The stuff that dreams are made of

My big boss here at work (he of P365SAS fame) came into my office the other day and in a low voice asked me “Where can I sell some gold and silver?”

Well……

The Metals Pimp is somewhat semi-retired so I gave my boss the card for my buddy at the local coin shop. How much are we talking about, I asked, trying not sound terribly nosey. “Somewhere around $75,000 to $100,000”, he replied. That’s not a lightweight amount, but it’s not earth-shaking either. But there’s an opportunity in there.

Whenever you buy PM’s (precious metals) there’s a ‘premium’. The premium is what you pay on top of ‘spot’ price. Spot is what the markets say current price is. For example: Gold is $2500/oz. so my guy is selling 1 oz. at “$100 over spot”. This means he’s selling it for spot price ($2500) plus another $100. Thus, your one ounce of gold will cost you $2600.

Now, what if you want to buy a smaller amount of gold? Maybe just a 1/10 oz? Interestingly, the premiums are higher the smaller the piece of gold. For example, a 1/10th oz. gold Eagle  may be “10% over spot”. Well 1/10th of $2500 is $250 (because you’re not buying an ounce…your buying 1/10th of an ounce), and 10% of $250 is $25. So that 1/10th Eagle is, to you, $275.

Obviously the best thing you can hope for is to buy gold at spot, or even below spot. How do you buy gold at spot, you ask? Easy(ish): if the dealer buys it below spot, he can sell it at spot (or slightly above) and still make his money. The difference between what the dealer paid for it and what he sells it for is the spread….thats his profit. Gold is $2500/oz. He buys an Eagle over the counter for, say, “$20 below spot” and he sells it for “$25 over spot”…his profit is $45. Thats how this works.

Why would anyone sell their gold at below spot? For the same reason anyone sells anything – they want /need the money. But, also, some forms of gold are more desirable than others. If you walk into a coin shop with, say, some 1/10 Eagles or 1/4 oz. gold you’ll probably get a better price than if you walked in with a 10 oz. bar of gold. Why is that? Well, among other things, risk. It’s a lot easier for our guy to sell a 1/10th Eagle or similar small gold unit than it  is to sell a 10 oz. bar. And every day he has to hold onto that 10 oz. bar is another day of risking a swing in the market. So, the bigger gold doesn’t get you as much when you sell it as the smaller gold does.

Usually what happens is when the dealer takes in a large quantity of gold, say a tube of 20 gold Eagles (thats $50,000 at current pricing), he just immediately calls a wholesaler and sells it to them that day so he doesnt get caught with it if the price craps the bed the next day.

So, if you want a good deal (gold at spot with no premium) you have to be willing to take gold in a form you may not ideally want. I told my guy that if he ever gets any gold in that he wants to sell at spot, let me know. And, once in a while, that happens. He’ll take in something that is in a form that makes it unlikely to sell quickly (foreign coin, commemorative, odd metric weight, etc.) so he just wants to get it sold and take his profit. Thats where I step in. I just want the gold…I dont care if its a French Rooster, British Sovereign, or Credit Suisse bar. In fact, I just got three British Sovereigns the other day at spot.

So, anyway, I called my guy and said that I was sending him someone that might have a bunch of gold he wants to unload. He said that if it worked out, he could give me a bit of a finders fee. I countered and told him that this was what I wanted as my finders fee: I get the opportunity to buy up to two ounces of gold at his price. I know he’s not going to pay more than spot, so I’m hoping there’s some fractionals (1/10, 1/4, 1/2, etc) in there. If I could get 20 1/10ths at spot I’d be supermegahappy.

Why don’t I just buy them straight from my boss, you might ask. I don’t want to create the awkwardness of hemming and hawing a deal out with the guy who signs my paycheck. Let the other guy do that and then just buy from him.

So, I’m hoping that when my boss returns from his trip next week he’ll have a nice stash of metals to take to my buddy and that I’ll wind up getting some good stuff at cost. I mean, I can live with two 1oz. Krugs at spot, but I’d much much rather have 20 1/10th Eagles at spot.

We shall see.

40 thoughts on “The stuff that dreams are made of

  1. Hypothetically speaking (if you speak hypothetical, of course) what sort of a split would you take between silver and gold if you had a fair amount of money tied up? For instance, I have about an 80/20 split between silver and gold coins. I sort of spit-balled that kind of a split a few decades back, and as I was able I’ve bought more, in those ratios.

    Now, the precious metals people should first invest in (after water/food/shelter/energy sources/tools/clothes/books/knowledge/etc.) is tin and copper, and nitrates of course. Gold, silver, platinum, etc. are probably close to the very bottom of the ‘needs’ list.

    These days, I wonder if it’s the optimal division.

    • I think that being mostly in silver makes sense. I’m guessing(!!!) that silver is more of a ‘day to day transactions’ kind of thing. Five gallons of gas? Silver. Boxes of ammo? Silver. Labor? Silver. Whereas gold is the big-ticket stuff… Land? Gold. Horse? Gold. Medical treatment? Gold. Bribes? Gold.

      But I have nothing to base that on.

      • Agree completely. If we devolve to a pm based barter economy, I’ll be able to get a lot more stuff with (say) ten silver dollars than a gold sovereign – despite the sovereign being worth around $645 dollars, and the silver dollars being worth around $22.50-ish.

        Or, I can trade that sovereign for a pair of moccasins, make a moccasin maker very happy and not buy some fresh venison because I have no more money left, having given it all to the moccasin guy.

      • Is that based on weight or value? In other words, is it 3 of silver for every 1 of gold? Or is it $300 of silver for every $100 of gold?

        • For me, it’s based on cost at acquisition. It just feels about right, that split.

          Now for another question: Silver coins, presumably US ‘Junk’ silver…which denominations?

          I have mostly dollars, with some dimes and quarters… Should I bias more heavily towards the smaller denominations?

          • For transactional purposes, with silver at around $28, you’re saying you have a bunch of units worth more than a $20 bill. If you had some ready cash for shopping purposes, would you want all $20s or some $5s and $10s, too? Keeping in mind that change might not be available…

            That being said, I have avoided dollar coins mostly because they have a bit more premium over spot (even considering the silver content) rather than because they are fairly large in terms of purchasing power. I have mostly quarters, some halves and dimes.

          • Dimes and quarters will be the preferred size for most transactions. Dollars carry too much of a premium and you will never get change when breaking it.

  2. From a preparedness angle over a certain amount makes sense for transitioning to gold.

    Case in point – Someone I know needs to use a pickup truck to move their silver. The same amount in gold would fit in a pouch in a backpack.

    So if a person did say 10k in silver , 10 k in small gold then one ounce gold coins it would probably make sense.

    • SurvivalBlog mentioned this very issue a while back. From a logistical standpoint, gold is more portable but if one is going to hunker down in place then several hundred pounds of silver is doable. With the recent high, a 25lb (400oz as stored in London) bar of gold is now at $1 million.

    • I second that. Here in Europe, British Sovereigns are basically the only bullion coin that “normal” people know of.

      Many would also use British Sovereigns as jewelry, incorportaing them in necklaces and bracelets, so I guess the drilled coins are the result of a bad mounting job.

      My mother also had a 1956 Sovereign as a necklace pendant, but with a proper mounting that did not damage the coin. Now the mounting is long gone, but the coin passed onto me…

      Thanks from Italy,
      Daniele

      • You said that you were getting gold at spot that was “in a form that makes it unlikely to sell quickly”. A hole in a Sovereign would be an example of something that would be hard to sell. An undamaged Sovereign shouldn’t have any trouble being sold.

        • A large coin (Say 10oz) or 100oz bar, or some commemorative from some private mint is a form not likely to sell easily. The first because 100 oz of gold at market is a quarter-million dollars, the second because how much trust does someone place in a mint they’ve never heard of?

    • Generally you get a whole lot less than you think. Silverware is mostly plate so it’s especially a bad deal. Jewelry is lightweight so it takes a hell of a big bag to get an appreciable amount, and before it can be used elsewhere it has to be melted…

      Nothing personal, but who would trust an ingot from Patrick? And 14 karat gold is only ~60% pure gold and not too many people care about the other alloy metals.

      And gem stones are not a great store of TEOTWAWKI wealth: They may be later on, during the recovery, but who knows?

    • I think the only value a survivalist would find in jewelry would be discretion. Have a handful of 24k gold wedding bands in your size, so you could wear one to your hand trade without indicating you have lots of precious metals. There are still problems with that, but it’s one thing to consider.

      • I gotta tell you, if someone tried to pay me for something after the apocalypse with a bunch of gold wedding rings the first thing I’d think was that he killed a buncha people and took their gold teeth too.

        In countries that prohibit their citizens from owning gold bullion, some workarounds have been achieved. I am told there are gold chain necklaces out there that are ugly and flimsy but each link is a particular weight and purity of gold…you want to trade something, you clip off the appropriate amount of links.

        • It was common to see gold chains like that sold in the souks of Bahrain and Jebel Ali back in the ’90’s. Still kicking myself for not getting some back then (as well as many other things I know wish I had done when younger, but that’s probably common.)

          • I saw in a shipwreck museum that Spanish miners/merchants turned gold into “chains” instead of coins or other jewelry back in the day because the crown didn’t levy as much of a tax on chains as they did other things. I’m not sure how long that lasted but I appreciate their spirit.

        • Paying with gold teeth sounds like a good way to become known as a villain, haha. I would like to emphasize the part I typed about wearing one at a time.

  3. I don’t remember who was advising me at the time, but when I started stacking in early 2011, I bought a monster box of silver Eagles for $30.85 each, 50 1/10 Gold Eagles for $152 each and 25 1/10 Gold Eagles for $153 each. A few months later, I panicked and paid $30k for $1,000 face of junk dimes and quarters. Yep, $30 per $1 face. Took it in the shorts on that one, but I learned from that expensive mistake.

    All told, I have 136 ounces of silver for every ounce of gold I own. I don’t really have target numbers for gold/silver balance, either in ounces or dollars, but I do believe silver is MUCH more undervalued than gold and I believe, as you guys do, that silver will become our primary daily currency during SHTF. My best stacking “score” was in July 2022 when I got a monster box of Krugerrands for $23.49 each.

  4. When buying selling precious metals, anyone worry about keeping the transaction below $10,000 so it is mot reportable to the government. One online dealer that I was dealing with had small premium. Not sure why I thought to ask but it turned out that he keeps tract of the $10,000 limit by calendar year not transaction. Need to watch your back.

    Also if you sell you are supposed to pay a hefty tax. So again, pay attention.

    • Many types of gold coins have no reporting requirements when buying or selling way above the 10k threshold you mention. You could sell 100 1 oz. American Gold Eagles without any paperwork being required.

  5. Just bought some Peace Dollars yesterday at the local coin shop, cash transaction with no information shared. Long time ago we bought 1000 ounces of silver at $8/oz! Still got it.

    Sent a check (lower premium) by USPS priority mail, always had good service, last month to a bullion dealer for a bulk sale and the USPS lost the package/envelope! $10 to mail an envelope and SOL. effin post office.

    I always thought the Krugerrand was the gold coin of choice on the international market, but I could be wrong.

    • One would think that an ounce of gold is an ounce of gold, right? But if you have, say, a US Gold Eagle or a Krugerrand, and you have a generic 1 oz. gold bullion round from Steve’s Metals Refinery out of Nevada, one of those is going to be more internationally recognized and accepted than the other even though both are the exact same thing. Thats something to think about. I think people will have more ‘faith’ that a minted gold coin is genuine than they would for a gold bullion round from an outfit theyve never heard of. Not as big a deal with silver, but I think it’s something to think about with gold.

      • From legit big shops the premium on one ounce gold coins seems to vary a little. 30-60 bucks from brand to brand with no names being the dirt cheapest, followed by private mints then the government minted coins.

        I like Krugerrands but can’t say why.

  6. I can buy all of the silver I want @ melt from my LCS. Seems nobody wants Constitutional 90% silver Coinage in my area, much to my advantage.

  7. I agree with those here that silver would be the day to day currency for a collapse of the dollar. I’ve split mine between “junk” silver and 1oz eagles. Mostly because the silver quarters, dimes, and nickels (WW2 35% nickels) are recognizable by most people. The eagles would be for slightly larger purchases. Almost all my gold is in 1/10 oz eagles and 1/20 oz Aussie coins. There are a lot of smaller fractional gold items such as Aurum notes but I think they would have a hard time gaining acceptance.

  8. He has a bunch of PM, but doesn’t know where to sell it. Hm, sounds suspicious to me. Are there that many people out there that have no clue about coin dealers.

    • It seems most likely what he was asking was not “where can I sell this” but rather “can you recommend a place to sell this”. I suspect he was asking whom I would trust for such tranactions.

  9. Considering all the options one should consider the downside of PMs. What if no one was buying? A while back there were very few coin shops or dealers buying 100oz silver bars, due to lack of demand combined with price, so there is a chance to be stuck with something no one wants.

    In a true Mad Max, EOTWAWKI, Nazis rolling blitzkrieg over the ol’ homestead scenario, a bar of silver is pretty worthless. Even if it could be used as a bribe to the soldiers of the occupying force what’s stopping them from just shooting the owner and taking it? There is an old post-apocalypse movie out there, Don Johnson’s first role I think, called ‘A Boy and his Dog’ where it seemed the only the only thing of value was water, canned food, guns and ammunition. Worth watching, the dog sniffs out women for the guy and he opens cans of food for the dog, they communicate telepathically, a real symbiotic relationship!

    • Broadly speaking, the apocalypse doesnt happen overnight. Imagine a rollercoaster. At the very top, thats where life is good and normal. At the very bottom is Mad Maxville. At the very top, no one really trades for metals because everything is fine and the currency is working. At the bottom of the rollercoaster, in Mad Maxville, everyone is using canned goods and ammo as currency so they don’t have to eat their children. No real use for metals there, but people will still value them. Its that ride from the top to the bottom where the metals have the most value.

      • Silver is the finest antibiotic/antiviral known and is a superior water cleansing methodology. If your Grandparents lived through the great depression they may of told you about keeping a silver dollar in a water pitcher to prevent water borne disease. This is also the basis of the term “blue blood” as a overdose of silver causes a blue tint to blood and even skin and makes one almost impervious to infection.

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