Guarantee Buy Back for Buyer
If you are buying your 1st oz of silver, Guaranteed Buy Back are some of the most attractive words for you. Guaranteed Buy Back could is an value added commitment from sellers to buyers. However, as a buyer you must fully understand what exactly does Guaranteed Buy Back means before judging if this is a real good deal.
As the terms suggest, Guaranteed Buy Back means the seller make a promise or guarantees with his reputation that he will buy back the silver he has sold to you. In general terms, this form of guarantee should be “no question ask”. Seller should not ask you question such as “Why do you want to sell?”. For a strict Guaranteed Buy Back, as long as the buyer could produce proof that the silver item is bought from the particular seller, and the weight of the silver has not changed, the seller would buy it back. There are silver sellers who are offering Guaranteed Buy Back but making a different version of Guaranteed Buy Back that includes terms such as “silver must be in manufacturing condition”, “confirmation of buy back is subject to seller’s decision”, etc. For a silver seller, it is a fair business practise to have certain terms and condition as Guaranteed Buy Back is big commitment. However, if there is a Guaranteed Buy Back that comes with a long list of terms and conditions, the Guaranteed Buy Back is as good as not having one. Terms and conditions for Guarantee Buy Back that apply to high numismatic item could be even more complicated. If you are buying from a seller who offers Guaranteed Buy Back, do check out the terms and conditions attached to the Guaranteed Buy Back.
Secondly, take note of buy and sell spread#. The higher the spread, the less attractive the buy back is. A higher spread simply means the buyer is losing more money if the buyer decided to sell back to the seller. Due to this spread, the price that seller is offering to buy back from buyer is lower than fair market price. In other words, if you are selling your silver yourself in any open market such as SLS or eBay, you could sell for a higher price compared to selling back to the seller who offers you a Guaranteed Buy Back. Typically the spread for silver in Malaysia is about 15%. Any seller who offers spread outside this range, whether too high or too low, buyer need to be cautious.
So should you exercise your Guaranteed Buy Back option? The following is a list of question, the more you find yourself answering Yes, the more suitable Guaranteed Buy Back option is for you:
- You want to liquidate# your silver very quickly?
- You do not want to deal with multiple buyers in order to sell all your silvers?
- You do not want the trouble of promoting, Q&A, negotiating, answering calls, replying email / PM, delivery, etc in order to sell your silver?
- You are not good with selling and ashamed with selling?
For the above convenience, you are willing to sell your silver for a discount?
If you found yourself answering Yes to 2 or more of the above questions, Guaranteed Buy Back is something you could consider. The primary advantage of exercising Guaranteed Buy Back is very little hassle on the buyer side to liquidate the silver. The primary disadvantage of exercising Guaranteed Buy Back is the buyer’s selling price will be lower than a fair market price.
However, for discussion sake, if there are 2 sellers (Seller A & Seller B) are offering the exact same silver item with the exact same price and everything else remains equal, while Seller A is offering Guaranteed Buy Back and Seller B does not. You should choose Seller A for the Guarantee Buy Back offer because it is an value added commitment from the seller. You might not want to exercise the option to sell back to the seller right away, but you never know what could happen in the future. Who knows you might need cash desperately one day? Having such a commitment from seller is better than not having one, provided that such commitment does not cost anything extra to the buyer.
This is a sample chapter from eBook titled Practical Guide for: Investing Silver in Malaysia. Download the full version