How to sell gold and silver bullion legally and through legitimate buyers

Question

Please note: This might seem like a over-simple question, but I do believe its on topic, and it is certainly not a duplicate. In fact, I can't find a credible answer to this question anywhere on the internet. So I think, as simple as it is, it deserves an answer here!

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Throughout my life I've heard over and over again that gold and silver are the foundations of our entire paper note-based monetary system. Its very common for people to invest in and buy gold and silver bullion (coins or bars) to keep in case of a rainy day.

I was listening to someone speak recently and they were talking about how they had a decent store of silver bars for such a rainy day. And my first thought was hey that's smart. But then my second though was: why? Why is that smart?

Then I thought, well, how would someone convert bullion (again: gold/silver, bars/coins) back into money when in need?

So I went to consult the Google Gods, and asked them: how do you sell silver bullion?" and, unless my Google Fu is particularly weak, it seems that the only places where you can buy/sell bullion is: antique coin dealerships.

Am I missing something?! I would have expected to be able to walk into any bank with legitimate gold/silver, and make an even trade based on their price point at the current time. But no, it appears that you need to find a local coin dealer and go to them. Am I missing something?! Isn't that strange?

So you invest in bullion (invest is the keyword; the intent is to have your purchase be worth something that you can capitalize on at a later time), but you can't take it to a bank and get money for it, you have to take it to Big Larry, your local coin dealer who operates out of a dimly-lit office on the side of a used car dealership. Big Larry somehow makes a business out of this, but the trail seems to run cold when the bullion gets to him.

Who do the coin dealers sell the bullion to? Are there any other credible/legitimate/trustworthy places you can turn to to sell bullion, like banks, or even local branches of the federal reserve (!!!) ? Why do I get the feeling that my whole life, every time I see someone buying bullion, that they're really just falling prey to some hoax/scheme?

Answer 1

At one point in history, gold and silver had something to do with paper-based money. Actually, quite recently - less than 50 years ago.

Now, they don't.

If you want to "convert" silver into paper money, you need to find someone who wants to buy it from you. Same as any other kind of metal. There's no special super-secret way to exchange silver for paper money.

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The theoretical advantage of holding gold or silver, instead of cash, is that if civilization partially melts down (e.g. collapse of the US government), then cash becomes worth less, or nothing, but gold and silver don't.

Of course, in a total collapse of civilization, gold and silver are also worthless. In that case, the only meaningful currencies are food, water, and bullets.

If you manage to survive to the other side of the apocalypse, your gold will be the most valuable thing you have. Food, water and bullets won't be so valuable when there's not an apocalypse, and all your other stuff will probably be destroyed.

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The other main advantage is that governments can't mess with it. In the Western world, no matter how much you hate the government, you probably trust them to not mess with the currency too much. For the foreseeable future, a US dollar, a pound, or a Euro will always be worth something - they're not gonna disappear or hyperinflate. Not all countries are like that. Alternatively, you might just be really paranoid. Or maybe you think something will happen that will force them to screw up the money supply (cough cough pandemic cough). Well, they can't screw with gold. Cryptocurrencies work pretty well for this scenario as well, but they're pretty new and volatile, whereas gold is tried-and-tested.

Answer 2

A very layman explanation. Please note that all below refer to "a rainy day means a stock goes awry for few day maybe weeks or there might be some spike in price of gold or silver".

A gold bullion is worth it's price in gold. It don't matter if it's bar, coin, ring¹ or candelabre. And you can sell it in any place that buy/sell (trade) such things. Pawn shops, jewellery stores, "cash for gold", probably even currency exchange office.

Banks do not deal with gold so they have little to no interest in dealing with such thing. Again, You need to apraise such thing. It's not a matter of trust what is written on the bar or how good bite can the clerk take on your gold. It's a job on itself. So why would bank hire such specialist when it's just cheaper not to.

Second thing: as you noticed, Investment. Dealing with ores give people feeling they buying physical thing (remember when stock were piece of paper and not name on a screen?). So when the market goes dark they will still be able to sell that "product". Because they have it.
Also there is volume to price mentality. A grain worth of $1000 might take a space of whole house while $1000 of gold might be a coin easily hidden in pocket.

So you don't sell bullion or bars but gold and silver.

₁ A golden jewellery might be worth more than it's price in gold as there is extra price on the marksmanship to create it. Sometimes one pair of earing or ring without a stone in it is reffered as "golden scrap" and it's price might be even lover than it's weight as buyer will calculate the need to melt it or effort and cost to make second one to make a pair.

Basically whole idea of gold/silver dealins is based on assumption that gold/silver will be in higher demand that it is now.

Answer 3

Bullion is both a currency hedge and an industrial commodity.

And many bullion dealers, for instance, sell one-ounce gold at 5% or less over spot but buy one-ounce gold at spot. A bullion dealer is not a hoarder but a hedger. In fact a hedge with futures can financially benefit from contango. If the bullion dealer should have too much stock on hand they can sell bullion, along with scrap jewerly, to a foundry.

If a local bullion dealer can't be found then there are two or three bullion dealers that operate on a national basis and that accept shipments of bullion.

But significant amounts of bullion should not be kept at home and should not be kept in a safe deposit box. Large amounts of bullion can be kept in commercial gold vaults or in financial accounts.