This is How Bullion Dealers make MONEY from Silver & Gold | Can we do the same!?
ฝัง
- เผยแพร่เมื่อ 27 ต.ค. 2020
- #silver #gold #preciousmetals
Today I talk about how most dealers will actually make money selling gold and silver coins.
This video is not financial advice in anyway - it is just a simple economic theory that can be applied to many businesses including those in the precious metals industry.
Making money on gold and silver is not just for the dealers. We can run the same business model on a smaller scale and still make money on our gold and silver coins and bars. It is not hard to do but it requires discipline and a lot of hard work over a longer period of time.
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I didn't hear a single word from the man . All I heard was the PRESCIOUS clinkings of the beautiful silver coins....
I Always get something from your content, and thank's for the ramble BYB much appreciated..
Thank you so much my friend, appreciate you stopping by and commenting!
It's actually a lot simpler than that, because while the price of precious metals do fluctuate, the changes balance out. Sometimes you sell at a lower spot price, sometimes you sell at a higher spot price. So ignore the fluctuations and focus on the spread. Rarely do the fluctuations outweigh the spread, and those times are offset by the times they work in the dealers' favor.
A lot of places will hedge their inventory with futures or ETF's. So say they have 100k oz of silver in inventory, they will consider that their base inventory. If a customer buy's 10 oz or 100 oz, they will buy that amount in futures. So they will always own 100k oz in physical or paper silver. Because physical silver has a large spread and paper doesn't, they profit make a big profit (3-8%) every time someone sell's their silver, and can buy silver in bulk or when their is a discount if their physical inventory levels get too low.
Also, future prices are higher to account for storage cost to they can make a passive 0.25% a year just holding physical inventory and being short futures (rolling over every so often).
Brilliant update as ever...bullion dealers like everyone else are subject to market forces but they have transaction/commission charges on their side which the public don't and also the difference between bid/offer spreads or spot/premium. Have mentioned this before but would love a video on how/where best places to sell silver. Thanks, keep safe and keep going !
Dittos, on a video on how/where best places to sell silver/gold.
That's your personal issu😂
Great video! Thank you for sharing your experiences and insights. :)
Glad it was helpful!
Thanks for the rambling! 👍
It's precisely because dealers have to restock that they safeguard their margins/profit by not lowering premium on PMs. If anything they raise premium even when spot price is falling; even when they know they can therefore restock at lower prices. Why does this happen? Not because dealers generally are unscrupulous, though some are. It's because there's a tendency to higher demand as spot falls. And for the dealers that's just a bonus- more profit.
Always thought-provoking, so ramble on, BYB, I'm always listening right to the end, The Silver Forum's ting-a-ling.
I'm only small beer but since i've been buying for the last three years I've had no trouble selling at a profit. It's just a matter of being able to wait. Maybe it's being in Australia & our coins aren't always readilly available. For 1 oz coins, I work out my cost to post (locally), what it it costs to be delivered to me from the dealer, & the selling fees, then I add $6. I generally buy five of each coin I collect. Two go straight to my stack, Two I list as quickly as they move, & two I will list further down the line when there are very few around. It works for me, then every now & then you make out like a bandit. I made $30 on a 1 ounce bar from an obscure Carribean mint. I'm building up slowly, but it works for me.
I am buying my first silver bullion and am struggling to find how to sell them, am buying them from the royal mint
There's a inner magpie in all of us, "shiny" things.
SMAUG!
Great video! lots of good insight
My love of silver has taken me from just a humble beginner stacker, to a humble hobbyist in metal pouring, and to a point where I've decided I want to make my own coins and bars. I don't think k I'll make a lot of money but I d9 think I'll have a lot of fun
I am not sure that high premium coins are enough to compensate eventual losses of their main stock in a high volatility market (composed mainly of bullion coins with low margins) otherwise dealers would certainly go bankrupt in a severe correction. I have heard that they are hedging their stocks position with options on market
I wonder what is the margin Dealers get from Mint to Costumer. Say Spot price silver is 23$, Silver Eagle to costumer is 30$, how much do they pay to the US mint for that same coin? 25~27$ perhaps?
most bullion dealers do hedging i.e is the process of playing both sides of the market to provide protection against fluctuations in precious metal prices. Bullion hedging means that the dealer has offset their long positions with their short positions and vice versa. By doing this, the dealer is ensuring that they never have an overall long or short position. This helps the company be somewhat immune to price movements that gold, silver and platinum see on a day to day basis.
They do, but that hedging itself costs. It's another "cost of doing business" that accounts for their higher prices than a guy flipping some coins on the side.
Great video again byb interesting subject I think a lot of people into stacking have thought about buying and selling metals for a profit at some point in time . Keep your videos coming 👍
Thank you so much my friend, appreciate it!
The is a difference between a flipper and a dealer. A flipper can but low and sell high. If spot drops, you just dont sell. Dealers, for the most part, can still sell low. They buy shorts to hedge. Being a true dealer take a LOT of capital.
How much capital you talking? Just intrigued, thanks
Your video gives a very clear explanation on how the entire dynamics works. I am not quite convinced with the accounting part of the business. Say at the end of each month we had to pay our monthly overheads, reload our petty cash float and basically all the business expenses- what will an accounting entry look like ? Where will that cash come from? To extract that cash, will I need to sell the metal ? Kinda puzzled so please bear with me on the query
I have been working through this--first thank you for the video. I think the challenge is if you buy 500 coins, those are locked in. If you are selling maybe 10 coins one day, you cannot instantly lock in those 10 coins as it is cost prohibitive to only buy 10
I don't think they buy exactly 10 coins and exactly the same type of coin either. Sometimes you cannot find the same thing. I thing the general rule is to buy low sell high and use the profits you make to repurchase again no matter the market. My only thing is how do they truly earn a profit then if they are always using profit to repurchase the items. It seems to be an on going situation.
Gold and silver are inventory to a bullion dealer. Their business model is different from a pawn shop or an individual. When you buy product from a bullion dealer, they immediately buy product back from their wholesalers at spot price. They essentially lock in the price at spot and have no risk to spot price fluctuations. If they can sell 100 gold coins in a month at $50 over spot, they make $5,000 in premiums. If they sell 5000 silver bullion coins at $2 over spot, they make $10,000. The margins are less for wholesale online bullion dealers, but they move more product. We can't do the same without volume sales and getting the bullion wholesale price. There's more to it than that, but that's the basic model.
seems like my LCS is VOLUME VOLUME VOLUME and that makes sense, i own retial shops (not bullion related) and the name of the game is margins for me, yes volume matters but it seems gold and silver dealers rely on volume of sales.
I day trade the SLV stock and buy and hold physical Silver and Gold.
Replacement Cost Accounting.
Next In First Out.
And if the prices drop below what u bought at....just say ya... Out of Stock ... till the Prices go back up.....Then say you just got Stock in......Simple.
Dealing in items that have an open market with a daily spot price, your margins are ALWAYS gonna be thin. Anyone thinking anything else doesn't understand markets and business.
Which are the silver coins that milk spot the least?
Hey man, where did you get that silver dragon ounce coin?(the one on the left when showing to the camera) I love it! And how much did you pay for it? Thanks in advance. I'm just new to stacking gold, I've a few 1 ounce Britannia's, maples etc... but I love your channel! Although not so much the 23% tax on silver here in Ireland!
Been doing this to increase my silver stack, told the wife that even if i dont sell it right now ill make money later when we retire
All I know is APMEX profits like crazy with each Libertad they sell. They buy em $2 under and sell +$15 over spot. I requested a quote from them to see how much they offering. Thank you for the info BB! I knew dealers and LCS aren’t profiting crazy, I just didn’t know the details in my head lol
I have no doubt some of the best known dealers will take advantage when they have such easy prominence in google search results and are all over sponsoring the big youtubers in gold and silver with lots of lovely affiliate codes. It is the same in the UK with a company called BullionbyPost
@@timan206 really? Ive used sd bullion because they have the lowest prices???
@@timan206 I just compared goldeneaglecoins with sd bullion and they have very similar prices idk what your talking about
I was looking at a shipping receipt for a tube I bought and it cost them $28 on one tube that was $2.11 over spot. That left the dealer $14.11 if they paid spot. I have a feeling the big guys don’t pay much more than it trades for on COMEX.
Where should i buy hold and silver? I've always been interested to have gold and silver on hand just to have some are there any online places that are safe to use or can I just welcome to the gold Town USA type of store and buy it is it better to buy bullion or coins?
Sir do you buy or sell palladium? Or do you know it's price? Thanks
Great video
Anyone know where I can get number stamps for year and weight sent to me internationally?
High premiums at the point of sale, offer no more than melt price buying common bullion.
Exchange rates and premiums.
The local coin dealer in my area low balls people down on their luck, I have seen him do this several times. His bull shit excuses range from '' I have to get my gas money back to ''I tithe with my church ''. I used to buy from him, but he will NEVER come down a penny no matter how much you spend.
Interesting topic. Do dealers actually get products from different mints under spot ?
I don't think they can buy from the Mint under spot. But i am very interested to see some numbers on the margin they get from Selling/Buying and spot.
In essence, you are saying the dealers have to sell as as possible which locks in the price/premiums so they are not exposed to changes in price?
Do you think they have silver options to add a protective element incase Ag price drops?
of course, they do buy options/ sell futures or vice-versa. This is a very complex business.
Honestly, because of the insanity of the market right now, I'm turning to more numismatic coins. Being from the US, that's what I focus on most, but I'm getting nice coins from all over the world.
Thanks for sharing, I really appreciate it!
Wouldn't those lose value with market volatility?
Depends on the coin. Some are just more popular than others.
@@numismaticmaster8612 oh I see
Have any gold 2 Dollar Newfoundland coins in your collection?
buy low, manage your costs, sell high.
Yes indeed!
Silver are plenty in the market unless the govt.print coins as money......then demand of silver will rise....
How do sell at 22 then buy back with 3 or 4 dollar over spot to get back in silver
You don’t. You consistently charge $x or x% over your cost including premiums, shipping, and taxes if applicable.
Iam from the uk iam struggling to get started the prices are so high iv been watching different videos especially USA stackers and they get coins so cheap compared to the uk dont get that I wont to keep stacking but in uk on ebay or net so much to buy dong know how they get them prices from I cant do it and sell it for profit good vid would be good to know were your can get it from would be nice
I don't know why the Americans call their silver dollar coins, Silver Eagles. The eagle is on the reverse of the coin. They should be called Silver Columbias, because depicted on the obverse is Columbia (the original personification of the USA, before she was replaced by 'Lady Liberty'). The common practice is to call a coin by what is on the obverse, not by what is on the reverse.
By Congressional Act.
@@NefariousEnough In contradiction of the normal practice of calling coins by what is on the obverse.
@@nobs8862 A US Congressional Act assigns a name, a colloquialism if you will, for a release without regard as to what is on that particular coin or note.
@@NefariousEnough No sh*t. That still does not change the fact that the government named the coin in contradiction of normal practice.
@@nobs8862 OK.
exactly 👍
Thanks!
Now all online buyers..........easy for business......
Silver stacking is a happy hobby....but not sctually making money......
Good vid
Thanks!
I'm looking for a video or research info on how to sell your PM's stored in a private vault overseas (Switzerland). Instead of selling the PM's back to the bullion dealer at only spot price; is there another way to sell PM's to someone else and make a little more than spot price (other words receive a portion of the premium price + spot price)?
What is PM ?
@@rubiconoutdoors3492 precious metal
I want to open a silver exchange coin shop how can I find you
I think the word is "parlay".
This principal is exactly correct. I learned this with stock investing but you tied it in to physical stock.
Very interesting topic! I wondered how they make money when metals begin dropping!
As far as I have seen with some dealers, they run 'out of stock' when the prices drop. And as soon as the metal prices are rising again, they somehow miraculously 'suddenly' have all the stock in the world again.
It is ethical? Nope. But then again, wouldn't you do the same if you were in the shoes of the bullion dealer...?
What about taxes?
Bullion by post are the best at ripping you off
They are top of google search results so they get the customers who don't know any better
@@BackyardBullion very true that’s what the power of money can do
@@othomaso100 If you don't mind me asking how? Looking at their website they seem to have pretty decent prices for gold, only about 5% over spot, and that includes delivery.
I'm not being mean or anything btw, just wondering.
how so?
@@BackyardBullion What is best place to buy?
God bless!😀😁
Hello, I noticed that you were using your hands to communicate. Is this a new sign language that I’m not familiar with. It was mostly in the beginning. I’m confused.
How do I become a manufacturer
I believe buying your Ag from a good,smaller, 14:19 Ag recycler & professional 9999 Ag refiner all in one is where you’ll get your Best Buy’s! 🤠👍 let me know!!
You are not keen on bullion by post so where is the best place to buy silver and in the UK
Chards, atkinson's are the best dealers. The Silver Forum has the best prices.
@@BackyardBullion Thanks
@@BackyardBullion Do you not recommend the royal mint? I want to put my cash into silver (can't afford gold) as a way of investing my cash instead of zero or low returns in a bank. Not deluding myself, I know I'm not going to make hundreds or even a profit just don't want to make a loss. Giving serious consideration to thesilverforum
Buy the Silver from whom? Where do dealers buy their silver at a rate less than they can sell it for?
The Mints themselves. Or from people wanting to sell.
Who do we sell our silver and gold to? Pawn Shops??
How come 1 troy oz American Gold Buffalo of .9999 pure gold is bigger than 1 troy oz Canadian Gold Maple Leaf coin which contains .9999 pure gold also?
Thickness of American Gold Buffalo coin is 2.98mm and diameter is 32.7mm and Canadian Gold Maple coin is only 2.8mm and 30mm in diameter
Keep in mind that they are 3 dimensional objects. The stated thickness is the MAXIMUM thickness, not the thickness throughout. The Gold Buffalo has more relief (i.e. differences between the high spots on the coin and the low spots) than the Gold Maple Leaf. This sort of thing is obvious with the High Relief products. High Reliefs are something that rare among coins minted for circulation. Pretty to look at, always catching on things in your pockets, wearing away too quickly, etc, etc. Not a concern for bullion coins, but high relief does cost slightly more to make. Coins that cost more to make AND don't last as long? Not something the gubmint wants to pay to put into circulation. Collectors though, they'll often pay the extra.
I’m too focused on the kilo bar…
Is buying silver 5$ over spot per ounce , normal price ?
Yeah
@@talpa6969 thnx 👍🏻
This video has a flawed explanation. If you buy 100 silver coins for $100k, hold, and sell them for $110k, despite making $10k, you won't be able to buy more coins than you sold, as was explained. You'll only be able to buy 100 coins again, so pointless. When you sell you have to wait for the market to drop again to buy back in lower, and that could take weeks/months.
Its not flawed if you have buyers who are still paying the same percentage above spot t to get small quantities of the product you are selling. So if I buy $10K in silver US half dollars at $9 each, and sell them for $14 each and silver spot starts to climb, I will still have customers who want to buy the same type of coin when I buy them at $10 each and sell them for $15 each. Demand is rarely impacted unless silver premiums are sky high. Even then demand doesn’t completely subside. So your statement that you can’t make money and this is pointless is false. There is ALWAYS demand - but sales can decrease while inventories of coins sourced at lower prices clear the market.
I love your video but dude it hurt seeing how you handled those coins, They will not get any prettier. I live in Holland and silver as a hobby sucks here, You cannot buy any foreign bullion coin in shops and you have to pay 20% VAT + the premium + shipping so it will have to go up so more just for me to get even. Other downsides are, you pay premiums but when you want to sell them quick they only pay you back spot, which is spotty. Finding mintage numbers online is not always easy, You have to google for hours just to find out what would be a realistic selling price and I seem to have no luck with my coins, when ever I google some I bought in 2013 they have barely gained any value but another coin the year before or after goes for a higher price. Greets from Holland >
Hi there, I read your comments and understand what is troubling you. For starters I would buy bullion bars rather than coins but that is matter of strategy. I am very interested of finding your view on www.buy-gold-bar.com presenting new way of buying and holding precious metals. Would you ever go for it and if not why not?
We are inventors and creators of SmartGold Club and have zero success with it as a business idea. We would appreciate your honest feedback.
buy high sell low.
Hi BYB. Is the reason you are handling these coins like this in the video because they are poor quality, have milking or some other reason. Just curious as I handle mine with kid gloves
They were like this before I handled them - so now they are just melt fodder and I don't care!
I just want to know what the dealer is going to charge me when I bring my coins in to sell. Sheesh.
Maybe ask them and stop complaining about your lack of attention span watching my videos....
Why is there so much waste in the industry???????? ( I’m not counting lives))
Ramblers!
Thank you for being a rambling society member!
Im putting all my money on hydrogen today
thanks for the talk but you could have said everything in 1 or 2 minutes
Really, this is your comment? How about engaging in a discourse?
@@BackyardBullion i hear you my bad
Sounds to me like I'm better off selling gold sovs :/
Yeah, I think gold is always safer.
This is the business model I understand. It’s exactly the same model as the drug dealer, with considerably less risk.
He lost me at pound
It's how drug dealers make money.
Step one make a video about a ‘global reset’. Step 2 pay for some website boosting. Step 3 rake in the cash from idiots.