Make money selling silver bullion
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How do bullion dealers make money? Surely their entire inventory wasn't purchased at Detecto92 , Nov 30, They are still making profit if silver drops a couple dollars just not as much as they would if silver didn't drop since they usually buy for melt or under melt.
Lasers , Nov 30, Because they buy silver a percentage under spot and sell it for a percentage over. It's a slight margin, but hopefully they profit on volume.
On any given day they will own nothing. Or any given week, depends on the dealer and market volatility. Purchases will be hedged, sale will be hedged, and they make the profit on the daily turnover. How far they divert from this model depends on their view of the market and their risk tolerance.
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That's the almost zero risk position. Dress it up with more risk, you have more reward if you get it right, give worse deals and you don't get the volume to make the margin good enough to cover overheads. Depending on the competition locally, of course. But it would be wrong to think of bullion dealers sitting on great heaps of PMs that they have bought and paid for. The local pawn shop or coin dealer may work this way, but they will hedge the rish with much wider margins.
Use line of credit at. The bars I just bought tonight aren't even in stock yet. They'll get them in one door and out the next in probably the same day. I have no first hand experience, but I can see some creative use of a credit line, hedging, and tight inventory management leaving a lot of profit margin on the table for nothing invested.
I used to buy from a shop in Des Moines, IA and he told me that he hedges everything he buys.
Hedging isn't free, but if you can move your inventory fast enough, you'd make out just fine. Judging by how much stuff is regularly out of stock, I'd say they're not carrying more than a few days normal supply. SD , Nov 30, SD , Dec 2, Most don't hedge with a line of credit, as there is little leverage.
Put options will buffer downward movements as they can be sold to balance inventory losses. Straddle options where both a put and a call are placed at the same time, If the commodity stays the same price, you tend to lose.
Otherwise you win whether the price goes up or down.
How can I make money buying and selling bullion? - Blowout Cards Forums
Move the straddle as the price moves and hope for a big crash or a big upward movement. Sell out and buy the silver yourself if you don't want to maintain the move. Also, keep in mind that at just about any price point, people are both buying and selling. Often times they're doing so in the opposite way you'd think they would be. Buying when prices are high and selling when prices are low. It doesn't happen very often that a person backs up the truck to the bullion store and buys at the very bottom of a dip, and most dealers I've dealt with will adjust their margins in their favor when the spot price falls quickly.
However, they don't usually adjust them in the customer's favor when the spot price rises quickly.
So my question for Tim is, how would a bullion dealer not make money? As long as they have an ounce of business sense, the only way I can think of is not getting enough business to cover their overhead. Blaubart , Dec 3, If silver went up, you make more money. As much as they are selling at lower maybe buying at higher TreasureSlugN , Dec 5, Draft saved Draft deleted.
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