Interesting Article re: SA Gold Coin Exchange

[HR_COINS 10]

Beware the lure of royal coin souvenirs: Fin24: Markets: Technical Analysis

[Timeless Value 10]

Yes very interesting. Thank you for sharing this. At the end of the day prices are driven by supply and demand. As with any investment there is always risk. Investors must realise this.

[PBGold 10]

These articles always irk me, as the writers always create the impression that gold coin dealers are special businesses that are exempt from having any expenses.

 

They always hammer on the difference between buyback price and selling price, like it is actually feasible to work on 0.1% margins. It is not. Dealers are normal businesses with normal expenses, i.e. rent, salaries, advertising etc. Pricing structures are based on the financial requirements of a company, not some fairytale castle in the sky. Business is tough, that is the reality of the situation.

 

You cannot buy a coin at R 10 000 and sell it at R 10 100. It simply is not realistic. Your business will fail within 6 months.

 

There is more than enough statistical and historic data to prove that gold coin investments are good investments, provided that you educate yourself properly before buying, and of course shop around.

 

Sure, there are plenty of people that have been burned by buying a gold coin at ridiculously high prices but in 99% of those cases that person did not even bother phoning around for prices and information.

 

The writers of these articles understand very little of this market and exploit a few bad situations to ‘get hits’ or sell newspapers.

[HR_COINS 10]

Dear PB Gold

 

Thank you for the insight.

No one is mentioned Buying at R10 000 selling at R10 100. That would be ludicrous to say.

 

Take their current Rhino set.

It includes 1/2 oz gold 2009 rhino and 1/2 ox gold 2010 rhino and 1/4 oz white and black medallion.

 

At current mint prices 1/2 oz gold natura is R6760. 1/4 oz 3525

The total cost is R17045.

The mark up is over 82%.

In my opinion it is a rip off.

 

I am still learning about numismatics so any education will be appreciated.

Edited May 23, 2011 by HR_COINS
Corrected figures used

[PBGold 10]

I have heard of these sets but don’t know the actual retail price, so it would be difficult for me to comment on this specific product.

 

But in general I feel that SAGCE’s prices are justified, if you take a closer look at their business model. They are very much following the ‘brick and mortar’ approach in that they have shops in malls,airports,offices etc. I respect them for that. In a world that is dominated by online shopping, it certainly isin’t easy. (It’s too easy today for someone with no business knowledge to affect a market. But that’s another topic altogether.)

 

And the ‘brick and mortar’ approach costs lots of money. At this point the public must remember that dealers are normal businesses with normal expenses. A lot of unhappiness about dealers stems from the fact that the public is not willing to accept that dealers actually have to pay rent, salaries etc. and must therefore work these costs into their pricing structures.

 

Of course, one could argue that SAGCE deliberately incurs these expenses and that they somehow don’t have to, i.e. they could cut expenses to offer lower prices. Wrong. Business does not work this way, it never has, and even in today’s age of low cost internet marketing, it never will. In business you are either getting bigger or smaller, there is no in between.

 

If you think you can stay the same size indefinitely you know nothing about business. Why? Because your competitors are constantly trying to take your market share away from you. If you think you can just tread water, you will drown. So either SAGCE is expanding or shrinking. In order for them to expand they must pay money. Lots of it. And this reflects in their pricing models. Otherwise other dealers like Investgold, Centaurus, Randburg Coin, GRC Mint etc. will simply obliterate them over time.

 

Sure, you could find the same item at a lower price on Bob,

 

But, in the end of course, it is up to every person to decide where they will buy their coins.

Edited May 24, 2011 by qball