Ask what they'll buy it back for. Today.

Wendell here. Thursdays are the hard things — metal, land, the assets you can put a hand on.

I promised this one on Saturday and then didn't send it. Here it is.

Every piece of equipment I ever bought had two prices. The one on the purchase order, and the one I'd get if I turned around and sold it the same afternoon.

They were never close. A pump at eight thousand new was worth maybe two on the surplus market before it had run an hour. That gap isn't a loss on the pump. It's what the transaction costs. And it gets paid the moment you sign, whatever the pump does afterward.

I mention it because the same thing sits inside every purchase of physical metal, and it is not what most of the arguing is about.

Two prices, and you'll be quoted one

Start with something I didn't know. The United States Mint does not sell bullion coins to the public. Not to you, not to me, not to anybody walking in. It sells to a small set of official distributors. The Mint's own page says what those distributors then do. They “create a two-way market buying and selling.”

Two-way. Two prices. One they sell at and one they buy at, and the space between them is the business.

By the time a coin reaches a counter near you, it has passed through at least two more sets of hands. Each adds something. None of that is hidden and none of it is wrong. It's simply never the number in the advertisement.

So here is the question I'd ask before handing over money, and it takes one sentence.

“What will you pay me for this exact coin today?”

Ask it before you buy, not after. Write down both numbers. That difference, as a percentage, is the price of the trip — and now you know it before you take it rather than in four years when you go to sell.

A dealer who quotes both without flinching is doing normal business. One who won't give you a buyback number has told you something, and you should hear it.

Where the gap stops being a cost

A markup is a cost. A markup that gets described as something else is a different matter, and the regulator has spent years on this.

In 2020 the Commodity Futures Trading Commission and thirty state agencies charged a Los Angeles operation over a $185 million scheme. Around 1,600 people. More than $140 million of it retirement savings.

Here is the number that stopped me. The complaint puts the overcharges at an average of 100 percent to more than 300 percent above the prevailing market price. Not a markup. A multiple.

And the method, plainly stated. Customers asked what their bullion was worth. They were told the coins were rare, and carried a premium far above the base melt value. They weren't, and it didn't. Nearly every customer lost the vast majority of what they put in.

Three years later the same agency settled a $68 million case against a California dealer over silver coins, mostly bought with retirement money by about 450 people.

That order carries a detail worth holding on to. The customer agreement said the markup would not exceed 23 percent. The average markup customers actually paid was 71 percent. It was written down, in their own paperwork, and the number in practice was three times it.

Both actions say the same thing about who was called. Elderly and retirement-aged people. Money moved out of retirement accounts.

The pattern in both is worth carrying around. The pitch stopped being about metal — weight, purity, the number on the scale — and became about the coin being special. Rare. Limited. A collector's piece. That's the turn. Bullion is worth what it weighs, and any story that has to be told on top of the weight is a story you're paying for.

None of this is a view on whether to own the stuff. I don't have one, and wouldn't hand it to you if I did. This is the arithmetic of the transaction. That's a separate thing from the argument about the metal, and it's the half nobody quotes at you.

Wendell