In this article we will review the major differences between a nationwide full-service precious metal dealer and a local coin shop.
It is important to understand why most investors opt to work with one over the other.
Local Coin Shops VS National Bullion Exchanges:
The advantage of purchasing from a coin shop is the ability to inspect the product before a purchase is made. Unfortunately, most coin shops do not provide a consumer’s transaction rights in writing. Beyond a transaction invoice, a written outline of the consumer’s rights and the coin shop’s obligations should be provided.
In contrast, a legitimate national bullion exchange will detail all aspects of the precious metal transaction process in writing. This helps protect the consumer and offers a lawful remedy for any possible dispute that could arise after a transaction is consummated.
Unfortunately, liquidating through a local coin shop is like selling to a pawn shop, and it’s a foregone conclusion, you will receive less than market value at liquidation. In comparison, there are national bullion exchanges that offer a fee-free buyback policy to their clients. Coin shops will generally offer significantly less than what a national bullion exchange will offer for the same product at time of liquidation, and this is why local coin shops are referred to as pawn shops in the precious metal industry.
A local coin shop will generally conduct less business in comparison to a national bullion exchange. This reduces a local coin shop’s ability to receive volume discounts through major precious metal wholesale suppliers. In many cases, a national bullion exchange will pass wholesale supplier discounts along to the consumer. Enabling the consumer to receive a better value.
Also, a coin shop’s customer base is likely to be substantially smaller in comparison to a national bullion exchange, and this is why a coin shop will charge a higher fee per precious metal transaction. A national bullion exchange conducts business on a much larger scale and can offer a more competitive rate to consumers who wish to buy and sell precious metals.
Coin shops are more inclined to recommend the precious metal products they hold as inventory. It is common for coin shops to take inventory of the products they purchase directly from consumers. Which is why a coin shop’s product recommendation is less focused on the consumer’s investment agenda and more focused on the reduction of market exposure associated with retaining inventory. In contrast, national bullion exchanges utilize major wholesale suppliers to avoid the market risk associated with retaining inventory. This enables a bullion exchange to remain competitive as markets fluctuate and offer consumers product insight intended to best suit an investor’s goals. You want to ensure the recommendation you receive is more focused on your best interests and less focused on a coin shops agenda to move inventory off their shelves.
The services and programs that a local coin shop offers are limited. Generally, a coin shop does not offer IRA investment services. A coin shop is less likely to monitor your precious metal’s performance, and don’t expect to receive a call from your local coin shop when your precious metals are in profit either. In contrast, a national bullion exchange provides market insight, will proactively interact with their precious metal clients, and offer the ability to guarantee product pricing with a phone call. A national bullion exchange will offer services to help consumers with precious metal IRA’s, commercial insured storage facilities, and insured home delivery.
FAQ: Your Key to Understanding!
In conclusion:
Investors are shying away from the nostalgia of local coin shops and gravitating towards national bullion exchanges to receive better value and a higher level of customer service.
