Don't Trade Your Metals to A Dealer - Sell Them Privately
I recently came across a gold coin I desperately wanted. For those of you who know me, I normally have the motto "Gold is gold." If it's .750 fine or better, I'll buy it as close to spot as I can get. This one was different, and I'll share it in a future post, because right now it's in the process of being shipped to me.
I was short of cash and between paychecks, and the dealer I normally use only had 20 of these quarter ounce gold coins in stock. From personal experience, I know that's nothing and they would be gone in a week or less. I had some ten ounce silver bars I was willing to part with, so I messaged him and asked if he'd consider a trade.
The Offer
He said yes, but his offer price was melt value. I was shocked. For those who aren't familiar with gold and silver buying, any retail products always carry a premium. Coins have a higher premium than larger bars, but I was still expecting to be offered maybe $1.50 over spot. Nope!
Price Spread
I hadn't looked at his pricing of ten ounce silver bars and really should have. He was selling them for around $1.75 over spot. It's a great price if you're buying, but for him to make a worthwhile profit it's no wonder he offered melt value.
Selling Elsewhere
I knew my local coin store would offer me $1.50 over spot on silver, because they can never keep it on stock. I was willing to bet I could get more than that. I ended up waiting a few days and listed them for sale and found a buyer. I sold those two bars for $2.50 over spot and the buyer even paid shipping! I had the money in my account in a day, shipped off the bars and bought the gold coin I wanted.
Don't Settle
All of this leads up to a few key points:
- Don't sell when you're desperate
- Know the market
- Sell to private individuals
Selling when you're desperate will lead you to lose money. I didn't because I was willing to miss this deal, rather than short myself. I knew what I had, what is was worth and that I could get that for it. Dealers have to make a profit or they go out of business, so unless you bought your gold or silver far cheaper than spot price, you're better off selling privately to recoup as much of your premium as possible.
Follow these tips and you'll have no regrets!
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Great advice, @bulliontools !
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Psychology and knowledge always comes to play in business.
If it's face to face, a professional trader knows how to judge a desperate buyer or seller and knows how to coax and prod them to get the most profit 😂😂
Yeah, you have to have a good poker face if you're selling in person. 😆
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You did good. It is a very good explanation of how the market works. You should never be in a hurry to sell and you should always have some cash available to buy.
Thanks! I usually have some cash on hand, but this time around, I was caught short since I had spent money celebrating my anniversary with my wife and also bought her a Mother's Day gift.
Wow, that is pretty crazy. I'm looking forward to seeing what the coin was when you happen to share that. Do you feel like it is more dangerous to sell privately or do you do a bit of vetting before you make the deal?
It can be risky selling privately. I usually go through the r/Pmsforsale subreddit. Since I have a reputation built up there, people pay me first, and I have them pay through Venmo or Zelle as a private transaction, so it can't be disputed or reversed. I do check a person's feedback when discussing a deal and take that into consideration.
When you first start out, you have to ship first, but as your reputation increases you can then require payment before you ship.
They also have middlemen who are trusted and will act as an intermediary, so that helps.
Oh yeah, that doesn't sound too bad at all. It's just a matter of building a name for yourself. Very cool!
Good advice! Never take bad offers out of desperation, and definitely don't go to pawn shops!
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Great points to keep in mind, considering that I have yet to sell any metals. Trade, giveaway yes but sell, not yet.
So far I've not sold any to cash out, but to convert to other assets in Hive, gold, etc.
I may cash out some one day, but it'll probably be a last resort.
!BBH
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I have to remember this in crypto also. Don't sell because you want something else, wait until the time is right, then wait again until the time is right.
I do as well. It's better to save and hold what you have, unless the opportunity is just too good to pass up and time is a luxury you don't have.