Gold Newbie question.

[Goldmansacks]

Hi All,Just looking at Bullion By post and I'm just wondering if this correct

Gold spot 1488 Euro an ounce ,cheapest 1 ounce bar is 1589 so 7% above spot to buy

Sell them the same bar to them and you get 1445 which is 3% below spot. 

So if you buy off them and then sell back it's costing you 10% over spot?

 

[Goldmansacks]

Looks like it's even more expensive to do the same transaction on a half ounce?

[ChrisSilver]

Yes, if those are the prices from their website that is correct. They likely sell the secondary market items they buy for a slightly lower mark up under a different item. Don't forget they also have costs of checking/verifying the item, administration costs as well as other costs, and afterwards need to make a profit. 

To get the best return on your items though, it would be advisable to sell them via the forum rather than back to a dealer. As you should get a better price. You may also find better prices when buying items on the forum (I will let other members let you know about that)

In general the larger the size of the gold item (for the same item) the smaller the margin is. This can be compared to many products in many industries, due to the fixed costs associated with production and to incentivise a larger purchase. If the shipping cost is also built into the item this will also have an effect of making lower weight items have a higher cost per oz.

Note that the dealer may or may not have a larger margin on smaller items, but their costs of buying smaller sizes from the mint are most certainly larger per oz vs larger sizes ones of the same item.

[Pipers]

Best to buy coins, as margins are smaller.  As you are in Ireland you will be ok for a few types of coins.  UK sovereigns, Britannias, Canadian Maples, Austrian Philharmonics, American eagles and bufalo (edit) plus krugerrand.  There are a few Irish guys on the forum so ask them what is best to sell in Ireland and whether is is better to sell on the Forum in the UK or maybe Europe?

I know for a fact American tourists sell gold in Dublin/ Belfast. 

There is a Irish bargin right now if you look on the forum gold deals. 

https://www.collectorcoins.ie/en/proclamation-of-the-irish-republic-50-gold-proof-coin-2016.html

[Goldmansacks]

Thank you for your answer ChrisSilver,so to make anything off dealing with a dealer you have to make 10% plus on the spot price you bought at to show a profit?,that's a fairly big target.

[ChrisSilver]

I think looking at it to make a profit is the wrong ideology. I personally believe that precious metals should be looked at a way of long term savings or a store of wealth. As Gold, should in theory always maintain some form of value, even if that value goes down to less than you paid.

Note that precious metals prices may fluctuate significantly. Physical precious metals, if looking at them purely as an investment, should only be looked at for the long term. (Especially when Gold is currently around historical highs)

Trading the spot price for profit is another matter and if looking purely for exposure to the underlying spot price, there would be better ways such as allocated bars or exchange traded funds or derivatives. 

Holding physical gold as a store of wealth wether directly or in a safe deposit box that is easily accessible may have advantages especially in a time of crises when historically gold prices increase.

[Goldmansacks]

Thank you ChrisSilver.

[Prophecy]

If you want to trade gold quickly with minimal premium then try a vaulted service like bullionvault. If you're going physical as in having the metal in your hand, you have to think long term.

[Arganto]

Decent premiums can still be had on gold but shopping around is called for. The forum trade section as Chris said is really good for deals, but dealers often have decent offers too if you look through their listings. Bullion By Post tend to be on the pricier side but even they have good offers on occasion. Check out Baird & Co, Chards, ATS, Hatton Garden to name a few. Best value 1 oz or Sovereigns are a good place to look for <5%. Tonight may be a good time as spot has dipped! Spot can go either way though so don't take that as trading advice 😉 Some good stuff on the forum today.

 

[McDougall]

Keep a close eye on the Silver and precious metals stock prices each dealer/provider adjusts their prices to reflect these hourly/daily but I don’t think the premiums will go down by much until the market stabilises or becomes less volatile, and to be fair you can see why their premiums are higher because the prices of each metal changes so drastically within hours and days so they will need to safeguard purchases and sales as much as they can so their not running a business at a loss. 

[freefall]

21 minutes ago, McDougall said:

Keep a close eye on the Silver and precious metals stock prices each dealer/provider adjusts their prices to reflect these hourly/daily but I don’t think the premiums will go down by much until the market stabilises or becomes less volatile, and to be fair you can see why their premiums are higher because the prices of each metal changes so drastically within hours and days so they will need to safeguard purchases and sales as much as they can so their not running a business at a loss. 

I always thought bullion dealers would use derivatives to offset any movement in the price of precious metals.

I assumed they would be short the market as would gold miners. Likewise jewellery manufacturers or any other consumers of PM would be long to compensate for any fluctuations and let them concentrate on running their business. 
 

Or maybe they aren’t directly exposed to the movement in price in some other way. Possibly leasing the metal from larger dealers and agreeing to share a cut of the profits. Just seems far too risky to be holding so much volatile inventory. Maybe some folk on here would know better. I’d be interested to know.