Buy Gold & Silver! But how? Through an auction? From Classified ads?
I have been working as a dealer in gold & silver since 1992. I even own a retail business that sells gold & silver coins & bars. As such you can understand why I believe that everyone should own some gold or silver. The question that I am going to try to answer today is how should you buy gold & silver?
The way I see it there are only three ways to buy precious metals:
1) From a dealer in the metals.
2) Through auctions such as e-bay or even an auction house.
3) Answering a classifieds ads listing.
Let’s work our way backward.
3) Answering a classifieds ads listing. This is way too time consuming. You need to find out first if the person is a serious seller or are they just trying to find out what people are willing to pay. Another challenge is finding someone that is selling exactly what you are looking to buy. Then there is the quantity that you are looking for. My educated guess is that if you find someone on a classifieds site that has exactly what you are looking for & in the amount that you are looking for, then they are probably a dealer. Simply put, the hunter has now become the hunted.
No, you will not get the best price! Not even if the dealer tells you that he is having an immediate cash flow problem! If this was true, then any dealer worth anything knows where to go to get the best price and a quick turnaround time.
I will be candid with you and tell you that I do advertise on Craig’s List.
I consider it well worth the time for me to put up an ad every few days. I am getting about two replies per ad with, on average, one of them turning into an actual sale.
When I started to research starting a web site for selling metals, I wanted to know if people would buy via the internet without knowing who is selling the metals. So I went to Craig’s List, scrolled down the section, basically copied someone else’s ad & waited to see if I was going to get any e-mails.
I was surprised by the number of responses. I had put in about 5 ads and from each ad I got between 15 & 20 e-mail responses. However, I had not closed any deals. Not one of these turned into a sale. I was getting ready to give up when I decided to try another ad, but this time putting in more information in the ad so as to eliminate or answer as many questions as there were. I finally got results! I had my first sale. This encouraged me to continue. So yes, my ad has in it the exact amount that I want to get paid. I explain that I am located in an office & do not expect to meet at night under an overpass. I still get some questions like do I have 5 coins or is that too much for me to handle. I personally don’t understand this questions because what kind of dealer would I be if I only had a few coins or bars?
To sum up, with a classified ad you are dealing with a dealer, someone who wants to meet you in a dark alley or just someone who really has something to sell & it might be just what and how much you are looking for. It might even be at just the price you are looking for. So sure, if you have lots of free time on your hands, buying through the classified ads just might work.
2) Auction house or site.
About two years ago someone called me to ask what I would pay for some gold. The questions that he was asking led me to believe he had no idea what he was talking about. It sounded like he was reading something off a package. He kept asking me up to what price I would pay for this.
I tried to explain that the gold price keeps changing so I can only tell him what I would pay him now if he was delivering it to me now. I asked him how he got my number & he told me that it is on the web site that is having an auction of gold. Bottom line, there was a government auction of some gold that was packaged in my packages being auctioned off. Naturally I participated in this auction & I bought this gold. I then began to be involved in this kind of stuff. I began going to live auctions and buying gold on live auctions via the internet. Most of the gold that I bought was sold by the government because of drug enforcement or customs issues. This was a phase and now it is over.
What I don’t understand is why other people were going to these auctions. For example there was one government auction that had several lots of 100 krugerands per lot. It was moving so fast that I missed the first auction. By the time the second lot came up for bidding I had gone over to one of the people that call out bids at the auction & I was able to talk to him in “plain English”. I told him that I wanted to bid $70,000 for the lot. Gold was then at $770. By the time the auction was over I had bought 5 of the lots. As I was standing on line to pay people were coming over to me asking what I was going to do with all this gold. I told them that I am a dealer of gold but that I don’t understand how they were bidding so much for these coins when I was able to sell it to them for less. One woman that bought 100 coins for about $10.00 more per ozt than I was selling them told me that if she had paid too much, she would give them to her grandkids as a present. Now at the end of the day anyone that bought at that auction and is still holding onto them has done well. My point is that all auctions have an amount that might not be in line with what you have in mind. They also all have a closing time. This is true on e-bay or live - this is the predetermined time that the bidding for the auction closes.
While I know that the seller also doesn’t know ahead of time what the underlying price of the metal might be at the closing time, this is very important to the buyer. As I was buying, I was on my cell phone with my broker selling that amount of gold. I was remaining hedged the whole time. Now with e-bay, most of the auctions are for small amounts so again there is the time factor. How much time are you willing to spend? How much is the time worth to you? From my perspective, you would do better buying from a dealer then on e-bay because the e-bay commissions themselves are about 7%.
Yes, sometimes there is a seller on there that doesn’t know what he has but in general most people know what they are doing. I know this also from the fact that several of my customers are buying from me, turning around & putting their purchases up for sale on e-bay.
To sum up, if there is an auction that matches up with the exact amount that you want to buy & the timing of the auction is also when you want to buy, then it makes sense. Otherwise, this is not the best route to take.
1) From a dealer in the metals.
This is the ideal place to buy metals from. No, I’m not saying this only because I am a dealer.
I think that it makes sense because from a dealer you can buy when you want & how much you want. Still, there are things to look for when working with a dealer. As I was getting ready to launch my site, I took a look at other sites to see how much other dealers charged for the items that I wanted to sell. Now leaving aside the fact that many sites are selling things that they don’t have in stock, they are also not really telling you what you are paying for the metals. Yes, I know how to figure it out, by looking at the price that they show gold or silver at & then you look at the item price. But don’t forget they also tell you that they are updating the price at the time of check out. So what price are they really quoting you? Does this mean that if they show a price difference for lets say $50.00 per oz that this is the actual price that they are charging you? I think not because if it were so then they would tell you $50.00. So you will only find out the price after you have agreed to buy it from them.
Some of them are saying that you can buy it for as little as x above spot. Here I have found two different situations. One, the price of spot is very different then you think it is. I called someone who was advertising that they sell kilo bars at spot plus 1 ½ % so I asked what I would be charged & they quoted me about $35.00 above gold so I asked, saying that I don’t understand what spot is, lets say $800 so you are you asking me 835 & the person says that spot plus 1 ½ % is above the spot price that he is paying for gold & he was paying $827 per oz. I told him that I can sell him gold at $815 & he is paying too much for his gold & he hung up on me. Another thing that is happening is that some sites are saying silver for as little as $2.00 above silver but as you proceed with your order you find out that this is only if you are ordering 500 or more oz.
Bottom line, do your homework and find a dealer that you can trust to sell you what you are looking for at the best price possible.
About the company: Bullion Trading LLC accepts orders of any size and processes orders using the spot price. Bullion Trading LLC only sells from their active inventory and only stocks in-demand grain, coin and bar products. Come visit our website and see for yourself at: http://www.bulliontradingllc.com/index.php
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