Poll: what Silver bullion premium is too high?

As an INVESTMENT, a Bidiot on eBay is OVERPAYING for Silver when s/he spends how much (%age) Over Spot for bullion/coin 1-5 ozt Fine Ag, on average? Think of the bullion product(s) you most often bought or wanted, last 6-12 months.

(Assume solid dealer rating, s&h inclusive, same general circumstances, etc. all effectively constant.)

 

Log in or Sign up to hide this ad.

IMHO - The premium on precious metals is somewhat elastic and much depends on what direction the price is moving, and where it is relative to where it was a month or two ago. It is also largely dependent on the size of the purchase.

I generally try to stay under 10%, but I don't necessarily consider premiums above 10% to be excessive.

 

I just checked premiums on Provident and oddly enough, they are roughly the same as what they when silver was at $30/Oz. Not percentage wise mind you, but dollar wise. They are currently $3.50 each on ASE and that's what their premiums were when silver was 2x what it is now. Which means the premiums measured as a percent are almost twice what they were at $30/Oz.

 

What's the average premium that you pay OP?

 

We in UK have a 20% tax on the dealer price of (new) silver - so pretty much anything is 40% over spot when considering price/premium/postage and tax.

 

Your tone is rude and you're stalking. Please stop that.

 

Now that hurts.

 

Not if you buy anything in legal tender form. Britannias or pre 47 silver coins.

The cheapest way is to go to an antiques auction, and buy silver items by weight. You will need to calculate the correct top bid allowing for buyer's premium, but the dealers will mostly drop out at the price they'd pay for scrap over the counter, so one more bid should do it, you'd not be unsuccessful always at 5% over spot. Quite often you can get a handsome but unfashionable silver item that is not only a good chunk of PM but is also good around the house.

Just about all the silver I have is also useful or decorative as something other than a paperweight.

Also sales between non VAT registered parties are VAT free, so you can go to a coin fair and buy off of most of the dealers without VAT getting involved.

 

We have been around this before. If you want to buy modern silver bullion, even silver Britannia coins, you pay tax. If I buy junk silver from my local dealer, I pay tax on it.

As they say, tax and death is the only inevitable features of life.

 

If you want to buy modern silver bullion, even silver Britannia coins, you pay tax. If I buy junk silver from my local dealer, I pay tax on it.

Well, I certainly manage to buy metals with no tax. Items entered in auction by non VAT registered people are not subject to tax, and I have never charged or paid tax at antiques and coin fairs. You are not inevitably stuck with paying tax.

 

I'm not sure if you are naive or just trying to troll me. Again.

By and large, the folk selling modern silver coins bought their stock from somewhere. Unless they smuggled them in from somewhere abroad without tax on silver, they paid tax on them on import or VAT when they sold them. Declaring stuff as a gift on import is both smuggling and small scale.

For a coin dealer at a coin fair not to be making above the threshold for paying VAT they are not dealers, they have a hobby that may give them a small income.

You may pick up an old candelabra at a boot sale and I agree, no direct tax. Buy it from an antiques shop, you pay tax.

My apologies to the OP for off topic. I'm done with this now.

 

I have spent the last 25 years as an antique dealer. I have bought large amounts of both coins and general silver (and gold) objects at auction and from runners and private sellers. I have never paid any VAT apart from the VAT on the buyers premium at auctions, and this is factored into the top bid price I am willing to pay.

The margins would be slim, unless I got lucky and the other dealers missed something, but it would not be an infrequent thing to buy several thousand pounds worth of mixed silver items at an auction and flip them the same day at my bullion dealer's shop for maybe a hundred pounds profit, small pickings but no real risk or work involved.

One staple purchase would be 1970s sets of silver ingots or rounds, which I'd consistently buy for less than melt and sell to a private buyer for spot silver price. That buyer paid no tax.

Specialist coin auctions such as Warwick and Warwick could supply stacks of material, such as modern silver NCLT coins and gold bullion coins for about the melt price. This is all a far cry from the odd item from a car boot sale.

By and large, the folk selling modern silver coins bought their stock from somewhere.

Yes, from the sources I have mentioned, but they'd not be paying any tax to the sellers, because in most cases the sellers would be non VAT registered people. Lots entered by VAT registered traders into auction would be marked with an asterisk to indicate VAT was payable on the hammer price,in which case you'd simply bid enough less to cancel this out. Selling PM's at auction is a mug's game because of the huge costs to the seller, but there is an unending supply of mugs willing to do so, usually because they know no better or want to clear an inheritance into cash with the minimum of effort.

Unless they smuggled them in from somewhere abroad without tax on silver, they paid tax on them on import or VAT when they sold them.

There is no need to smuggle anything, and it is no interest if a buyer paid any tax to anyone a decade or more ago. Or even last week. What they get is the market price, and this does not include any tax.

The VAT registration threshold is about £70.000 per year turnover. And that's turnover anyone knows about, cash deals tend to leave no trace for the taxman.

Unmentioned so far is the fact that I could buy all the silver I could afford from my bullion dealer for cash over the counter for maybe 5% over melt, with no tax involved.

Anyone paying tax on PM purchases in Britain is simply doing it wrong. I really have no idea why tulipone is so dogmatic about this, I have no desire to 'troll' anyone, just stating the facts from my quite extensive experience.

 

Which isn't surprising, their overhead and profitability need to stay up so they can't cut the % markup as much.

My local dealer had UNC ASEs today for $25, which is pretty pricey. Proofs were $60.

 

God Bless the Labour Party, huh ? LOL

 

I sometimes get stuff from Apmex or MCM saying $0.99 over spot. So that's about 7%

Right now, they both are around 25% over spot silver for regular UNC ASEs, a few coins that is. Premium may fall by 1/2 for one of those green monster boxes I guess.

 

I recently bought many £20 .999 silver coins from the Royal Mint, they were £20 each, face value, because I bought so many shipping was free.
I paid no tax.
I`ve just bought a cash box of mixed silver including bullion rounds from my local antique dealer, no tax paid.

I can buy if I wish new bullion rounds on eBay. uk. I pay the pay the hammer price & shipping no tax is mentioned, no VAT on the invoice.

Afantiques is not trolling you, you are misinformed or getting ripped off.

 

Sorry OP - one last attempt.

Any reputable business doesn't really get involved with cash / under the table deals anymore. Lets agree to ignore that and stuff you chance upon at bootsales etc

Business in the UK MUST register for VAT when they turn over in excess of £81,000 PA of VAT taxable turnover but can register voluntarily far below this. Actually £81k of turnover is pretty low for any business - if it were your only income for the year you'd be likely far lower than the minimum wage. Being registered for VAT means that you can offset VAT paid against VAT charged. If a business charges VAT then the customer pays the business and the business pays the tax man. The VAT on the product the business buys to sell is thereby nullified. If you buy from Atkinsons Bullion / BullionByPost or other such businesses, this is their model with the VAT charged in addition to the basic cost.

If the business is not registered for VAT then they pay for the item + VAT and then absorb that charge until they sell the item to you. You still pay the VAT but it is in effect hidden and not split down on your receipt. Buying from a small eBay distributor is likely to be this model. Unless they avoided the tax somehow, they are selling a secondhand item (that probably once had VAT charged on it) or the tax is absorbed into the cost price and passed on to you when you buy it.

So you bought coins from The Mint. I could go to a bank and buy a £1 coin for £1 - no VAT. You bought a £20 for £20. Not really sure what you point is? That you bought a £20 face coin this about 1/2oz of silver (spot price about £5)?

I understand the US model to be far simpler. You buy something, you pay state / city sales tax unless the state doesn't require it - Delaware / New Hampshire etc.

 

This one was just right... http://www.ebay.ca/itm/500-Silver-A...07473?pt=US_Bullion_Coins&hash=item4ae37702f1

 

If the business is not registered for VAT then they pay for the item + VAT and then absorb that charge until they sell the item to you. You still pay the VAT but it is in effect hidden and not split down on your receipt

Your description is somewhat idealised. In practice I buy PM at a fraction under spot and sell for as much over as I can wheedle out of the buyer. The implication is that all PM deals involve a 20% tax burden, but the fact is that they simply do not

If I see a 30 ozt. sterling silver tray at an auction I will work out the amount I can get for it as metal, subtract the auction costs (usually only the buyers premium and VAT on the amount of the premium) and subtract that from my bid, so if I get the item at my top bid, I buy that nice heavy tray for the same money I can sell it for instantly to the bullion dealer.
If I am lucky, others have been less careful with their scales and calculator, or just don't have the money available, and I get the item for less than the amount I can immediately cash it in for. Happy day.
I can then take my tray to an antiques fair and maybe sell it on to someone who wants an antique silver tray for use around the home, and I make maybe 30% profit on it. If it turns out no one within miles wants a silver tray, I can cash it in, so to speak, at the refinery, get my stake money back, if prices for metal have remained the same, and buy something else.
No tax is involved at any stage of the process.

The coins Davey mentions are not much of a deal based on actual PM value, but they were sold without VAT being charged and not by any small, unregistered business, but from the Royal Mint, because legal tender coins are 'zero rated' for VAT. Paying a purely notional tax with a rate of 0% is not a burden to anyone.

This is related to the OP, both poster and post, as it discusses reasonable premiums to pay for precious metals, and my point is to refute the allegation that in Britain we are invariably stuck with a 20% tax burden.

 

Thanks for the digression though. The question "How does eBay handle taxes in the UK?" is off topic, but eventually I think we're all heading there: across the board 15% online tax. Check back in about 5 years or so! Maybe then, a 10% premium will look like 'the good old days' here too. Let's hope there will be some loopholes, yet.

I shouldn't imply that that tax cheating is ok, but I think I read somewhere that ~90% of bullion buyers (I think "Americans") admit they didn't pay local sales tax for online purchases today. Many online shoppers naively believe they simply don't owe tax (when they do) and lax enforcement allows that ignorance to persist, even when it's indicated on my state's tax form.