Cash on Delivery

Week 27.1 Cash on Delivery

First time COD, you don’t really know the seller thus you should be cautious. Inform your wife, girlfriend, parents, brother sister who are you meeting up with for what purpose.  Never bring your kid along during COD. Cash involved is quite high thus if there is a robbery the kid become a target.  Bring your friend along preferably guy as bodyguard-lah.

Try not to do it inside a car. If it is your car, the seller turn robber will drove off with your nice car. If it is his car, the seller turn kidnapper will drove you off and sell you to Hatyai if female. If you know the seller then it’s ok. I mean this is for the first time deal only.

Do the COD in some place where CCTV is already in place such as BANK ATM, shopping complex etc. Don’t ask them to send to your home or office unless you know the seller personally. A professional seller will not pester you for sales etc, they will respond mostly upon request or special reminder (for example you ask the seller to contact you when he got cheap goods etc).

Do it in a place where there are not so many people and not too little people.  Make sure you check your goods properly before you hand in the cash. Best way to hand in the cash is via ATM bank transfer.

For purchase of large item, it is always best to do COD instead of via the courier services. More advices available on personal basis, FOC for customer. Its’ not secure to explain everything in this blog.

If you have a secure place to do COD and it’s a repeated purchase, it always best to have some time off chatting over a cup of coffee or tea  and update each other on upcoming events. It’s a nice thing to do. Once finish chatting then only bring out the goods and cash to do the COD. I wish I could spend more time with each of them.

Yours’ Buying Action Plan

Week 26.1 Yours’ Buying Action Plan

Last week just before the rapid price movement, one buyer email me that he wanted 60 oz at around RM130/oz and some discount. I gave him some discount but then due to rapid price movement I email it to him later that the price is no longer valid. Normally, when I email I will put a clause there “Price valid till spot < USD36.5/oz“. So in the end he didn’t buy cause already over his budget.

Another buyer emailed me that he wanted the old price but the spot price already gone up USD2/oz. I unable to give him the old price as I will be selling at lost. He told me that he already told all his friends the old price as they are doing combined bulk purchase. Too bad can’t help.

Another example, due to time differences I email my supplier that I wanted to lock in at USD41/oz by the time he got his email the price was USD42/oz so he did not do anything. Then 1 week later it was USD48++ before it come down to USD32++.

What can you learn from these?

When you want to order the price is right but by the time you get to your supplier the price already changed. Here is the action plan if you want to secure an order and protection from rapid price movement.

1.      Just directly SMS or call the supplier and ask him for a verbal + SMS confirmation on the quantity and price. If he can’t, ask him to get back to you. If he didn’t get back to you call him again. One phone call is less than RM0.50 but every time the silver price moves it will be USD2-4/oz. You think about it-lah.

2.      Don’t wait for your friend-lah, they may spoilt all your plan. Once you have enough cash, just go ahead and buy. The rapid price movement may be more than the volume discount you get.

3.      If the price in ebay is right, just click the “Buy it now button”.

You must understand most suppliers are pricing their products based on their replacement cost. If the product is sold below the replacement cost, then it is a physical lost no matter how much $ he make. Supplier view their wealth in ozs of metal and not in $cash owned.

Precious Metal Trading 2

Week 25. Precious Metal Trading 2

Aiyah, this week I give early articles cause next week I won’t know when I‘ll be free. In Precious Metal there are 2 costs. Buying Cost and Replacement Cost.

Buying Cost is the cost of goods when you brought the good for initial sale.

Replacement Cost is the cost to replace the same goods you have sold. Assume you will be able to replace your goods almost immediately after you have sold it.

Let describe all the possible scenarios and your course of action

Selling Price	Action	Scenario
Below buying cost and below replacement Cost.	Don’t Sell Note (b)	Sharp downfall in prices. May 2011, price fall from USD49/oz to USD32/oz within 1 week.
Below Buying Cost and Above Replacement Cost	Sell	You can still make $$ during market down trend
Above Buying Cost and Below Replacement Cost	Sell	Normal market stagnant, market goes side-ways
Above Buying Cost and Above Replacement Cost	Sell if (a) Else don’t Sell	Market price moves up too quickly that you unable to replace your product immediately after you have sold it.

(a)    If you have a loan such as credit card cash advance, personal loan to repay, then just sell. Paper profit is ensured but you end up with less silver.

(b)   Please also ensure that you have some cut-losses measure in place.

However in most scenarios, immediate goods replacement is not possible. Customers’ purchases are normally spread out over a period of time. During the time in between you sell and replace, you may loses some money due to price fluctuation. In order to do 500 oz purchases, at least a sale of 400+ oz is required. There must be some way to minimize your losses. Thus, there will be sometimes where you need to buy some stock in advance to sell in future. The question is when will you buy?

Nevertheless, if you already established yourself in the market, when lot of people trusted you then you can earn commission. Just do only pre-order. Every 100 oz order, you take a commission of RM100-RM1000/= depending on how greed you are and how desperate is your customer and most importantly how likely you going to get the deal.

If you are an investor, look at weekly chart. If you are a dealer like me, then look at daily chart

http://stockcharts.com/h-sc/ui?s=SLV    for silver

http://stockcharts.com/h-sc/ui?s=IAU    for gold

You can change it for daily chart and weekly chart.

RSI-14 weekly chart	Action
30 – 40	Take out all your cash and buy
41 – 50	Take out lot of cash and buy. Keep some spare depending on your needs
51 – 60	Buy if your stock is low, if you expect customer to buy when RSI=70.
61 – 70	Buy if customer is buying.
>70	Sell, clear your stock.

This is not a proven method but nevertheless you can give it a try-lah. Stick to your trading rule ok. Please bear in mind that these trading are only applicable to your spare metal only, you should have some metal as safe keeping with you all the time which you will never sell at any price at least until 

a)      You die

b)      2012-2015.

c)      When Precious Metal peaked

d)     When government is more responsible in their finances.

Just don’t know when all these will happen, if I knew I will have been rich. Have a good week!

Customer Behavior

Week 24.1 Customer (end user) Buying Behavior

The customer itself

Lot of customers heard a lot of news/comments/etc, some heard the same news, some heard similar news and some heard different news from various different sources. Some of the news/comments/etc they heard including Peak Oil, Fiat currency, Printing Press of Federal Reserve etc. All these lead to one message “Buy gold and silver”. So, initially customer will have some saving in Fixed Deposit, Shares, Unit Trust and other investment vehicle.  Normally, they will target a portion of their saving to be in Precious Metal. Some will be on gold and some will be on silver. Off course those who are no-buy-Back-Chicken will only buy gold. According to Jon Nadler KitcoMetal, one should have at least 15% of your wealth in Precious metal.

Thus, they will then buy from me or someone else. For some customer, the initial purchase may be very small 1oz or 10 oz because they don’t know me mah. Ok it’s fine. Later on when the trust is built, they will buy a lot, maybe 100 oz. Just refer to my ebay feedback, you can see some of the repeated purchase. Then they ran out of cash as they already converted part of their saving into precious metal. Bear in mind, they also invest in gold which I normally don’t sell. (how to compete with UOB?.)

So let cut it short after, the customer converted his saving into precious metal, it is very unlikely for him to buy some more as he run out of cash. 100 oz is RM13000 already. RM13K silver, RM20K gold, RM10K cash, property, car etc. You can make your own calculation depending on your net worth. Not everybody is rich ok.

Customer Network

For some customer they will buy only for themselves, even their wife doesn’t know much about it. Part of the reason is their wife will “Nee Ngor Nee Ngor Nee Ngor”, why you buy so many “besi buruk”? Who will buy back your thing ler?

Some will resell the silver to their network of people. Thus my sale is dependent on their sales. After a while, those resellers who are strong (tahan lasak) becomes my competitor + friend. Their customers become my customer then later become my competitor and most importantly remain as my friend. What a tough market? Maybe one day I become a customer of my competitor.

Depending on certain customer, some will manage to influence their wife, relatives to buy silver. Thus, the amount may be more or less equivalent to what the customer spent. Let said the customer budgeted 10K for silver, his relative++ will also have a budget of 10K. Thus, for some customer, you will get additional indirect sales from the customer relatives. In most case, I normally deal with the customer and they will deal with their relatives.

After that the sales will dried up, it‘s not professional for me to pester them for more sales even if there is a good offer because not everybody is rich. Thus, I seldom email them or call them. Nevertheless, if they call me I‘ll always respond back. Once a while when there is a crisis (when silver goes up to USD49++ last April May 2011) I will get many call-lah. For new business expansion I have to find new customer, if not I will have to close shop and look for something else.

Silver NewsLetter

Week 23.1 Silver NewsLetter

Well, when you initially started everything was very interesting. After a while, a lot of the news from whatever source you named it, it sounds the same. The message is “Buy gold and silver and set it aside.” After so much time spent on reading, there is a need to minimize the reading time. I subscribed to Miles Franklin news letter. The author David Schectman will do all the reading by himself and will do a summary from all other Precious Metal authors and put it into his newsletter. The newsletter is email to all his subscribers. Well, if you just want to have a summary then subscribe to his newsletter. It is free. This newsletter will be sufficient for most of you who keen in Precious Metal investment.

Another source is

 http://harveyorgan.blogspot.com/

which talks almost every week on the amount of gold and silver transacted in COMEX. It’s a daily indicator for us on how far are we away from COMEX Default.

Other sources include

www.silverseek.com

Have a great week ahead of you.