Editor’s Note
This article examines how recent volatility in precious metals markets is impacting local coin shops, highlighting the delicate balance between fluctuating spot prices and maintaining business liquidity.
In recent months, rising gold and silver prices have led to an increase in people selling their metals.
Silver and gold spot prices are stabilizing after a period of record highs and volatile declines. This market instability appears to be a headache for local coin shops that typically buy precious metals.
If January was a party for the precious metals market, February is the hangover.
At the end of January, gold prices exceeded $5,300 per troy ounce (approx. 31.1 grams) and silver rose to nearly $120, before plummeting. This market, which saw repeated record highs and lows, has shown signs of calming down in early February.
One sector on the front lines of such volatility is local coin shops specializing in buying and selling gold and silver. While soaring prices have led to a surge in sellers, some coin shops told Business Insider they lack the usual outlets to offload the excess metal.
Tim Hoyer, who runs University Coin & Jewelry in Madison, Wisconsin, said he continues to make trades even as the market is plummeting.
According to Hoyer, when the spot price had fallen to $98 per ounce, a customer came in to sell silver.
The recent volatility is putting these businesses in a tough spot beyond just the rapid spot price fluctuations that erode profit margins.
Local coin shops play a vital role in the physical gold and silver supply chain by providing a trusted way for individuals to sell bullion, coins, and metal scrap.
If you bought a gold bar at Costco last year and want to cash it in, your local coin shop should be one of the first places you go.
These shops resell some of the metal they buy, but most is sold to refineries, where it is melted down and processed into new bars or coins.
The next page discusses how precious metal refineries are facing large backlogs.