This is How Bullion Dealers make MONEY from Silver & Gold | Can we do the same!?

#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.

Lots coming up in November, 3 oz Silver Forum Rounds, 5 oz Silver Forum Rounds, 1 oz BYB Bars - we are working on a new solid silver chess set too!

Big group order coming up as well, going to be a huge unboxing video for sure!

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[MA-vwpl]

I didn't hear a single word from the man . All I heard was the PRESCIOUS clinkings of the beautiful silver coins....

[BlaubartMT]

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.

[VerbilKint]

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.

[chrisd.]

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 !

[tomsullivan-kcfb]

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.

[johnmonrow]

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).

[mohammedshabbirpalodawala]

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

[viperviperpiro]

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.

[RichSilverX]

Great video! Thank you for sharing your experiences and insights. :)

[lindenmeyer]

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?

[shashankgolikeri]

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.

[brianfreland]

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

[Memee]

And if the prices drop below what u bought at....just say ya... Out of Stock ... till the Prices go back say you just got Stock

[mareecathie]

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.

[AUNZAnon]

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.

[nobs]

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.

[happysingle]

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.

[percyblok]

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.

[talksonabox]

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

[betterthan]

I Always get something from your content, and thank's for the ramble BYB much appreciated..