How Can a Trial Purchase Help with Choosing a Dealer?

look horse in mouth, inspect goods, buyer beware

Caveat emptor: buyer beware!

Q: Why should I conduct a trial purchase with a dealer before making any big purchases?

A: When seeking out a dealer to establish a business relationship with, it’s best to test the dealer by doing a small trial purchase. Buy some silver Eagles or a gold Eagle or Maple Leaf. Do you feel pressured? Did you get pushed to buy something you didn’t want or don’t really understand?

Then call the dealer about three weeks later and tell him you’d like to sell the item you purchased back to him. See what happens. You’ll learn a ton by going full circle, buying and selling from the same place. Keep in mind that you’re likely going to get less than you paid for the item. This is normal, and the difference is called the spread.

Questions to ask the dealer:

  • What’s the current price above spot?
  • What’s the total amount for the order?
  • Will the dealer buy back the product he’s trying to sell you and, if so, at what price? Solid dealers make a small spread (3% to 5%) and will be happy to buy anything back from you at any time.
  • Ask yourself if the dealer is more focused on educating you or selling you on the reasons to buy now. Ask all of your questions, and if you have any hesitancy or feel like you’re being pushed into something you’re not comfortable with, HANG UP!

The idea is to make sure you pick a dealer who’s honest and reputable, so you’re not constantly worried about being ripped off.