This text is from a forum on Silver-for-the-People. If you'd rather prefer to watch you can do so HERE. The side commentary and input from BrotherJon is well worth the watch! Whatever venue you select it is vital information for everyone whether you own silver, intend to, or may inherit some. Do your homework!
My thoughts on buying and selling silver.
 | Mojofabulous  Passive Overlord  |
Scroll to the end for the summary:
I'm just going to say it, I no longer believe semi-numismatic or numismatic coins are a wise purchase for the majority of working class people. To the newer members here who have no clue who I am, just know I used to be a super active member who almost fanatically supported the value in semi-numis on this forum(and others). Then I got a bit burnt out and took a break. Then I got busy and completely disappeared. So before you go off on me, hear me out. My argument has nothing to do with whether or not semi numismatic coins have value today or whether they can increase your profits over generic silver.
Instead I will start my argument with a real world example. In fact, here's my own personal experience:
I was an admin here(for a short time until I disappeared). I strongly supported semi numismatics and put my money where my mouth was. Further, I bought AND SOLD them on bullion trading forums(like bullionstacker.com) and on ebay. I did so profitably. It was nothing I could live on, but it generated profit. I began to notice something though. There was an inverse relationship between the number of coins I could sell in a single transaction and the profit I was able to make from each coin sold. My most profitable sales were single coin transactions. If I sold a full roll of coins, it was only done by decreasing the price to the point where I was making much more modest profits.
So I was left with a choice. Either I could spend increasingly more time doing smaller but more profitable transactions. Or I could focus on larger transactions at a smaller profit. At first I chose to focus on the smaller more profitable transactions until I realized that my profits were a function of TIME INVESTMENT. The buying and selling of the more profitable small transactions was consuming an ever greater amount of time(many hours a day). So, for a while I decided to focus on larger transactions. This cut down on time spent and expenses(like gas to the post office) but it also cut down on profits and more importantly, it continued to drive me further away from semi-numismatic and numismatic coins. Because people are less and less willing to make larger purchases on premium coins.
Then something even more important happened. I got a normal full time 50 hr a week job(I'd been doing odd jobs and part time work beforehand). Suddenly I only had 3 hours of spare time each work day with 2 days off. The time investment required to continue selling and buying coins on the side no longer seemed worth it when weighed against my desire to have 'relax' time for computer games, reading, etc. Basically, my time became very precious to me and I no longer wished to spend it buying and selling coins to generate profit, much less spending the numerous hours required to research what coins were going to be the next big thing.
Now here's the even more interesting thing. You know that job I got? I now work for a company called Gold and Silver Buyers. It's the largest gold buyer in Texas. Do you know what I've learned as a result of this job? The vast majority of people in this country have NO IDEA WHATSOEVER what the value of gold and silver is. Many people actually throw away gold and silver jewelry when it breaks(for example a broken necklace) because they think it has lost it's value. They completely fail to recognize that the metal itself has value. The only value they recognized was the (now) ruined form it was in (jewelry). Further, most of the ones that DO realize the metal still has value completely fail to understand how much value it DOES have. I cannot tell you how many people have walked in to my store and literally passed me a handful of broken gold jewelry and said "I have no idea how much this is worth, I Just hope I can get some gas/beer money for it." Literally 90% of the customers I see haven't even bothered to look up the spot price of gold or silver in their life time. They had in their hands $100-$500 worth of gold and silver and they expected it to pay for their $20-40 gas bill!
As a result, the trading of all precious metals is big business these days and I'm telling you right now, it's not happening at spot. It's happening at 20% of spot. It's happening at 30% or 40% or 60% of spot.
So I have a question for you. Do you really think those (I'll just say it) ignorant masses are going to take the time out of THEIR busy lives slaving away at a job they hate to pay for things they THINK they need will actually stop and educate themselves about the precious metals market? Further, do you think they'll actually choose to spend even more of their time investing in the knowledge necessary to benefit from the trading of semi numismatic metals? The correct answer is no.
I'll tell you what these people are going to do. They're going to buy WHAT IS AVAILABLE AND SIMPLEST. The most recognizable things will go first. Then the 'cheapest' will go second. Then whatever is left will go last. When the frenzy buying for precious metals truly begins, premiums will go up. This is true. But it will be true for ALL PHYSICAL SILVER AND GOLD. The premiums will go up rapidly but will simultaneously compress until there is little difference between generic, semi-numismatic and full numismatic silver. All will be expensive and all will be considered equal(even if it is also considered somewhat confusing and strange).
Why do I boldly state this to be a fact when the future is inherently unknowable? Because I've dealt with these ignorant masses now and have witnessed their understanding. Knowing how they will react in a financial panic where paper assets are piling in to physical assets is now truly simplistic to me. They will understand in their gut that something is wrong and they will react. But they will react with limited understanding. All they will know is that physical assets are where to be. They won't necessarily know why or which choices are best. So they will simply BUY. Those people couldn't care less if it's a 1964 quarter, a silver american eagle or a 1993 graded panda. If someone they trust or respect tells them it's silver, THEY WILL BUY IT. But they will buy the most recognizable and cheapest things first.
Lastly, I want you to consider something. To take advantage of the high premiums on semi to full numismatic coins, one must use the internet. Coins shops will pay ok, but nothing like you can get off the internet. This is because the internet links so many people together that it's easy to find the most interested buyers. So what happens if the internet isn't working or your access is cut off? Or what if the internet is working but mail delivery is no longer functioning normally? Any of those things could happen in a serious financial crash or war. Premiums over the norm only have value if they can be extracted through an actual exchange! Just something to think about.
So, I'm going to end this now with a summary of my main two points:
1. Numismatic value is a function of time investment. You cannot invest significant wealth in semi numismatics and hope to unload them efficiently while also having a life outside of precious metals. Those without that amount of time to spend would do well to buy the cheapest most recognizable silver possible(silver american eagles and 'junk' silver coins.
2. The spread between generic and numismatic silver WILL compress and it has nothing to do with semi numismatic value. The fact is, most of the people on this planet are just too ignorant to buy wisely. They will buy what is recognizable and available. Numismatic value is for times filled with certainty and leisure. Not uncertainty and fear.
Thank you for taking the time to read this.
http://www.brotherjohnf.com/forum/thankyoulike.php?action=add&pid=23693&my_post_key=ff0fe70a4f89734bd4a8819e07633097
I'm just going to say it, I no longer believe semi-numismatic or numismatic coins are a wise purchase for the majority of working class people. To the newer members here who have no clue who I am, just know I used to be a super active member who almost fanatically supported the value in semi-numis on this forum(and others). Then I got a bit burnt out and took a break. Then I got busy and completely disappeared. So before you go off on me, hear me out. My argument has nothing to do with whether or not semi numismatic coins have value today or whether they can increase your profits over generic silver.
Instead I will start my argument with a real world example. In fact, here's my own personal experience:
I was an admin here(for a short time until I disappeared). I strongly supported semi numismatics and put my money where my mouth was. Further, I bought AND SOLD them on bullion trading forums(like bullionstacker.com) and on ebay. I did so profitably. It was nothing I could live on, but it generated profit. I began to notice something though. There was an inverse relationship between the number of coins I could sell in a single transaction and the profit I was able to make from each coin sold. My most profitable sales were single coin transactions. If I sold a full roll of coins, it was only done by decreasing the price to the point where I was making much more modest profits.
So I was left with a choice. Either I could spend increasingly more time doing smaller but more profitable transactions. Or I could focus on larger transactions at a smaller profit. At first I chose to focus on the smaller more profitable transactions until I realized that my profits were a function of TIME INVESTMENT. The buying and selling of the more profitable small transactions was consuming an ever greater amount of time(many hours a day). So, for a while I decided to focus on larger transactions. This cut down on time spent and expenses(like gas to the post office) but it also cut down on profits and more importantly, it continued to drive me further away from semi-numismatic and numismatic coins. Because people are less and less willing to make larger purchases on premium coins.
Then something even more important happened. I got a normal full time 50 hr a week job(I'd been doing odd jobs and part time work beforehand). Suddenly I only had 3 hours of spare time each work day with 2 days off. The time investment required to continue selling and buying coins on the side no longer seemed worth it when weighed against my desire to have 'relax' time for computer games, reading, etc. Basically, my time became very precious to me and I no longer wished to spend it buying and selling coins to generate profit, much less spending the numerous hours required to research what coins were going to be the next big thing.
Now here's the even more interesting thing. You know that job I got? I now work for a company called Gold and Silver Buyers. It's the largest gold buyer in Texas. Do you know what I've learned as a result of this job? The vast majority of people in this country have NO IDEA WHATSOEVER what the value of gold and silver is. Many people actually throw away gold and silver jewelry when it breaks(for example a broken necklace) because they think it has lost it's value. They completely fail to recognize that the metal itself has value. The only value they recognized was the (now) ruined form it was in (jewelry). Further, most of the ones that DO realize the metal still has value completely fail to understand how much value it DOES have. I cannot tell you how many people have walked in to my store and literally passed me a handful of broken gold jewelry and said "I have no idea how much this is worth, I Just hope I can get some gas/beer money for it." Literally 90% of the customers I see haven't even bothered to look up the spot price of gold or silver in their life time. They had in their hands $100-$500 worth of gold and silver and they expected it to pay for their $20-40 gas bill!
As a result, the trading of all precious metals is big business these days and I'm telling you right now, it's not happening at spot. It's happening at 20% of spot. It's happening at 30% or 40% or 60% of spot.
So I have a question for you. Do you really think those (I'll just say it) ignorant masses are going to take the time out of THEIR busy lives slaving away at a job they hate to pay for things they THINK they need will actually stop and educate themselves about the precious metals market? Further, do you think they'll actually choose to spend even more of their time investing in the knowledge necessary to benefit from the trading of semi numismatic metals? The correct answer is no.
I'll tell you what these people are going to do. They're going to buy WHAT IS AVAILABLE AND SIMPLEST. The most recognizable things will go first. Then the 'cheapest' will go second. Then whatever is left will go last. When the frenzy buying for precious metals truly begins, premiums will go up. This is true. But it will be true for ALL PHYSICAL SILVER AND GOLD. The premiums will go up rapidly but will simultaneously compress until there is little difference between generic, semi-numismatic and full numismatic silver. All will be expensive and all will be considered equal(even if it is also considered somewhat confusing and strange).
Why do I boldly state this to be a fact when the future is inherently unknowable? Because I've dealt with these ignorant masses now and have witnessed their understanding. Knowing how they will react in a financial panic where paper assets are piling in to physical assets is now truly simplistic to me. They will understand in their gut that something is wrong and they will react. But they will react with limited understanding. All they will know is that physical assets are where to be. They won't necessarily know why or which choices are best. So they will simply BUY. Those people couldn't care less if it's a 1964 quarter, a silver american eagle or a 1993 graded panda. If someone they trust or respect tells them it's silver, THEY WILL BUY IT. But they will buy the most recognizable and cheapest things first.
Lastly, I want you to consider something. To take advantage of the high premiums on semi to full numismatic coins, one must use the internet. Coins shops will pay ok, but nothing like you can get off the internet. This is because the internet links so many people together that it's easy to find the most interested buyers. So what happens if the internet isn't working or your access is cut off? Or what if the internet is working but mail delivery is no longer functioning normally? Any of those things could happen in a serious financial crash or war. Premiums over the norm only have value if they can be extracted through an actual exchange! Just something to think about.
So, I'm going to end this now with a summary of my main two points:
1. Numismatic value is a function of time investment. You cannot invest significant wealth in semi numismatics and hope to unload them efficiently while also having a life outside of precious metals. Those without that amount of time to spend would do well to buy the cheapest most recognizable silver possible(silver american eagles and 'junk' silver coins.
2. The spread between generic and numismatic silver WILL compress and it has nothing to do with semi numismatic value. The fact is, most of the people on this planet are just too ignorant to buy wisely. They will buy what is recognizable and available. Numismatic value is for times filled with certainty and leisure. Not uncertainty and fear.
Thank you for taking the time to read this.
http://www.brotherjohnf.com/forum/thankyoulike.php?action=add&pid=23693&my_post_key=ff0fe70a4f89734bd4a8819e07633097
