True value of second hand bullion

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well u pay here in Australia gold pelican. but you dont overseas.
Not for second hand with zero numismatic.

Im talking both bullion bars up to a kilo and ounce rounds

I dont think its neccessary to over pay because what are you actually getting with that premium over spot?


What costs are dealers factoring into new nonnumismatic bullion?

Tax obviously
advertising
admin
goodwill costs (returns and so on)
etc etc etc
Can you quantify roughly how much of the premium on new bullion accounts for these costs and value that simply doesnt exist in 2nd hand bullion.
(yet in Australia we pay for it anyway)
 
I think you've got some misconceptions about "overseas" RomanControl.

Having visited the states numerous times, yes, you can buy bullion cheaper there - but it is an economy of scale thing - there are private mints in the US (and a lot of them) that crank out more 1oz rounds in a year than the Perth Mint makes 1oz coins. ASEs are minted in the tens of millions. It's simply cheaper to start with, even new from dealers. US investors can buy ASEs at retail prices for less than the wholesale prices the Perth Mint charges for 1oz coins. The products are very different - but if you're chasing cheap silver, the supply simply isn't in Australia.

I've done the legwork on getting private rounds manufactured in the US - even ordering in the tens of thousands, the wholesale cost over spot is higher than many of the "specials" you see online. Don't know if you've ever heard of the concept of a "loss leader", but sometimes companies sell a product at cost or below in order to attract new customers. APMEX are probably getting their rounds made literally in the hundreds of thousands, or even low millions of ounces per year, which is a totally different scale of production with lower costs again. A couple of sales of minted rounds in tubes for under $1/oz premium does not define a market.

I don't know if you've been buying silver long enough to experience a physical shortage in the market either - times when you just can't get your hands on silver for love or money, because there's six week waits or longer from *anyone*. When that happens, premiums in the secondary market rocket from simple supply & demand.

I've been the guy on the customer side of the counter in many a US coin or bullion shop - you can't buy new rounds for 89c over the counter. Got lucky in one coin shop (a real *coin* shop that just had some bullion on the side) with the $1/oz bucket of old 1oz bars - APMEX bars in the wrapper were the same price as 1979 Valentines Day art bars. Mind you, he was paying $5/oz under spot for them too if you wanted to sell to him.

Have a look on eBay if you want to see the real "second hand" bullion market in the US - a quick search on APMEX silver completed listings shows auctions closing at $4-6/oz over spot for 1oz rounds (and occasionally higher for bars). These are auctions, not buy it now - so you can't explain away the higher prices with "eBay and PayPal fees" - no bidder is going to bid an item higher out of kindness to cover the sellers fees, it's simply price discovery.

If you want to find out the OpEx of a bullion dealer, I suggest you start your own.
 
If I had the capital , I don't see the advantage of being a dealer when I can sell privately with less costs and the same markup
 
RomanControl said:
[youtube]http://www.youtube.com/watch?v=t0_egjO1EEY[/youtube]
Click to expand...
Mate that's old ,what are you trying to say :rolleyes:
You really don't have a grasp of how business actually works :(
 
As someone who was looking at having bars manufactured about 6 months ago, I can tell you now that I was looking at spot +5% for a simple poured bar with a generic lettered stamp on it. Thats before shipping, customs etc.

Oh, and the kicker? It was in the US too.
 
It's a bit of a chicken and egg thing here in Australia. Noone is going to sell for close to spot, because they can't buy at close to spot. Who in their right mind would buy something at a particular level of premium and then on-sell it without retaining some or all of that premium in the price? (unless they were desperate for a quick sale)

And as for why the premiums on generic rounds are less in the US than here in the first place, it's been said before: economies of scale. We simply don't have the same number of private mints churning out minted bars and rounds, nor the same number of potential buyers.

Australia's strength lies in its relatively high-premium coins (i.e. mostly Perth Mint), some of which are bullion (e.g. Koalas); some of which should be considered semi-numismatic (Kooks, Lunars ... due to the limited mintage). But even the 'pure bullion' coins change design every year, have reverse-proof elements and are finished to a higher quality than American bullion coins like ASEs. And there are advantages to stacking these coins; namely that the premium is retained when you on-sell, and this offers you a good hedge against falling silver prices (especially with the limited mintage coins like 1 oz kooks, gold roos and lunars). I bought some kooks last year at a ~15% over spot premium when silver was around ~$37. And despite the fact that silver is now ~$31, if I sold them today, I wouldn't have lost much money on them. I agree though that this starts treading the line between 'coin collecting' and 'stacking' though - limited mintage bullion is as close to numismatics as I intend to get and I'll be steering well clear of actual numismatics.

The only way of getting American prices for generic rounds is probably to actually travel to the US and bring them back in person (obviously only worth it if you are travelling there for other reasons already). Thing is though, this only works with smallish amounts at a time (<$1000 AUD), lest you risk customs being retards and trying to charge you GST (though on 999 silver, they shouldn't!), so it'd be a slow process...
 
Cimexus said:
It's a bit of a chicken and egg thing here in Australia. Noone is going to sell for close to spot, because they can't buy at close to spot. Who in their right mind would buy something at a particular level of premium and then on-sell it without retaining some or all of that premium in the price?
Click to expand...

A good point. And one that would lead to questioning the Institution i.e. Perth Mint,
and their buy back policy.
Why would they, as a recognised bullion trader, expect the Public, to sell back to them, under Spot?
Cheers
Aum
 
Aum said:
A good point. And one that would lead to questioning the Institution i.e. Perth Mint,
and their buy back policy.
Why would they, as a recognised bullion trader, expect the Public, to sell back to them, under Spot?
Cheers
Aum
Click to expand...

Just a guess - maybe their pricing policies are designed to discourage people selling back to them? The time it takes to conduct a buyback transaction may make it economically unviable to offer higher prices.
 
goldpelican said:
I think you've got some misconceptions about "overseas" RomanControl.

Having visited the states numerous times, yes, you can buy bullion cheaper there - but it is an economy of scale thing - there are private mints in the US (and a lot of them) that crank out more 1oz rounds in a year than the Perth Mint makes 1oz coins. ASEs are minted in the tens of millions. It's simply cheaper to start with, even new from dealers. US investors can buy ASEs at retail prices for less than the wholesale prices the Perth Mint charges for 1oz coins. The products are very different - but if you're chasing cheap silver, the supply simply isn't in Australia.

I've done the legwork on getting private rounds manufactured in the US - even ordering in the tens of thousands, the wholesale cost over spot is higher than many of the "specials" you see online. Don't know if you've ever heard of the concept of a "loss leader", but sometimes companies sell a product at cost or below in order to attract new customers. APMEX are probably getting their rounds made literally in the hundreds of thousands, or even low millions of ounces per year, which is a totally different scale of production with lower costs again. A couple of sales of minted rounds in tubes for under $1/oz premium does not define a market.

I don't know if you've been buying silver long enough to experience a physical shortage in the market either - times when you just can't get your hands on silver for love or money, because there's six week waits or longer from *anyone*. When that happens, premiums in the secondary market rocket from simple supply & demand.

I've been the guy on the customer side of the counter in many a US coin or bullion shop - you can't buy new rounds for 89c over the counter. Got lucky in one coin shop (a real *coin* shop that just had some bullion on the side) with the $1/oz bucket of old 1oz bars - APMEX bars in the wrapper were the same price as 1979 Valentines Day art bars. Mind you, he was paying $5/oz under spot for them too if you wanted to sell to him.

Have a look on eBay if you want to see the real "second hand" bullion market in the US - a quick search on APMEX silver completed listings shows auctions closing at $4-6/oz over spot for 1oz rounds (and occasionally higher for bars). These are auctions, not buy it now - so you can't explain away the higher prices with "eBay and PayPal fees" - no bidder is going to bid an item higher out of kindness to cover the sellers fees, it's simply price discovery.

If you want to find out the OpEx of a bullion dealer, I suggest you start your own.
Click to expand...
Im not sure you looked hard enough for rounds manufacturers

Heres an email from a US mint from my enquiries

Thank you for the additional details...

Bullion Production / Satin Finish
500 to 749 pcs $1.15 each
750 to 1000 pcs $1.00 each

Silver purchase is $ .50 over Market - Market Lock is established upon receipt of cleared funds for silver purchase. 500 to 1000 pcs/production 3 weeks from receipt of funds for silver production.

Coin tubes $ .25 each / packaged 20 coins per tube

Please also consider shipment costs. We generally ship via USPS Registered Mail/Insured to all U S Postal locations. Insurance is calculated based on order value at time of shipment.

Let me know if you have any further questions, I am happy to assist you.


$1.50 each still leaves a dollar or two per round profit I also found a place for 99c over spot for over 1000 pieces but cant find the email i must have deleted it
 
RomanControl said:
Tax obviously
advertising
admin
goodwill costs (returns and so on)
etc etc etc
Can you quantify roughly how much of the premium on new bullion accounts for these costs and value that simply doesnt exist in 2nd hand bullion.
(yet in Australia we pay for it anyway)
Click to expand...

Shipping.

Shipping is a killer in Australia.

Our admin costs are also higher because businesses here pay wages people can actually live on and super so we can retire without having to see out our days eating dog food.

There's also the fact that dealers have to make a buck themselves, which is why in the U.S. they'll purchase any privately minted, generic round with an ugly design that is covered in scuff marks for below spot and sell it a bit above spot. If some guy off the street is prepared to buy it off them, they make money. If nobody wants to buy it, they send it off to a smelter paying minimum wages and get it melted down for cash or in exchange for a new privately minted, generic round with an ugly design that's got a bit more shine to it. If they're a big dealer, they sell it at or below cost to gain market share and pick up the difference selling higher premium stuff to collectors.

We simply don't have that kind of market here because we don't have the population to sustain such massive churning of metal. Even if we did have the same number of private mints as the U.S. does, they'd still have to ship their products out which, again, with our higher shipping costs mean they still wouldn't be competitive on the international market (ergo, there wouldn't be enough demand and a lot of private mints would have to close up shop).

You can get low premium bullion here: post-46 predecimal goes for spot (or less), 100oz bars go for a bit either side of spot depending on who's selling them and 15kg blocks are available at extremely low premiums.

If you want bullion that other people actually want so you can trade with them, you pay more because that's what the market, in general, is prepared to pay.

That's sort of how markets work.
 
I don't think someone will listen and comprehend your information though Big AD.
There is an agenda and anything that gets in the way is ignored.
 
Big A.D. said:
RomanControl said:
Tax obviously
advertising
admin
goodwill costs (returns and so on)
etc etc etc
Can you quantify roughly how much of the premium on new bullion accounts for these costs and value that simply doesnt exist in 2nd hand bullion.
(yet in Australia we pay for it anyway)
Click to expand...

Shipping.

Shipping is a killer in Australia.

Our admin costs are also higher because businesses here pay wages people can actually live on and super so we can retire without having to see out our days eating dog food.

There's also the fact that dealers have to make a buck themselves, which is why in the U.S. they'll purchase any privately minted, generic round with an ugly design that is covered in scuff marks for below spot and sell it a bit above spot. If some guy off the street is prepared to buy it off them, they make money. If nobody wants to buy it, they send it off to a smelter paying minimum wages and get it melted down for cash or in exchange for a new privately minted, generic round with an ugly design that's got a bit more shine to it. If they're a big dealer, they sell it at or below cost to gain market share and pick up the difference selling higher premium stuff to collectors.

We simply don't have that kind of market here because we don't have the population to sustain such massive churning of metal. Even if we did have the same number of private mints as the U.S. does, they'd still have to ship their products out which, again, with our higher shipping costs mean they still wouldn't be competitive on the international market (ergo, there wouldn't be enough demand and a lot of private mints would have to close up shop).

You can get low premium bullion here: post-46 predecimal goes for spot (or less), 100oz bars go for a bit either side of spot depending on who's selling them and 15kg blocks are available at extremely low premiums.

If you want bullion that other people actually want so you can trade with them, you pay more because that's what the market, in general, is prepared to pay.

That's sort of how markets work.
Click to expand...
I suggest you look at the shipping rates &divide it up by the number of coins & you will find you can still be competitive



http://www.coin-rare.com/shipping-policy.aspx

Misinformation is starting to become rife around here
 
Naphthalene Man said:
I don't think someone will listen and comprehend your information though Big AD.
There is an agenda and anything that gets in the way is ignored.
Click to expand...

I would've thought what Big AD & GP posted was common sense.

There is far more than meets the eye to get silver rounds created and imported.

Even if you manage to get 99 cents over spot rounds as per renovator's post you still have (I might be missing some stuff):

- Shipping
- Insurance
- Customs fees (minor but still)
- Wiring fees
- Escrow/COD or whatever fees

And this is ignoring
- FX Risk
- Silver spot fluctuation Risk

Just taking into account the costs of getting the rounds to Australia you'd be lucky to get $3/oz over spot.

Then you'd have to market your product and build up a network to sell, probably another 50 cents on top just to get some ads up. I'll assume this includes setting up the ABN, web hosting etc.

This still is break even no profit. For the amount of risk you're taking you definitely need a profit or why would you bother?

Low risk low return, high risk high return.
 
I would still prefer to pay a premium over spot to be able to walk into a bullion shop in Australia, pay my money over the counter and trouser the silver there and then. Same goes for F2F in Sydney. Interstate Silver Stackers would be the third level preference in the scheme of things. - buying collector coins from Maggie, paying for auction wins and some lucky buzzes or hard to get coins.

I am not the sort of guy to send a couple of thousand dollars OS, wait a month, trust I'll get my coins, hope spot hasn't crashed in the meantime and then pass them on to my chums at cost.

You would have to be Pollyanna to expect second hand bullion at close to spot!
 
renovator said:
I suggest you look at the shipping rates &divide it up by the number of coins & you will find you can still be competitive



http://www.coin-rare.com/shipping-policy.aspx

Misinformation is starting to become rife around here
Click to expand...

Yeah, 100oz of ASEs cost $49.95 or $0.50/oz extra to get them here.

Then you add the customs charge of ~$60 which brings it up to ~$1.10/oz.

Then there are exchange rate/wire transfer fees. You can do that relatively cheaply now, but that's still going to add another $0.05-$0.15/oz.

Those coins on that site are already USD$4.05 over USD spot, so we're now at about USD$5.25 over spot.

You can get the same 100 ASEs locally from Bullion Money for AUD$4.82/oz over spot plus ~$0.17 shipping or $4.99 all up, so even with the AUD/USD exchange rate being what it is, it would still be more expensive to get those coins shipped in from overseas.

And five bucks over spot is apparently still way too expensive for some people.
 
renovator said:
goldpelican said:
I've done the legwork on getting private rounds manufactured in the US - even ordering in the tens of thousands, the wholesale cost over spot is higher than many of the "specials" you see online.
Click to expand...
Im not sure you looked hard enough for rounds manufacturers

Heres an email from a US mint from my enquiries

Thank you for the additional details...

Bullion Production / Satin Finish
500 to 749 pcs $1.15 each
750 to 1000 pcs $1.00 each

Silver purchase is $ .50 over Market
Click to expand...

...which backs up my point exactly? APMEX will do retail specials for 1oz rounds at 89c over spot. Less than the raw fabrication charges being offered wholesale.

I had similar quotes (but without the 50c/oz premium).
 
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