Modern Money Changers: The Sane Person’s Guide to Gold and Silver in a Crazy World by Shipley Syd

Author:Shipley, Syd [Shipley, Syd]
Language: eng
Format: epub
Published: 2020-10-22T16:00:00+00:00

5

Is this a good deal?

A good deal is wherever you find it but it takes some experience to identify a false good deal from a real one. Let’s take a look at some common deals.

Below spot? What a great deal!

So you’re going along and come across a price tag that has you doing a double-take. Did my local coin guy really just offer to sell me a pile of old 90 percent silver dollars below spot price? What a great deal!

Maybe not. Not if the dealer’s buyback price is also below spot, which it must be or they wouldn’t be selling it to you that way.

The money changer always gets their cut. This is not a hobby or an investment for them. It’s how they make their living. They must have positive cash flow today, not thirty years from now.

If demand is low you can expect the dealer to bait you with lower prices for that item. That’s good business for them. But it doesn’t change the fact that there’s a hidden bid-ask spread behind the scene. Try to sell that item back to them a minute after you bought it and you’ll see that they sold it to you for 50 cents below spot but they’ll buy it back at a dollar below spot. So it’s not the premium or discount over spot that’s the most important factor, it’s the resale value. And that depends on supply and demand.

A good bargain is often found when a particular product is in low demand but you expect demand will increase in the future. One example is the 90 percent coins I mentioned previously. When the market for those is on fire, man is it hot. When interest wanes, you’ll see the premiums drop and you can snatch them up in anticipation of a future financial crisis sending not only silver prices but 90 percent coin premiums through the roof. Thus, cha-ching, double good fortune for you who were smart enough to buy low.

Most of the time you’ll be holding your position a while, though. The more times you change your cash-to-metals position, the more times you pay the money changer. Think of it like when you go to buy a car, new or used. If you trade in your vehicles frequently, you pay more dealer fees, more taxes, more of a lot of costs that add no value whatsoever for you, the purchaser.

As they say, it’s cheaper to keep her. As much as I hate some uses of that expression, baby it’s so true, and that’s why I still love you.

Dealer games

Coin dealers can be completely genuine and yet baffling to an individual collector. One point I want to call out is that the price the dealer is asking for the coin doesn’t necessarily indicate demand. And many times they’re not trying to rip you off. It’s just that demand varies and it’s relative to what’s going on with other products. So dealers try different prices to see where the magic number is to make the most profit overall.

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