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posted 2 months ago by
tanner12oz
Senior Member

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I know this is probably more of an FWF question, but can someone ELI5 why this is a good deal?

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This is in the "bullion" category so you don't get eBay Bucks nor can you use gift cards or most portals (Swagbucks supposedly pays on non-bullion coins, although my orders are still pending). If you had a high paying enough credit card (2% or up) or needed to make minimum spend, and are willing to take commodity risk, you could buy them and sell them immediately for what you paid, making a small profit.

I don't really like the no name assay companies though, and prefer to buy gold buffalos and maple leafs at spot during periods when eBay is offering 8 or 10% Bucks on non-bullion coins. So I'll pass on this deal for Bucks, although during the period when I need to cash out Bucks (which is normally a 1% period) I may buy from the "bullion" category.

There will always be a few coins which are categorized as non-bullion and which pay off eBay Bucks.

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Calwatch, spot on about the no name mints and assayers. Much harder to easily dispose of to some buyers.

Republic metals it a nominally reputable house, but nothing like Pampe Suisse.

Here's a decent list of places I'd trust the hallmarks of:
http://www.buygoldbarsonline.com/bullion-brands/

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Redbeard25 said:   I know this is probably more of an FWF question, but can someone ELI5 why this is a good deal?
  Spot price is the benchmark commonly used to peg the worth of an ounce of gold at a given time. It is dynamically derived from futures market pricing. It is a nominal amount, as given buyers and sellers may not be willing to trade physical bullion at that amount. Typically, buyers will wish to pay less than the benchmark and sellers will wish to charge more. Volume is one consideration in price variability, as is confidence in the product. Some purveyors are better known and thus easier to trade. Many governments issue coins. Typically these command confidence in the market and are easier to trade, and therefore will have a higher premium over spot. So, to the extent that spot provides the average price of physically traded gold, the discount to spot and premium over spot determine the gross profit for deals at a given time (ignoring that the gold may have been purchased at a time when the spot was different). Because purveyors need to make a profit, and $1 over spot is less than one tenth of one percent of gross profit, it is unlikely a retail buyer will be able to acquire the physical metal at a lower cost than this. Thus the "deal" at this price. Hope this helps.

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Cheap prices indicate prices may drop. So clearing inventory.

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I agree these no name brands are less liquid than well known bullion which is less liquid than gold coins from a government mint. Which is reflected in the relative prices.
For SHTF you want Krugerrand, Gold Eagles, etc

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Many of Apmex buy-back prices for various popular gold coins are way under spot right now.

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sloppy1 said:   Many of Apmex buy-back prices for various popular gold coins are way under spot right now.
  So why not buy them from someone well below spot, melt them down and sell them as bullion for near spot?
It would seem that there is some arbitrage here, particularly for a large well-respected company that could sell bullion at a decent price.

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canoeguy1 said:   
sloppy1 said:   Many of Apmex buy-back prices for various popular gold coins are way under spot right now.
  So why not buy them from someone well below spot, melt them down and sell them as bullion for near spot?
It would seem that there is some arbitrage here, particularly for a large well-respected company that could sell bullion at a decent price.

??? The buy-back prices are what APMEX is willing to pay to buy them...not necessarily what you or I could buy for.  It would also generally be foolish to melt coins to sell as bullion.  

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raringvt said:   
canoeguy1 said:   
sloppy1 said:   Many of Apmex buy-back prices for various popular gold coins are way under spot right now.
  So why not buy them from someone well below spot, melt them down and sell them as bullion for near spot?
It would seem that there is some arbitrage here, particularly for a large well-respected company that could sell bullion at a decent price.

??? The buy-back prices are what APMEX is willing to pay to buy them...not necessarily what you or I could buy for.  It would also generally be foolish to melt coins to sell as bullion.  


Let's say that I'm well-respected company X. Apmex is offering to buy a particular coin for $40 under spot.
Therefore, Company X bids $35 under spot (beating Apmex's offer), and buys the coin. Company X melts it down and sells the gold as bullion for $5 over spot. That's a $40 profit.

Why is this argument wrong?

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canoeguy1 said:   
raringvt said:   
canoeguy1 said:   
sloppy1 said:   Many of Apmex buy-back prices for various popular gold coins are way under spot right now.
  So why not buy them from someone well below spot, melt them down and sell them as bullion for near spot?
It would seem that there is some arbitrage here, particularly for a large well-respected company that could sell bullion at a decent price.

??? The buy-back prices are what APMEX is willing to pay to buy them...not necessarily what you or I could buy for.  It would also generally be foolish to melt coins to sell as bullion.  


Let's say that I'm well-respected company X. Apmex is offering to buy a particular coin for $40 under spot.
Therefore, Company X bids $35 under spot (beating Apmex's offer), and buys the coin. Company X melts it down and sells the gold as bullion for $5 over spot. That's a $40 profit.

Why is this argument wrong?

  1. There is a cost to "melting" -- way more than $5/oz
  2. A coin is minted by a sovereign government and is always going to have a premium over bullion, you would never melt it down.
  3. Good luck finding someone to by "canoeguy1" hallmarked bullion
4. Good luck convincing buyers you are a "well respected company" for $5 more they can go with APMEX they know they won't be scammed.
5. Provident Metals usually undercuts APMEX and the buy/sell market is extremely competitive

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No price mentioned anywhere in the OP or in the title?

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Apmex can be trusted

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vks22 said:   No price mentioned anywhere in the OP or in the title?
  It is in the title ".99 Over Spot". IOW, you pay about a dollar more than the current spot price of gold (which can/does change throughout the day).

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tanner12oz said:   Great deal here... http://m.ebay.com/itm/112375525146?_mwBanner=1
  
99 cents for an oz of gold? 

i am in.

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quaters said:   
canoeguy1 said:   
raringvt said:   
canoeguy1 said:   
sloppy1 said:   Many of Apmex buy-back prices for various popular gold coins are way under spot right now.
  So why not buy them from someone well below spot, melt them down and sell them as bullion for near spot?
It would seem that there is some arbitrage here, particularly for a large well-respected company that could sell bullion at a decent price.

??? The buy-back prices are what APMEX is willing to pay to buy them...not necessarily what you or I could buy for.  It would also generally be foolish to melt coins to sell as bullion.  


Let's say that I'm well-respected company X. Apmex is offering to buy a particular coin for $40 under spot.
Therefore, Company X bids $35 under spot (beating Apmex's offer), and buys the coin. Company X melts it down and sells the gold as bullion for $5 over spot. That's a $40 profit.

Why is this argument wrong?

  1. There is a cost to "melting" -- way more than $5/oz
  2. A coin is minted by a sovereign government and is always going to have a premium over bullion, you would never melt it down.
  3. Good luck finding someone to by "canoeguy1" hallmarked bullion
4. Good luck convincing buyers you are a "well respected company" for $5 more they can go with APMEX they know they won't be scammed.
5. Provident Metals usually undercuts APMEX and the buy/sell market is extremely competitive

  1) The profit is $40, not $5. Again, this is just an example
2) Apmex is buying coins for BELOW spot, so the coin is wotth LESS than spot. Which is where the arbitrage comes in.
3) Which is why I said "well respected company", not "canoeguy1".
4) Again, a large company would be doing this transaction. Maybe even APMEX itself.
5) OK, so use Provident Metals for this example. Why don't they buy the coins cheap, melt them down, and sell them for spot price?

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canoeguy1 said:   5) OK, so use Provident Metals for this example. Why don't they buy the coins cheap, melt them down, and sell them for spot price?
They do, and you have half of it correct.  Provident buys coins under spot, but resells them for spot + coin premium.
It never makes sense to melt down pure silver & gold coins.  They normally fetch a premium over spot.
canoeguy1 said:   2) Apmex is buying coins for BELOW spot, so the coin is wotth LESS than spot. Which is where the arbitrage comes in.
This is the hole in your logic. Just because APMEX offers under spot to buy back the coin doesn't make it worth less than spot. If you sold it retail (on eBay) you would get at least spot.

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Just as an update, Swagbucks did pay out for three ounces of gold, but then changed their terms to exclude everything from coins and other money, consistent with the other portals. 

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