The bottom line is BN or any other exchange/dealers have to move a lot of stock at that small margin profit line just to cover wages, insurance, rent, super etc and something for the owner. Its a tough gig to be in and to remain in business and expand. Thanks Michael and the team.👍
Somehow the overseas dealers I buy from are much cheaper but still have the same costs you mention. Even some sellers on ebay are cheaper for some items they have in stock *facepalm*. 🤪
@Knackers_Oreilly ... well said ... Bullion Now does an amazing job and provides a wonderful service ... to bring us Aussies such a great selection of metals 🙏
How often do you make orders to maintain your neutral position? Once a day? Every few hours? And when you make orders of special coins (such as a series), do you have the order ready to go, and then hit the 'send' button when you're starting to get a short position? I've often wondered how you go about it in a practical sense
Ideally we hedge 2-6 times a day. Some days (usually when it's busy) we don't hedge as often as we should and that is exactly when you should be hedging. Sometimes we will build a short position in anticipation of being able to order a new release series (eg we are starting to think about this now for the PM lunar series) but it is only ever a small position because we just buy in in several batches as we sell other metals through the shop
Hi Michael how do you hedge your starting position? When you initially buy your first batch of stock you are exposed to the market price. Do you buy a Gold put option in that situation?
Love your channel, and first time commenting here, I live in Israel and it is a bs country to buy gold in. Israel charges individuals VAT when buying gold. Anyway, if I buy my gold let’s say with you guys, would i be able to take it home? ( i am aware of the taxes upon my arrival )
Does this mean that you get no breaks over any holidays 🤣 During Christmas lunch... Oh no looks like I gotta order 20oz of gold as someone has just bought some
If you sell 1oz pamp suisse bar do you go ahead buy that exact same bar that same day or can you buy another 1oz gold brand or coin or another type of Bullion product?
In simple terms hedging is an activity where you bet against yourself. It is also a way to put more money into a trade as risk of getting wiped out reduces. Michael do you hedge through Gold options as well or just Physical Gold? In the current volatility anybody who isn't hedged running a bullion business is just rolling the dice.
The assumption here is that 1) you have enough buying and selling activity which is probably only a case for well established trader 2) and buying and selling volume is closely matched. But does that really happen in reality? When the price is going up you naturally want to sit on gold, and when price is dropping, it would be more beneficial to sit on cash? Thanks for sharing, educational video for sure. It takes guts to deal in commodity where price fluctuates widely, and you have zero control of spot price.
Bro that’s a lot of words to say nothing. He has a core supply of 1000 If he sells 100 at 3,500 at the store and buys 100 from his supplier at 3,500 there is zero profit and zero loss and the core of 1000 remains at 1,000. The store pockets the commission/delivery charge which basically pays the bills
Actually this works whatever the buying and selling from customers is because if we have a heap of buybacks we sell to the refineries and if we need to buy a lot of one type of metal we go shopping at one of the wholesalers.
I’m “ betting “ that they have containers of tubes in their vaults with what THEY paid for said gold/silver . I have had a local coin shop simply tell me that they are “ currently only selling what comes through the door today .” That way they can magically come up with inventory when the spot prices exceed what THEY paid when the price was higher . This way they hold on to the expensive gold/silver and wait for the market to correct in their favor . Otherwise they would simply go out of business . They are also semi - insiders and have a feeling of whether we are in a bull/bear market . They also need to cover rent , insurance , electricity , etc . They are in business to make money obviously .
You obviously know what you're doing but doesn't this guarantee that you are adding a cost to your product? Or is it similar to stocks that ratchet their way up, but plunge in the down direction? I would think over time ups and downs would average out or even give you an edge since, over time, the spot price goes higher.
Yep - I'd be lying if I said I have never been caught out but that is exactly why I know how important it is to keep the hedging up to date at all times. No "she'll be right, I'll do it in the morning".
The bullion dealer keeps premiums high, thats how. Dealer love the premium game, they can lower them slightly when the price rises, and inflate them when the price drops. The premium IS the dealer’s best friend.
The bottom line is BN or any other exchange/dealers have to move a lot of stock at that small margin profit line just to cover wages, insurance, rent, super etc and something for the owner.
Its a tough gig to be in and to remain in business and expand.
Thanks Michael and the team.👍
Somehow the overseas dealers I buy from are much cheaper but still have the same costs you mention. Even some sellers on ebay are cheaper for some items they have in stock *facepalm*. 🤪
@@jamesdoe3713 Do you have a direct current product example of an overseas dealer being cheaper than Bullion Now ?
I'd be interested to know this too. We are pretty competitive world wide as far as I'm aware.
You are very welcome
@Knackers_Oreilly ... well said ... Bullion Now does an amazing job and provides a wonderful service ... to bring us Aussies such a great selection of metals 🙏
You answered my question. That's smart. Thank you, Michael.
You're welcome
Thanks for the info Michael. I wasn’t quite sure how it worked until now. Clear concise explanation - cheers! 👍
Fantastic advice Michael!!
This was clearly taped before Friday live 😊
Thanks for your insight
Taped, now you are showing your age 😝😝
Is it really that obvious??? :)
Articulate in your explanation and perfectly understood. Thanks for that
Very interesting topic. Thank you for the inside look into the coin business.
You are welcome
How often do you make orders to maintain your neutral position? Once a day? Every few hours? And when you make orders of special coins (such as a series), do you have the order ready to go, and then hit the 'send' button when you're starting to get a short position? I've often wondered how you go about it in a practical sense
Ideally we hedge 2-6 times a day. Some days (usually when it's busy) we don't hedge as often as we should and that is exactly when you should be hedging.
Sometimes we will build a short position in anticipation of being able to order a new release series (eg we are starting to think about this now for the PM lunar series) but it is only ever a small position because we just buy in in several batches as we sell other metals through the shop
@@BullionNowthanks. Since getting interested in stacking, the 'behind the scenes' stuff has also caught my interest
Hi Michael how do you hedge your starting position? When you initially buy your first batch of stock you are exposed to the market price. Do you buy a Gold put option in that situation?
I love Bullion Now. I miss these videos. Thanku for helping the gold bug in me feel good about stacking.
Glad you enjoyed
Thanks for the information, good subject matter. Cheers.
It's a pleasure
I understand your reluctance to mention your holding as a hedge, but I was wondering do you try and increase your position year on year?
Love your channel, and first time commenting here, I live in Israel and it is a bs country to buy gold in.
Israel charges individuals VAT when buying gold.
Anyway, if I buy my gold let’s say with you guys, would i be able to take it home? ( i am aware of the taxes upon my arrival )
I hv only ever bought from Perth Mint and Bullion Now
That is music to my ears :)
Does this mean that you get no breaks over any holidays 🤣
During Christmas lunch... Oh no looks like I gotta order 20oz of gold as someone has just bought some
It certainly can mean that at times
If you sell 1oz pamp suisse bar do you go ahead buy that exact same bar that same day or can you buy another 1oz gold brand or coin or another type of Bullion product?
Makes perfect sense 👌
You should lunch the "Bullion Academy"
In simple terms hedging is an activity where you bet against yourself. It is also a way to put more money into a trade as risk of getting wiped out reduces. Michael do you hedge through Gold options as well or just Physical Gold? In the current volatility anybody who isn't hedged running a bullion business is just rolling the dice.
The assumption here is that 1) you have enough buying and selling activity which is probably only a case for well established trader 2) and buying and selling volume is closely matched. But does that really happen in reality? When the price is going up you naturally want to sit on gold, and when price is dropping, it would be more beneficial to sit on cash? Thanks for sharing, educational video for sure. It takes guts to deal in commodity where price fluctuates widely, and you have zero control of spot price.
Bro that’s a lot of words to say nothing.
He has a core supply of 1000
If he sells 100 at 3,500 at the store and buys 100 from his supplier at 3,500 there is zero profit and zero loss and the core of 1000 remains at 1,000.
The store pockets the commission/delivery charge which basically pays the bills
Actually this works whatever the buying and selling from customers is because if we have a heap of buybacks we sell to the refineries and if we need to buy a lot of one type of metal we go shopping at one of the wholesalers.
You have to buy at the same rate that you sell, is what you are saying?
Great talk!
Thank you!
Hi good question I have been asking myself
Glad we could answer it for you. Hope you're feeling better Mate
What if the price keeps going down, how do dealers keep buy and sell at the same price?
I’m “ betting “ that they have containers of tubes in their vaults with what THEY paid for said gold/silver . I have had a local coin shop simply tell me that they are
“ currently only selling what comes through the door today .” That way they can magically come up with inventory when the spot prices exceed what THEY paid when the price was higher . This way they hold on to the expensive gold/silver and wait for the market to correct in their favor . Otherwise they would simply go out of business . They are also semi - insiders and have a feeling of whether we are in a bull/bear market . They also need to cover rent , insurance , electricity , etc . They are in business to make money obviously .
I’m purely focused on what price I will be paying on the day, never thought or considered the business practices of the seller.
Fair enough too
You obviously know what you're doing but doesn't this guarantee that you are adding a cost to your product? Or is it similar to stocks that ratchet their way up, but plunge in the down direction? I would think over time ups and downs would average out or even give you an edge since, over time, the spot price goes higher.
Another term, Dollar cost average for dealers? 😊
Basically - yes
👍
I dont have to ask my Bullion Dealer if they hedge, because they let us know in Bullion Now videos!
I will never feel guilty buying $1,800 ounces and selling them for $2,400 again 😂
Good. People are often worried about that when the come into the store no matter how much we reassure them it is fine.
Everyone always gets caught short sometime .
Yep - I'd be lying if I said I have never been caught out but that is exactly why I know how important it is to keep the hedging up to date at all times. No "she'll be right, I'll do it in the morning".
How Does A Gold Dealer Make Money When The Price Drops?'
He probably spends his time making TH-cam VIDEOS, LOL".
No-one said it yet... First 😅
and no one cares
The bullion dealer keeps premiums high, thats how. Dealer love the premium game, they can lower them slightly when the price rises, and inflate them when the price drops. The premium IS the dealer’s best friend.
I know very few dealers that do this. It's a quick way to anger your customers and go broke in the end
**JUST VERY CRAFTY !!!!**....YOU HAVE A CAR SALESMAN CONFUSION WAY TO DESCRIBE THIS ,,,,
Happy to clarify anything that confuses anyone about it :)
I farted
In all seriousness, i sold some gold so i could buy stacks of bibles to give
So what you’re saying is…..being rewarded for enabling market manipulation is a good thing for your customers…….
Are you a qualified idiot or does it just come naturally for you.