Exit Strategies for physical Gold and Silver

[PAshortie]

For those of you that hold physical gold and silver, what will be your exit strategies when you feel it's time to sell? I have gold and silver coins that I purchased from APMEX.com. I originally planned to sell them back to APMEX, but it's smart to have more than one exit stratey. I don't plan on selling for quite some time but it's best to have a few options when I do.

Thanks...

 

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[PAshortie]

Maybe you could short a similar amount of GLD or SLV and establish a hedge.
Disclaimer: blah blah blah you undertake all the risk blah blah blah

Hm. Never thought about that one. I bought SLV about 2 years ago, shortly after purchasing the silver coins...almost a 50% gain as of today. Paper profits of course.

 

[rxcknrxll]

pardon my apparent ignorance, but why would you need multiple exit strategies for gold coins? do you have eagles or what? take em to any dealer and you'll get basically the same price for them. am i wrong?

 

[PAshortie]

pardon my apparent ignorance, but why would you need multiple exit strategies for gold coins? do you have eagles or what? take em to any dealer and you'll get basically the same price for them. am i wrong?

Gold Eagles and Silver Maple leafs.

When I think of coin dealers, I'm thinking of the average small "corner store" coin dealer you usually see. I didnt think those types of shops would handle relatively large orders, of say 30K+. It's not really a matter of how much I'll get for them b/c it's easy to find out sell prices amongst dealers. My concern is liquidity. It may take APMEX 2 weeks (example) to process my order but there could be other companies that can do it in half the time.

 

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[max momo]

PAshortie,

30k in gold should not pose a problem for most 'corner' coin stores. There really aren't that many coin stores around anymore so the ones still existing are fairly stong. You may be surprised by how well some of these operations are capitalized.

When I was in negotiations to buy a coin store about four years ago my business plan, vetted by those who had previously owned and operated coin stores, was to purchase the store inventory for $400k and have an additional $100k in cash for purchases. I was also advised to have between 40 and 50 ounces of gold available for sale at any one time.

As another consideration for selling strategies, you may want to remain under the reportable limit (10k) and sell in three or four smaller batches. This also allows you to average out your realized prices.

Finally, a good exit strategy should determine WHY you are considering your insurance (gold coin) and WHAT you plan to do with the paper FRNs instead.

Ciao.

 

[Jonleehacker]

I haven't checked recently, but scrap sterling silver (that I have a box of) was selling for a premium over the spot price on eBay a couple months ago.

Meaning the spot was $18 per ounce and on eBay it was selling for $20. The dealer down the street will only give 80 - 90% of spot.

 

[max momo]

Jonleehacker,

You can sell bullion/sterling silver over spot occasionally. Although I've also seen an equal amount of times where the reverse is true.

One major drawback of selling silver over the internet is shipping charges.

Moreover, Brick and Mortar dealers typically will offer less for silver than they do for gold. Silver is usually bought 5-10% below spot wheras gold is bought around 2-4% or even closer sometimes.

Depends on many factors.

Two factors I can provide here, since I've already written these out and can provide excerpts here are How to Choose a Coin Shop and When to Sell to a Dealer.

1. How To Choose A Coin Shop
Now THAT is a good topic to mewl on about.
I like to go to as many different places as possible, but concentrate my buying at just a couple.

For the time being:
Canvass all in your area. Look up 'Coins' in the yellow pages. Call up the owner and ask for the hours. Since many shops are owned and operated by just one individual or couple, it is not unusual for the store to close - even if during common store hours - when the owner needs to run an errand, see the doctor or take a day's vacation.

You may consider what neighborhood the coin store is in and then surmise what the expected clientele and business plan is. For instance, if the coin store is in the nicest part of town, in a business suite, you may need an appointment to visit - or at least be willing to spend a substantial amount of money (several thousand dollars) if dropping in unannounced. Don't expect to get much attention, or even be able to get in the door, if you show up in sweatpants and announce that you simply want to look around or purchase some common lower-priced coins.

Alternately, if you are seeking high grade and slabbed type coins, your best bet is probably not the check'n'go/pawn store/coin shop in the hood with all the bars on where you either need to ring the buzzer or show an ID to the armed guard to get through the door with alarms and bars across the entrance.

Understand that each store fills a market niche and that over time, after visiting multiple stores in multiple cities, you should be able to determine which one in any given city matches your wants and needs.

Once you get to the store, be discreet in your mannerisms. For instance, do not count a large amount of cash while sitting in your car. There could be unsavory individuals out there noticing you without you noticing them. by and large, security is rarely an issue. Should you wish to conduct a transaction of a very high dollar amount, such as selling your grandfathers lifetime collection (if he collected the good stuff) you may seek to meet at another location or perhaps request the store owner visit your home to conduct an appraisal. Store owners are always seeking to buy material, and high quality estate sales are one of the highest margins of profit for a store owner because they can always sell high quality collections to the wholesale market on a very short turnaround.

The coin business has some of the best and worst business people around. They all have differing market niches and business plans. Understand that most coin business exist economically because they buy coins from people who walk in of the street. They cannot make money buy selling coins to collectors because that market simply isn't big enough (yet). Understand that the store owner is used to people walking in all day. Most first timers will look around, maybe ask some questions, and walk out of the store without buying anything. Some may ask to use the restroom have a glass of water, and take up time that could be used to serve other customers and then still walk out of the shop without buying anything. Retail jobs dealing with the public all day are not very easy. Some people think everything they own is a rarity worth thousands. Others are on drugs. Buy definition, half the population has an IQ below average and it may seem to the dealer that he get a higher proportion for whatever reason. As a result, many old timer dealers get a reputation for being a little bit crusty. You will be associated with the typical behavior of a first time visitor until that moment you exhibit some atypical (and hopefully positive) behavior that will demand some time and attention from the shopkeeper.

Many times you will walk into the store and not meet the owner at all, but a salesperson or counter helper.

First Time in the Coin Store: DOs and DONTS

DO:
- Say hello or introduce your self
- Let the shopkeeper know what you are interested in
- Be courteous and polite, no matter what the reaction on the other end
- Let the owner know you carried in some coins or other material such as a book or loupe

DON'T:
- Make too many assumptions about your first visit. Relationships are a big part of the coin business and relationships take time.
- Try to haggle the very first time in a shop. The margins in coins are not that large; in bullion VERY small.
- Don't ask to not to pay taxes. (In some states, Ca, Md. purchase over 1,000 in coin or bullion will exempt payment of state sales tax.

One technique is to bring in some coins or a book or magazine with your inventory and show the owner the type of coins you like to collect and are seeking to buy. This will help the owner determine what type of merchandise to show you. Also, realize that if you walk into a coin store for the first time and want to sell coins, the owner must assume that he will never see you again, because you are selling off your entire collection, and therefore there is no reason to begin a relationship. This dynamic may sour your initial experience because the dealer must offer the lowest reasonable wholesale amount possible in order to make a profit. Don't have wild expectations for your coins; you may have bought coins with problems that were not obvious to you since your not an expert, and almost without a doubt you will overestimate the value or your own collection and the quality of your coins. If you need to sell some inventory and plan on visiting the coin shop again, consider instead asking to put coins on consignment.

Ask the exact same question at each store, and compare answers.
What were the conditions of the store, compared to each other?
What are the respective neighborhoods like, any security concerns as you walk to/from with coin or cash? Security guards/cameras watching your every move (and capturing your every purchase)?

Helpful and KNOWLEDGEABLE service? That is, can you learn something from the person at the counter; and more importantly, are they WILLING to teach?

Will the counter person let you look at the coin, taking your time, in detail?
Does the inventory, and other factors, suggest that they would love to make you a sale, but DON’T NEED TO? For that matter, would they be ABLE to make a big purchase, on the spot – cash – if that is what you needed at any given moment.
Are all sales through the cash register, with a receipt?

Next step.
Buy a coin from each shop you consider doing business with.
Now, try to sell it back. What are the differences?

2. When to Sell to a Dealer
There better and worse times to sell bullion and coins to a dealer. The worst time to sell is Friday Afternoon. Why, well for one thing the dealer is getting ready to go home and has generally lost interest in buying. Moreover, the dealer takes on a larger portion of risk when buying right before the work week closes. Dealers often base their bid price (what they are willing to offer) on CoinNet and NY spot price. These are no longer available, generally, after 3:30 Eastern Standard Time. Third, a coin dealer doesn't necessarily want to lay out several or tens of thousands of dollars before the weekend. This creates an opportunity costs by removing cashflow that could be used over the weekend to make offer on private estates. Buying on a Friday afternoon provides that there is no opportunity for the next 48 hours to sell the bullion or coin, since the stores are closed.

For these reasons, Monday Afternoons often provide the best time to achieve the bets buy price from a dealer. The markets have already opened and determined some semblance of direction and the news of the weekend is generally out into the market place. The rest of the week provides opportunities to sell and move inventory. The longer the purchase sits in the store, the staler it becomes = "dead inventory".

Likewise,
Various Days of the Month provide a better sell period, and

Various Months of the Year provide a better sell period.

 

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[EasyMoney_in_NC]

I haven't checked recently, but scrap sterling silver (that I have a box of) was selling for a premium over the spot price on eBay a couple months ago.

Meaning the spot was $18 per ounce and on eBay it was selling for $20. The dealer down the street will only give 80 - 90% of spot.

Its still doing that. I was literally just on fleabay looking over some auctions I've been watching and libertads are selling in lots for $21/ounce.........crazy when spot was just over 17 last week! Maple's still bring good money as well. I don't understand why these people are willing to pay so far over spot other than they think silver will break out on a uphill charge again in the near future?