The Problem with Everyone Buying Gold

so I bought a bunch of gold or a bit of gold it's all relative I guess bought a bunch sold a bit traded for some but I think I'm confusing this whole thing so let's back [Music] up so I bought a buffalo from Esty bullion at the beginning of May spot price was slightly below $2300 and they also happened to be having a sale on Buffalo at the time so two wins double sale on this week I traded for two more I also bought an eagle that I traded for a few more and I bought another so it seems like a lot at least to me but after everything was said and done I just added a few ounces and really that's all I'm working on just Buffalo's Eagles not much else I'm a few Eagles short of a new tube that maybe I'll Vault maybe I'll bury in the Rose Garden but the bigger story of what's happening in the market what's happening in the shops is probably a lot more interesting than what I'm buying personally because that is what's driving all of this so a lot more interesting to find out why than what before we get back to it if you're looking for gold and silver hit up SD bullion new customers can even get gold and silver for spot that's sdbullion.com slne so let's start off with what's happening in the market and in the shops I'm just coming back from one of my local shops and this is going to be the third local gold and silver shop that I've spoken with saying the same thing people are not coming in to sell they're coming in to buy and maybe that's a surprise to you maybe that's not I've kind of heard the opposite around here online but if you've been into to see your local shops or you've been in contact with any of the online dealers my guess is you're hearing that story people are coming into buy they're not coming in to sell so this is great if you're in the business of selling gold or silver this year has been huge for dealers at least anecdotally cannot speak for the whole industry of course but if you've been wondering if higher prices for metals are pushing retail buyers out of the market that does not seem to be the case and mostly that's good for everyone so we're going to get into the problem in a minute but before we get there two of the shops I spoke with said the only thing people are selling is silver and that should probably be expected and I don't personally think it's a good time to sell silver but it's the highest price that it's been in over 11 years so some people are going to jump at that now nobody told me a lot of people were selling silver just that if they're selling anything it's silver now there is an exception that's going to be inheritance stacks and air comes in they don't understand what they've inherited so they sell now they're not getting out of it because they never really got into it now that means a few things one is that if you're selling you should be able to get a decent price now decent is relative as prices go up dealers tend to give you less back it's just higher cost for them it makes sense but I've heard stories about dealers not even offering spot and the handful that I spoke to though they're giving a little bit less than normal but they're all giving at least spot for eagles and Buffalos and two of the three were giving spot for a gold Maple Leaf all of them were giving spot for really any kind of silver round any kind of silver bar as long as it was clean is we all know how silver gets now other random stuff gold coins gold bars that are at least well known maybe they're giving a little UND spot and then less for the things that you'd imagine so the Obscure stuff the old European coins no real surprising is there another thing all this active buying means is that the retail Market is holding up prices for this stuff now I've seen comments from people saying only central banks are buying gold individuals they're only buying silver but that's really the kind of story that I don't even know it comes from somebody with no actual communication with the outside world maybe we all know that Central Bank buying is driving a significant part of this price spike but if retail buyers understand that influence they don't seem to care one of my local shops just happened to say he's having the best year he's ever had and I didn't even ask and that might be a little bit of a surprise because 1 o gold coin right now goes for $24 to $2500 and that just feels expensive it feels like things escalated quickly but buyer psychology can be a really weird thing when something is more expensive people will actually feel more compelled to want it that 2009 ultra high relief Double Eagle right there is 1 oz of pure gold it's sitting beside Eagles that are also 1 o of pure gold it costs a lot more and yeah I wanted it a little bit more than another Eagle so jumping to the first problem here something that I've been mentioning is that pullbacks have not been significant now normally when we see spot price jump as quickly as we're seeing a 20% jump in 6 months we also see profit taking that leads to Corrections and those price Corrections that give us these dips to buy in on well the dips just haven't been very significant there was nearly a $100 swing in price between the Buffalo I bought May 1st and the eagle I just bought this week but only partly because of a dip in spot price I think that amounted to maybe $40 or $50 the rest had to do with the difference in premium between those shops now I'm at a point where I'm just not as worried about price because the dips aren't really happening low 2300s feel like enough of a dip for me I'm more concerned about what I'm buying than whether I can get $50 off if I wait long enough so what else on the topic of buying well I haven't really talked much about Costco but people with very little background in gold or silver are coming in through these purchases the anecdotal part is that I actually know people who've done it people in the real world casually mentioning that they just bought some gold from Costco now it's a little bit of a weird phenomenon because Costco is just not part of the gold and silver ecosystem it's like buying sushi at the gas station and it turns out it's actually pretty popular now I'm not implying Costco's gold is bad bad but the one-way nature of their model and they sell but they don't buy or they don't allow returns that makes for a possible problem Downstream or at least it adds to one and what am I talking about well the problem is that people end up with gold that they don't know what to do with now if that person is wealthy and some of the people I know who mentioned it they are it might not be something that they have to worry about maybe it's something they'll never sell I think some people see gold as a checklist item and it's kind of a new thing extra batteries check first aid kit check gold bar check now they're ready for anything but there are others out there who are going to be selling down those wiim buys and possibly selling down all on the same trigger and that could affect everything that I've been saying about dealers seeing lots of buyers in very few sellers so on the front end we have new people into the game buying physical gold and silver maybe with no real idea how to sell but welcome new friends no real change on the back end though we could see a quick flip in the market with A Rush of sellers now don't hold me to any of this but my guess is we're going to continue to see strong performance for gold and silver it doesn't take any real stretch of the imagination to say but on top of that we could see some crazy activity so price movement that pushes price to a point that just isn't sustainable so a spike in price and then a crash a crash being 15 to 20% loss in spot price and what happens in a crash in asset prices well a lot of smart buyers sell toward the top that pushes prices down and that gets the attention of the less smart buyers who then all rush in to sell at the bottom things change slowly and then all at once now I don't see this being a 2011 to 2013 situation I'll just give you a chart to show you what that looks like and we could see some of this so a possibility of a big price run as everything converges the prices jump they go well beyond my Baseline case that I mentioned for strong medals performance and those big changes get a lot of attention especially from the buyers with little to no history with physical metal so they're watching what's happening they're buying on the way up they're selling on the way down but they're on a delay meaning they buy at the top and they sell at the bottom so this is where I need to tell you that I don't have any special forecasting abilities I can't tell you what will or will not happen but we're working with logical assumptions one is that with Central Bank buying propping up sales normal retail fear and greed Dynamics aren't in complete control and that's big reason that I don't think we'll see the 2011 2013 Spike and crash I don't think that's a great comparison but the assumption that new buyers will become the most likely sellers is still fair and if those new buyers are Costco buyers and they don't understand how or where to sell well a lot of the good that Costco is doing for gold and silver attention right now could backfire again no shade intended there I just haven't gotten real excited about Costco selling gold now twice now I've checked their prices against SD bullying the price was within $10 I checked the gold Maple Leaf this week I checked the Buffalo when I bought it at the beginning of May both within $10 but Costco didn't have them available either way so typically those buyers are stacking cash back programs rewards and I get it I understand the fun in that but I'd rather have a relationship with a seller who I know will also buy back and really that's just a sideshow on the whole topic here if we put it all together people are not selling they're buying at least in the retail physical market so the buyer profile might be a little a little bit different with these new buyers coming in but it's good in just about every way the two exceptions that I'm talking about here are just that we aren't seeing significant price drops so we're not getting the dips that we all like and new buyers are always going to be likely to become new sellers they potentially would hit the shops at the same time flipping the attitudes of the dealers who are buying the gold back and what we do about all of this is still pretty simple you buy when it makes sense so when it makes sense where it makes sense what makes sense I'm not buying a gold bar because I happen to see it on my way to get a case of protein and peanut butter and then you sell when it makes sense the important part here is not to follow the herd ever really but especially not when we know the herd is bringing in so many new people who might have just been on their way back to the blueberries and bananas and spotted something shiny now no offense if that's you I still think you made a good decision so let's call it good there let us know if you're buying what you're buying or you're buying when you're buying whether you're still getting used to the higher prices and I think we'd all be interested just to hear what's happening in everyone's Market can't really use my pool of five or six dealers as what's happening everywhere so let us know and then while you're in the comments be sure to hit the like button if you found any of this interesting be sure you're subscribed with notifications turned on if you want to hear more on the topic and if you're still here thanks again for watching I always appreciate your time take care [Music] ah [Music]

Channel: 2 is 1

Views: 53,939

Keywords: Gold price, Gold bullion, gold and silver, gold coins, buying gold, buying silver, gold stacking, silver stacking, precious metals

Id: ImXytHolqCU

Length: 11min 14sec (674 seconds)

Published: Sat Jun 01 2024