market should be sold at or below wholesale price, fair enough! Nothing wrong with that.
But Tolly has totally rejected market prices in his post.
 
Sorry if it appears if I am stirring the pot. Each one of us has our own experience and as such would offer different advice to newbies and with all opinions we would all eventually agree to disagree........
 
House said:
M Order has already been established amongst older members due to their observations of how trades are run and it helps the process if everyone is on the same proverbial page. I think every member would agree with that.
Click to expand...

I'm a member, and I disagree with that.

What has happened in the past does not mean it has to happen now or again. And this crystalise my previous posts. So called older members paradigm's are not the final word (neither is mine).
 
Mr.G said:
I think this forum is presently dominated by a group whom have set a paradigm of high pricing and expect that everyone else will accept this to validate their 'valuing' of items.
Click to expand...
WHAT?)))
this forum offers the most diverse stock for the best price no other place can beat
 
tolly_67 said:
Sorry if it appears if I am stirring the pot. Each one of us has our own experience and as such would offer different advice to newbies and with all opinions we would all eventually agree to disagree........
Click to expand...

Nothing wrong with opinions.

When silver was over forty bucks, an offer in the thirties would be deemed as rude but now would be a godsend.
Click to expand...

But I just think its brutally misleading when you post something that calls for a rejection of market prices in the valuation of silver. I understand that there is disagreement in the selling premium (or under premum), which is fair enough. You might think spot + 10% is too much. Or even spot +1% is too much. Or even spot - 5%.

But a statement like the one you made, has totally rejected the idea of market prices. What I'm trying to say is, the $30 offer when spot was $40 is totally different to the $30 offer when spot is $22. And EVERYONE has to try and understand.
 
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