Gold and silver are on fire these days – they are sizzling! Gold is at its highest price ever and silver is on its way to matching its highest price, $50 an ounce, that it hit in 1980. This article will help you if you want to get in on the excitement of the precious metals market, either as a seller or a buyer.
Be prepared, know the prices of gold and silver
The first thing you need to do is be prepared. Know the market price for gold and silver going onto the bourse floor of the coin show. If you have Internet service on your phone, then you will be ahead of the game. But if not, you can still get your best price. This article is discussing strictly bullion gold and silver, not numismatic coins. For information on collecting and investing in numismatic coins, please see this article.
How to buy or sell gold and silver
You may wonder why I am covering buying when the prices of gold and silver are quite high. The demand is strong world-wide for the yellow and white metals, and experts in the field are predicting that prices are going to continue to rise. Check the prices on Kitco.com; click on the “All Metals Quotes” tab at the top left-hand side of the page. That will give you the ‘bid’ and ‘ask’ prices of gold and silver.
Traditionally, the bid price is the price the dealer will pay to buy metals from a customer and the ask is what dealers will ask when selling it. But that concept goes out the window these days at a coin show. Why? Because the market is so volatile. When you buy gold or silver, you want to pay as little as possible, but no dealer is going to be “giving away” gold or silver.
Each dealer has his or her own system and method of marking up bullion. When you go to a dealer, know the bid price. Tell him that you would like to pay bid, and know the figure. Most dealers will charge a premium above the bid (or ‘melt’) value, usually up to10 percent.
On the other hand, when selling your bullion silver or gold, you want the best price. So ask for around 10% above bid and write down the price you are offered.
Know exactly how much you want to buy, and stick to it
Know exactly how much you want to buy, whether it is one-quarter ounce, one ounce or ten ounces, and stick to that amount. That will make it easier for you to get price quotes and compare what different dealers are selling gold and silver for. Get the price from the dealer and write it down on his or her business card; also make a note of the location of the table. Don’t try to haggle, just get their “best price” and move on. The same goes for selling your bullion coins.
Variables in the price of precious metals
There are many variables involved in the price of precious metals. If the dealer had to pay more of a premium, then he will pass that on to you. He or she may just want to get the best price possible, and charge more to you because of that. On the other hand, a dealer may have gotten a good price and then charge you less. Dealers generally work on a very small profit margin and want to move as much gold and silver as possible so they can go out and buy some more. That’s how they make money, by turnover. When selling your bullion, if the dealer needs it, he may offer you a bit more than someone else.
Some dealers don’t handle bullion, they’re numismatic coin dealers, and will sell bullion to you at a discount or at melt just to get rid of it. You’re job is to ask. Get about five prices from five different dealers and make sure that you write down all the information on their business cards: price, amount of gold/silver, table number or table location. Then sit down with a cup of coffee or a bottle of water and mull over the prices. They should be some difference in the price. Pick the lowest price and then go back to that dealer and make your purchase. If selling, then pick the highest price and go get your cash!
Coin show etiquette
If you are going to do business with a dealer, then you want to be on his or her good side. To that end there are some basic rules of etiquette to follow on the bourse floor. If a dealer is in the middle of a transaction or if there are several people at his table taking up his attention, then leave and return later when he is not busy. Dealers appreciate that. Also thank him or her for their time after they give you a price or you complete a purchase. Not everyone does that and they remember that, and appreciate it. If you are given a price that you think is ridiculously high, then say ‘thank you’ anyway. You’re not going to get anywhere by antagonizing the dealer, and it may be the best price you’re given that day!
How do you pick a dealer to work with?
The best way is by personal recommendation. If you make the circuit of coin shows in your state or region, however, then you know who is reputable and with whom you want to work. If this is your first time at a coin show, then don't worry. Ask one of the dealers at the show, "Who runs this coin show?" He'll point him out and tell you his name. Introduce yourself to him and explain that you are either buying or selling precious metals. Then ask him to recommend four or five dealers with whom to work. He will direct you to the people that he know are fair and honest. That is as good as a personal recommendation. The person running the coin show has a reputation to uphold. Thus he will send you to the best people.
What kind of bullion should you buy?
Stick to what is called 'junk' silver, the 90% U.S. silver coins from before 1965: dimes, quarters, and half dollars. The silver dollars will cost more. Don't buy modern bullion coins. There is a hefty premium per coin with those. Buy gold coins, either U.S. or world, from before 1933. The modern bullion gold also is sold with a premium. Shop smart and you will save big.
Now you're ready to go to that coin show and buy or sell silver or gold. Have fun and enjoy the excitement of the booming prices of precious metals!
The author is a numismatist and member of the ANA.
Eric Brothers - Eric Brothers' forthcoming book,The Berlin Ghetto, will be published by The History Press in the U.K. in 2012.
