Where to sell?

All your questions about physical and paper gold
bailouts4ever
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Where to sell?

Post by bailouts4ever » 16 Nov 2011, 07:51

Selling gold is not difficult. Gold is highly liquid. Although the media often sells people that "if you bought gold, you need somebody who wants to buy it, if you want to sell...". Yet, when thinking about this one can use that assumption for every asset class (stocks, bonds and even your car or house). A market always exists in form of a buyer and seller meeting in form of price and goods exchanged...

So finding a buyer is a less difficult task than proclaimed by public channels.

Yet, when selling gold one has to clarify one fact - what kind of gold do you want to sell? "Gold" finally ranges from standard bullion coins/bars to collectible coins, jewelry or scrap metal. Be aware that the most important and decisive factor for your final sales price is the gold content. While a standard bullion (despite the Kruger Rand) coin is 999 or 99,9% gold, this may not be the case for jewelry or scrap pieces such as teeth etc. The buyer will thus first check your items and then give you a corresponding price. This post will assume that you sell standard bullion or scrap metals. Numismatic premiums or jewelry prices will not be considered as this forum is not touching these topics.

Also be aware that there will be a certain spread between the bid and ask price for gold. While you may pay 100% for gold when buying it, you will be offered somewhere between 95 to as low as 80% when selling it. This bid/ask spread often varies heavily between buyers.

Let's discuss some suggestions:

1. Bullion dealers
Just like buying gold, selling your metal at respected bullion dealers can be an easy and efficient way. If you sell bullion to a bullion dealer there will be little reason for discussion or talk. He knows what he is buying, just as much as you should know what you are selling. Experience shows that often bullion dealers offer a competitive buying price for gold somewhere around eight to ten percent below spot price.

2. Gold buyer shops
With raising metal prices all across Europe gold shops are popping up. These often loudly advertising buyers sometimes leave a questionable impression. While surely not all business men running such an operation are questionable, one still hears of unadjusted scales, extremely low buying prices or falsified gold tests. Thus, be careful and gather information of what you are actually selling giving you a rough idea of what price you may end up with. Experience shows that often bullion dealers offer a competitive buying price for gold of ten to 15 percent below spot price.

3. Gold refineries
In some European countries (like Austria or Germany) you will find clusters of refineries. They also offer to buy gold and will either sell it on (in the case of bullion) or refine it (in case of scrap or jewelry). Most of these companies are highly respected, well known and often run for decades by the same management. Thus, they are trustworthy but calculate with refining costs. Therefore their prices offered to the public are often 20 percent (in words twenty!) below spot price.

In most cases you will be offered to be paid with bullion. This payment method may make sense when thinking of selling some gold scrap and getting bullion afterwards - yet, in this case you need to consider a certain add-on on bullion prices due to refining costs.

4. Ebay
If you trust Ebay and Paypal you even try to sell your gold online. This may give you the option of getting a price very close to spot price. However, you may want to consider extra costs for Ebay sales fees or Paypal transactions.

5. Friends, Family and other private contacts
Just like for buying gold that may be a respectable source. However, when selling gold privately you may want to consider who you sell to and make sure that you get a reasonable price for your metal. Keep in mind that people you do not really know may then be aware of the fact that you own precious metals.

6. Banks
It was hard to believe what I heard from selling gold to banks. Yet, I repeatedly got it confirmed. For a variety of European Banks gold purchases from customers require the customer to a) give the gold to the bank in advance without payment, b) the bank sends the gold to a laboratory for analysis on its content even for standard bullion coins/bars, c) the lab gives the info to the bank, d) the bank offers the customer a price well below spot price and deducts the analysis costs from that price as well. What an expensive nonsense!

In other words: You may get a better rate with all other options stated above than with selling bullion to a bank!

I invite all forum members to participate in this post and add further sources to the list.
0.00 € is what your account statement will show on a long enough timeline.


Goudvink
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Re: Where to sell/where to buy?

Post by Goudvink » 16 Nov 2011, 14:15

Correct me when I am wrong, but it seems you consider a premium of 10% as acceptable? If we talk about bullion/coins I think thats far too much. Premiums vary from coin to coin (and from time to time), the most popular coins can be sold without a premium. For example Tov Hazel (https://www.tov-hazel.com/shop) buys Krugerrands and Maple Leafs at zero premium, bullion at 1%.

I should prefer to sell to family or friends without premium. If they don't want to buy it, I would consider to sell to a bullion dealer if the premiums are under 2%, otherwise I would prefer Ebay.

For now, I am still more interested where to buy at the lowest possible premiums. Most of my coins I bought on Ebay, and some I bought at Goudmarkt.nl and Tov Hazel. The actual best price I can find on the internet is at this last mentioned shop, where they sell Dutch ducats at 1,5% premium.

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Blondie
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Re: Where to sell?

Post by Blondie » 16 Nov 2011, 18:53

Goudvink wrote:Correct me when I am wrong, but it seems you consider a premium of 10% as acceptable? If we talk about bullion/coins I think thats far too much.
This depends to a degree on one's perspective... personally I feel that the price we pay for physical gold now, including premium, will approximate the premium only in the future.
In this light, premiums of up to 15% are acceptable to me in order to take possession of a gold bullion item I want.
Sometimes the speed and/or ease with which I can conclude the transaction justifies a higher premium to me.
In the future, the bulk of my gold may never be sold (who knows), and should this be the case, all else being equal, I would prefer to have a few items of more personal interest among the more generic (interesting provenance, rarity, arresting appearance, anything that I personally take a shine to). Technically they may have lower liquidity if trying to reclaim the initial premium, but they will always have their bullion value at minimum. I they don't leave my possession, then it matters not.

Just another angle.
You don't own your stuff; your stuff owns you.
http://flowofvalue.blogspot.com/

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Rasta
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Re: Where to sell?

Post by Rasta » 16 Nov 2011, 20:08

@Blondie

It is personal preference, but I am actually planning on selling my gold after we hit the big revaluation. Well perhaps not all of it, but certainly the bulk of it.

Gold remains an excellent consolidator of wealth, but it doesn't allow you to increase your wealth. I am planning to make "my gold" productive, by exchanging it for income generating investments. The reason for me is simple: I am still young, and possibly the wealth after the revaluation doesn't allow me to retire early. I need my wealth to grow, in order to decently retire when time comes.

The older you are, or the more you have been able to load up before the revaluation, the less need there should be to make your gold productive.
Eventually there will be an awakening, a balancing of the scales and a bill to be paid, and for that I hold gold - Jim Sinclair

Zytom
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Re: Where to sell?

Post by Zytom » 16 Nov 2011, 21:13

I agree with Goudvink, premiums of 10 percent and more are excessive for regular bullion bars and coins.

At one of the largest gold dealers here in Belgium the spread on a Krugerrand (and other popular 1 troy ounce coins) is currently 2.5%. You pay 4.5% above spot when buying and you receive 2% above spot when selling your coins back to the dealer.

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Spruitje
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Re: Where to sell?

Post by Spruitje » 17 Nov 2011, 00:39

I agree with Goudvink & Zytom but I wonder what the premium will be just after a revaluation... perhaps 10% or more. :|
Study while others are sleeping; work while others are loafing; prepare while others are playing; and dream while others are wishing.
- William Arthur Ward -

bailouts4ever
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Re: Where to sell?

Post by bailouts4ever » 17 Nov 2011, 08:05

Good morning everyone,

Of course everyone would like to buy and sell without any premium at all. Fact though is that dealers make profits via premiums. With growing demand for physical they still expect jerks selling gold instead of buying it and that's where premiums applied even by Europe's largest dealers. Just checked and e.g. for Proaurum Switzerland the bid/ask spread for a Maple Leaf is 1371/1303 = 5%...

Who knows maybe in the future spreads will shrink making gold dealing a steady but boring business. But at least in the market I am active there is 5, 10, 20 percent premium for sales - depending on your channel.
Last edited by bailouts4ever on 17 Nov 2011, 08:22, edited 2 times in total.
0.00 € is what your account statement will show on a long enough timeline.

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Blondie
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Re: Where to sell?

Post by Blondie » 17 Nov 2011, 08:18

Dealers supply a service, they need to be paid for this. No premium, no dealer. Simple.

If gold were much more valuable, the premium would be much smaller percentage-wise, but must still be enough to cover the dealer's costs and supply a profit.

Just like any other business... if its customers are too stingy to make the business viable, then it is a service they will have to do without.
You don't own your stuff; your stuff owns you.
http://flowofvalue.blogspot.com/

bailouts4ever
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Re: Where to sell?

Post by bailouts4ever » 17 Nov 2011, 08:23

Exactly. Without a certain (even small) margin there is no advantage in taking the risk of running a business. Gold dealers have been doing great in recent years not only due to premiums but also through price hikes.

Filling up the gold stock Monday, selling the stuff on Thursday including the 5% price raise in between...but these times are gone right now...
0.00 € is what your account statement will show on a long enough timeline.

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Blondie
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Re: Where to sell?

Post by Blondie » 17 Nov 2011, 08:31

bailouts4ever wrote:Exactly. Without a certain (even small) margin there is no advantage in taking the risk of running a business. Gold dealers have been doing great in recent years not only due to premiums but also through price hikes.

Filling up the gold stock Monday, selling the stuff on Thursday including the 5% price raise in between...but these times are gone right now...
Most dealers buy and sell at the same rate, so the premium is all they ever make. Possible profits and losses due to price variations are thus hedged out of existence.
In other words they have no exposure to price changes, unless they expose themselves on purpose. In a bull market an unhedged dealer could just wait out a correction to avoid a loss, but this isn't how professional dealerships are run.
You don't own your stuff; your stuff owns you.
http://flowofvalue.blogspot.com/

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