Reflections of a Sell-Out

Two weeks ago, on FOMC day, I loaded a number of ammo-cans into my truck and drove down to the LCS to show them what was inside and see if they wanted to buy it. The contents were precious to me, containing most of my stack of silver and all of my gold. but I learned a few things about myself and about dealing in precious metals.

I need to learn more.

Overall, I felt OK about the decision because we were keeping two ammo cans full of junk silver as crash insurance. (Of course, WW3 could change things).

Why sell out? Well, an opportunity to purchase real estate presented itself, providing a multi-family property where our son could live and have a part time job managing for us. The time came to pay off some borrowed fiat and smash the champagne bottle against the side of the ship. This particular ship should provide a nice monthly retirement check for a long time, and is actually a nice property where one could hunker down.

Now it is time to begin saving and re-stacking again. A death in the family gave a good start as my wife and her siblings divided up dad-in-law’s stack. But I learned a few things about selling-out that morning on the phone with online dealers, and finally at the LCS, in the hour before Yellen took the microphone.

First, a large amount of silver is very heavy, and quite inconvenient to lug around. I had dug it up the day before, blaming the various holes in our back yard on the dog when a nosey neighbor peeked over the fence. Then, I did not sleep well, knowing our future security was sitting in convenient-to-carry ammo cans next to the couch in the living room until the next morning.

Second, I learned that dealers like to change-up their buy-back price on you. I got on the phone  with my favorite online dealer to lock in a sell price before the FOMC minutes were released. I knew to the penny what that metal was worth at spot. And I also knew dealers pay various prices for different forms of metal.  I gave a list of what I had to sell: 10 oz and 100 oz AG bars, gold eagles, and some one ounce generic gold bars in protective plastic cards. They said they would have to call me back with their price. 15 minutes later I was shocked to hear a price $3500 below spot—much less than they advertised as a buy-back price on their website. They must read TFMR--seems that they knew the smash was in the cards.

I told them, “Hold that thought.”  Then I imagined the work involved in double boxing that metal in several cartons to keep the weight under 30lbs each, the rolls & rolls of tape, then paying postage for the weight, tracking, and insurance. Not cheap. (140 lbs oz of metal, if you must know.) A few years ago I arbitraged my Franklins into bars at 5$ over spot and the package burst open in the mail. The Post office delivered it in two parts. No metal was lost. Whew! Dodged a bullet.

Third, selling online is not quick. I’d be spending all day getting this metal in the mail, then have to wait 5 business days, after arrival, before they mailed out a check… 2 weeks to get the fiat. The interest on the renovation loan was beginning to sting a bit—two more weeks meant another few hundred dollars.

So I told them “No deal” and took the metal to the LCS. I had expected to receive spot price for the big bars (as I was told several weeks earlier) and spot for the eagles, and 2% under for the little bars. By the time I arrived, I figured he’d lowball me like the online dealer. Expecting the worst, I was pleasantly surprised when his price was only $1200 under spot. I was disappointed he was dealing hard, but his offer was far superior. So we took it and walked out with a check that we took straight to the bank. Yellen spoke. Metals were smashed.

Fourth: The eff-ing check bounced!  We found out late Saturday afternoon and had to wait all weekend to go to his shop. I worried all day Sunday that his doors would be locked on Monday morning. I even wondered if I’d really want a bankrupt coin shop if I won a lawsuit against him. Part of me felt absolutely sick.

He was totally apologetic and did not defend himself in any way. We followed him straight to his bank where he first did some transferring, then had a cashier’s check issued. I am convinced it really was a simple error on his part. Fortunately, we had an account at that same bank so they honored the check instantly and credited our account. Whew! That was too close for comfort.

Even though the dealer had problems paying us, I still trust him… but not with a big sale again. In fact, I have no plans to ever make a big sale again. I prefer the $1000-ish sales where a buyer hands you cash over the counter, or title to property, or a car title, or a truckload of firewood.

In the aftermath, I feared that I’d have “Stack-Seller’s remorse” in a bad way. But it never hit me. My world did not end. It helped that metals prices continued to fall the following two weeks. I reviewed the risk/reward factors of our real estate purchase, versus the risk/ reward factors of holding the metal—or even getting caught without it when our dream day finally arrives. I felt good about the deal overall—especially since it gave us a property free & clear with no obligations to any banks. And I think I proved to myself that I am not motivated by mammon—that I really only serve one master.

We began planning how to budget and rebuild the stack, deciding I’d be a different kind of stacker in the future: smarter, shrewder, patient.

For starters, no more big bars. They are easy to count but, adding & subtracting the premium both ways puts them in the ballpark with Eagles or Maples, which do get spot price from the dealers. And as AGXIIK pointed out, when/if the AG price ever hits $100 per ounce, each big bar’s sale must be reported to the IRS. I don’t plan to have to sell the stack again, so when I do sell, it will be in smaller amounts, with smaller units of silver. The gold was so much easier to count, move, and brought a better price. Smaller denominations of gold will gain the same advantage—perhaps ½ ounce coins rather than a full ounce. And when we all may be forced to sell to survive, the economy around us will not be what it is today. Finding a dealer who can buy a large quantity may not be easy, or safe, nor would we want to sell it all at once then.

Next, we want to do a better job of stacking at the lows, instead of chasing price up and stacking at the highs. So I am sitting on my dry powder until the annual Christmas sale. Even though yesterday’s action was encouraging, we have still not broken free of a down-trending channel that started Sept 8, and I suspect the banksters will continue pressuring price until the year’s end. (Of course, WW3 could change things). But as long as we seem to have some stability, I am in no hurry to re-stack until December.

Finally, I am leaning toward stacking only Eagles or Maples (either metal) or purchasing lower quality graded & slabbed US collectable coins that are selling near spot. I suspect that counterfeiting will be a serious problem when metals finally return to the world stage as money. My LCS man told me that he prefers a sealed monster box to five 100 oz bars.  It might be wise to purchase one of those assay machines like Charlie has. I have seen stories about fake Morgans, coined in China, that are have been floating around for several years now.

I have grappled with the best form of metal to buy over the years and welcome all advice. The recent experience convinced me that such decisions can be critical and expensive.

With my stack mostly gone, we are now redoubling our prepping efforts, planning to build a self-sustaining homestead and move in by this summer with our remaining fiat savings. (Of course, WW3 could change things). If this economy can remain stable through Trump’s presidency another 3 years, we will all have the opportunity to prepare more fully and stack-em higher. And I seem to recall that 2020 was the year predicted for the big reset by one of the “know-it-all” wizards back in 2010—you know, the old guy with goofy hair that wrote a book about currency wars. I thought he was crazy then… now, ... maybe not?

I no longer predict the end of the world. We’ll just keep prepping and enjoying life. After the crash we shall work our arses off in the garden and greenhouse and hopefully still enjoy life. (Of course, WW3 could change things).

72 Comments

LP's picture

Just wondering ...

Did you consider exchanging your Ag and Au with the owner of the real estate you purchased and bypass the middleman (LCS or big bullion dealer) completely?

scoremore's picture

Great topic!

A couple of things to consider...

Black Friday sales seem the best to me but I have only been watching for the last couple of years.

Benefits of Eagles and Maples:

1. Gov issued/ Harder to counterfeit

2. If a confiscation issue was declared perhaps they would be excluded. i.e. just bullion.

Drawbacks:

1. High premiums and margins.

2. Recent mintages are mass produced so low numismatic value.

I like the Sunshine Rounds and Bars because they stamp them and you can buy a decoder. Also you can invest in a Gold and Silver purity scanner. The premiums and margins are low 39 cents to 65 cents over can be found. Selling back currently has been hit. 35 cents under. It was spot. So it ranges depending upon their needs. Perhaps many have been selling of late. I know the private storage company I use just opened up a new location so business must not be too bad....and I insure it...call me stupid but it does give me a piece of mind...the unit comes with $5k insurance and I add on for cheap. Not everything is kept there but most.

I keep a low amount of junk just in case for bartering...dimes, quarters, halves. I have been buying Morgans of late because the prices have dropped and I owned few.

The rest of my stack is about 50/50 bullion and gov issued slight numismatics. I own very little maples because of spotting and Eagles because of spread and mass mintages.The bullion I own is because of the margins and to sell them quickly upon a big move in the GSR and convert to Gold.

I own no silver chunk above 10 ounces.

About a quarter of my Gold is fractional but they will try to give you less for those presently if you want to sell. I figure if there is a big move they may become more popular for tax reporting purposes and they may give you a better price.

I am not a high roller like you all but I have a nice stack compared to the general public.

Those are my thoughts...

Going on a Morgan Rum errrrr I mean Morgan run.

If I think of anything else I will add it later.

Note: When I said you all I didn't mean you in particular DR....I meant the community. Had to note this to save a spot for Charlie...Hahhahaha

Dr Jerome's picture

real estate for gold

LP: We bought it from a bank. I didn't ask if they would accept bullion for it... but you don't know until you ask.

Scoremore: I never thought of myself as a high roller--its just that all our extra fiat from 2010 until 2016 went into silver... My cost average was over 35 due to a very large purchase at $45 per ounce (ouch) in April of 2011. I'll be writing off this loss for many years.

Time for Charlie to post now!

NW VIEW's picture

Real Estate and Gold!

The current rate of return on residential rental property is just great.  The people with big fiat, in our area, are buying/building condos/duplexes and rental homes.  Those with a few millions in the bank are tired of that 0.1%/yr. rate of return in the banks.  

Some agents are using a cap rate of 6% to establish the listing price on newer units.  We built a set of units 26 months ago and kept them.   They cost X for the total construction.  The current value, after the 2 years, is 1.7X and climbing.  Rent income is already .26X for the 26 months. 

There are gold nuggets everywhere but the kids are stuck in college.   Jim

bp9291's picture

big bars

So the big bars (100 oz) will sell for over $10000 and be reported, this is assuming that all factors are the same as they are now, which is a big assumption.  Who knows what will and won't be the rules and the laws.   You want to sell a big bar, just cut it in half, if its a shit hit the fan thing and the price is over $100 its the metal that counts, not the pretty.  It may be an off book sale anyway, who knows?   I think a diverse group is always the best way to go,  its easy to over think things now because it just drags on and on and on, thanks Joe

Angry Chef's picture

For Me It's All About Counter Party Risk...

...buying, selling, and shipping PM's is a pain in the ass. Particularly Silver because of the bulk. But that is the price one pay's for avoiding the Banks. So really it comes down to how comfortable one is in storing and protecting one's stack. And I think that has a lot to do with your age and the environment you live in. I deal with a company here in Toronto, Canada that has the option of vaulting one's stack. The fee's cover insurance and security. The advantage is when I want to sell I call up my dealer and tell him what I want to sell and we negotiate the price. My funds are then sent directly to my account within 24 hrs. 

It doesn't completely avoid counter party risk as the Government could change the Law tomorrow and force all these private security companies to give up the Gold & Silver stored for National Security reasons. But it's a simpler option than lugging a bunch of monster boxes of Silver Maples around.

I still like the idea that you don't own it unless you hold it. But not everyone is comfortable with storing their PM's personally. So a third party vaulting service outside of the Banks works 2nd best. The advantage is when you need to sell it's simple. The disadvantage is you pay for security and insurance so there is cost involved. And the outside chance that a broke and indebted Government may want to restock the National Treasury with whatever they can get their slimey greedy hands on.

bp9291's picture

keys

Seems to me one of the keys is to be able to live for a good while if you can't sell anything, for one reason or another.   That involves where you live, having funds outside the banking system, food, protection etc.   I think moving out of urban areas is a good thing for sure, but if things get dicey you will have to protect everything you have, there will be plenty of dickheads wanting to take your stuff.  

Its always easier to buy things than sell things, so things get weird and there may be no buyers for a good while, dollar goes to hell what you gonna sell it for?   Barter is always a possibility, I would be happy for a nice supply and demand market but we all know that never happens, thanks Joe

Turd Ferguson's picture

the war drums grow louder again

MODERATOR

Libero's picture

War Drums

where is a good coup when you need it?

25th amendment, section 4:

"Section 4. Whenever the Vice President and a majority of either the principal officers of the executive departments or of such other body as Congress may by law provide, transmit to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office, the Vice President shall immediately assume the powers and duties of the office as Acting President.

Thereafter, when the President transmits to the President pro tempore of the Senate and the Speaker of the House of Representatives his written declaration that no inability exists, he shall resume the powers and duties of his office unless the Vice President and a majority of either the principal officers of the executive department or of such other body as Congress may by law provide, transmit within four days to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office. Thereupon Congress shall decide the issue, assembling within forty-eight hours for that purpose if not in session. If the Congress, within twenty-one days after receipt of the latter written declaration, or, if Congress is not in session, within twenty-one days after Congress is required to assemble, determines by two-thirds vote of both Houses that the President is unable to discharge the powers and duties of his office, the Vice President shall continue to discharge the same as Acting President; otherwise, the President shall resume the powers and duties of his office.[3]"

boomer sooner's picture

War drums

Trump is marching to the fiat ponzi pushers drums and th e y are getting worried.  We are on the slide, but the cliff may be nearing.  IMO

Dr.Jerome, thanks for the update.  Future thoughts may need to include premium increases in physical.  

chrtoo's picture

Big Bars.

Thanks Dr Jerome!  This real world experience is thought provoking .. I have forwarded on the link to a friend; I wish there were more folks that I could send this to but Nobody Understands (or Cares  as Grant Williams coined).

I have an old poured silver bar which, thanks to this article, I would likely now move to the top of the list to liquidate should a need arise. I appreciate the insight on prioritization and agree with gov't issues.

CHR.

imfd's picture

What comes first...

War or Hurricane #4, named Ophelia potentially, knowing a liitle about Shakespeare, there could be tragedy lurking.

chrtoo's picture

GoldMoney experiences.

I had asked around Turdville, several months, ago about any experiences folks had using the GoldMoney MasterCard Debit card. I was planning on using this card, as available cash, on a US-based Cruise from Seattle to the Alaskan panhandle and back.

I am Canadian which adds further interest in calculating capital gains as conversion from AU to US$ is also involved while the AU is owned and valued in CDN$. Throw in a ladder of purchase pricing for the AU and now I need a spreadsheet.

I did get one response from a rather nice fellow but a long way from the Canadian Tax situation (Hi @Dingo!).

The Trip was outstanding with way better than average weather, according to the locals. Got to go Fly-Fishing in Stika with my youngest daughter, catching pink salmon on their run in a beautiful stream. This was Holland American and the food was grand.

The GM card was accepted without issue at the various Ports of Call retail locations. I didn't exercise it too much and now have a good amount left on the card, unspent. Even used it in a Goodwill store in Ketchikan.

GoldMoney does not provide a way to repatriate the money on the card, back to current valued AU holdings. You would need to cash out the card and use your financial instiution to re-buy more AU, at curret market value and currency, including paying the small GM premium on purchase (.5%).

Unlike the suggestion, the card does not hold AU (suggesting changes in the value of the card, as the AU price moves). The card is an outlet for your GoldMoney AU holdings, like selling and taking physical delivery (10gr cubes) or selling AU back to digital credits in your bank account. you sell AU and buy US$ which are then charged up on your card for use at retail.

The value left on my card is in US$ which I can use in Canada and the machines will convert and charge the exchange appropriately (although the rate of exchange will be quite horrific). I'm not far from the border so I can always head for Chicken in the Rough!

CHR.

P.S.  If anyone wants to offer insights into calculating the capital gains in a Canadian Tax situation, that would be outstanding! Tickle my inbox!

indiana rod's picture

North Korea

I don't think we are going to war. But the only thing a bully understands is when you threaten to bust him in the mouth.

One thing we know for sure. Bill Clinton giving North Korea five billion dollars didn't work. The agreement they signed meant nothing. If it has always worked, why not try again? Trump was the first President to call his bluff.

No one has mentioned it but think of all the ISIS leaders taken out with a drone. About the time a missile heads toward Guam Little Kim could get one on his pointy head.

Marchas45's picture

Great Story Dr. J

really enjoyed it but I started to get nervous inside when you wrote that you sold the lot but then I realized I still have mine.Lol

That was mean of me, sorry. I know a friend that sold his property for Gold and that was through a bank and they had to bring it to the closing table. It's amazing how few coins and bars of gold add up to a lot of fiat..

I live in Maine where they tax the hell out of you when you buy and sell it here so I have a few contacts that I have that will treat me right if and when I sell it. As for your sale price Dr. J that wasn't to bad amount below spot but then again I don't know how much you sold.

Me I stack anything that is 90% and .999 silver and a few oz's of gold if and when I get a deal but Silver is my desired PM. The Poor Mans Gold because if all hell hits the fan that's probably who I will be dealing with, "The Poor Man".. Keep Stacking

Sorry I missed out on 4th but it was my wee wife's 80th birthday today so we where out celebrating. She calls me her "Toy Boy" being younger in all. laugh

canary's picture

Fed must hike rates in face of hot U.S. lobor market...

Fed Rosengren expects the economy will likely to continue to grow above it's potential.

http://www.kitco.com/news/2017-10-07/Fed-must-hike-rates-in-face-of-hot-U-S-labor-market-Rosengren.html

Lemming's picture

Real Estate

Once upon a time there was a country that won a massive world war. Prior to that war, housing had been scarce, expensive, and hard to come by. Only the old or wealthy were able to own it. A long term mortgage was 5 years.

After the war a few politicians had a brilliant idea. Why not provide government, (taxpayer), backing for anyone who wanted a home loan? All of a sudden Johnny came marching to the real estate auction with a fistful of 30 year credit! Of course this was a tremendous shock to what had basically been a cash market for the last 50,000 years.

Imagine that! Of course real estate prices immediately began sky rocketing into the stratosphere due to the sudden availability of tremendous stacks of paper fiat to bid with. As time went on the market began to slow and stabilize at much higher levels. In order to keep the momentum going, it became necessary to lower down payments to almost nothing and lower qualifications to simply the ability to scratch an X on the bottom of a form.

During the ensuing 70 years a number of old cranks, (myself included), cautioned folks that these artificially rigged real estate market conditions may not persist indefinitely. Of course those cranks have all proven to be wrong. Those politicians that facilitated this new credit system were truly visionary, and this perfected fiat credit system is alive and well and flourishing to this day!

That is well for those that participate in real estate ownership because in the event of a credit collapse, and an absence of freely available fiat with which to bid up prices, real property prices would likely be a fraction of what they presently are.

Then there is the issue of holding property which you anticipate that a tenant will pay for. This tenant is of course a very astute and financially stable individual. This is an individual who rents not because he lacks the ability to scratch an X on a form, but because he prefers not to be burdened by such onerous chores as painting and plumbing maintenance. You can certainly depend on this bastion of stability to continue to pay the rents, even in the case of economic collapse, unemployment, etc.

Finally, there is the issue of no private property available within the borders of the United States, in fulfillment of the Communist Manifesto. Even if your property is 'paid for', it seems that unless you can come up with huge quantities of fiat for property tax payment, that you may find that you do not 'own' your property!

I was recently shocked to learn that an average middle class home in a more or less rural setting in Illinois will cost the owner $1300/mo. in property taxes! A 1700 sq.ft. 3 bdrm. 2 ba. 2 car garage home! Who among you will step forward to assert that one could 'own' a home in Illinois at this point?

Apologies to Dr. Jerome, but I, for one, will keep my silver..........

Dr Jerome's picture

No apology needed Lemming

Property taxes can be high or reasonable, but if one cannot pay them, someone else will get your property. I have been wondering if i can pay these taxes in advance...?  Seems that ideal prepping locations out west here have very low taxes on property, but if you cannot pay, it won't be yours long. The big cities tend to have the high taxes--not where I want to be when the US economy goes 3rd world.

crylandjr's picture

Kyle bass

Just read on Z-hedge that Bass believes private party gun sales should be outlawed...

Kyle Bass, kiss my ass. I used to respect him. 

canary's picture

Putin's 65th birthday......hope the last one.

http://cdn.images.dailystar.co.uk/dynamic/122/photos/620000/900x738/305620.jpg

scoremore's picture

3,2,1 The roof...The roof

AlphaRob's picture

PHYS AU & AG are call options on chaos that never expire

GLTA

RETSPY's picture

Putin's B'Day

May the Bear (the one in the picture) Rest In Peace.

All that Western NGO money for naught.

Angry Chef's picture

The U.S. Justice System Must Focus On Elite Criminality

When one speaks about the Nork's or Russia or Putin did it.... One must have one's sh$% together before opening one's mouth. No person nor Country is going to give you the time of day when one's own Law's are not enforced ( "All The Plenary's Men"...John Titus ). And when one's own E-Leech are allowed to rape and pillage with immunity. You've lost the moral high ground. So don't be surprised when you receive a mitt full of bee's because your handshake means nothing.

http://www.zerohedge.com/news/2017-10-06/us-justice-system-must-focus-elite-criminality

simjojim's picture

Silver Bulk

Won't be a problem when it's $250 spot.laugh

lund175's picture

Why big oil conquered the world

and what they plan next.

New doc. from Corbett Report that seems good

Long at 2 hours and very in depth history , almost to in depth at some spots.

EDIT: My  short attention span made me skip to the conclusion at 1:41

Great article Dr. J I always enjoy hearing personal experiences' when it comes to metal.

I am glad it turned out good for you after the scare. 

NUGTCALL's picture

Dr Jerome

Thanks for the insight.

I own the Physical Au & Ag metal personally. AND I own it via Sprott. PHYS and PSLV. This gives me the comfort to know that I can almost instantly exchange it for shit fiat (via Sprott)  or dig it up on my land and get the hell out of dodge if conditions warrant. Just my perspective for additional thought. smiley Oh ya I have BTC, ETH and LTC. I am insane ask my wife and kids.

canary's picture

When I read about the lunatic from Las Vegas..

Two things caught my eye....According to cassino employees who knew him, he was arrogant with a strong sense of superiority...I would think, it has a lot to do with his motive.

Joseph Warren's picture

Re: War drums

This article link was posted earlier. According to the analysis of this private group using open source information, the N. Koreans are likely already capable of hitting the continental U.S. with nuke armed ICBMs -

http://www.zerohedge.com/news/2017-10-05/decoders-offer-dire-warnings-about-north-koreas-nuclear-program

lund175's picture

Rouge money and Harley

Talking current events, silk road, etc.

More interesting than the oil video I posted above.

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