$70 million of ANA auction invoices come due this week.

[truthteller]

After 3 major auctions at the ANA, the "special" folks who have credit lines for 60 days must pay up this week. My guess is 1/3 of the invoices have been paid, 1/3 outstanding and 1/3 renegotiated. In addition, the "special" folks can't hold their US gold inventory much longer without losing money. Are you a "special" folk too?

 

 

 

TRUTH

[TJ'S Coins]

Should we expect bargains in the marketplace?

[truthteller]

The Baltimore convention will be the true test of the marketplace since I doubt invoices over 90 days will be acceptable, even for the most stalwart auction houses. Expect lower prices, some dealers might even lose money on inventory. Imagine that.

 

 

 

TRUTH

[IGWT]

After 3 major auctions at the ANA, the "special" folks who have credit lines for 60 days must pay up this week. My guess is 1/3 of the invoices have been paid, 1/3 outstanding and 1/3 renegotiated. In addition, the "special" folks can't hold their US gold inventory much longer without losing money. Are you a "special" folk too?

 

Yes, I'm special, too, in a Forrest Gump kinda way. Two questions to get to the Truth: (1) on what do you base your guess, and (2) what is the typical split among paid, unpaid, and renegotiated invoices two months after a group of major auctions?

[truthteller]

My guesses are on observations and conjecture. In the past, an auction house like Heritage used to give 60 and 90 days to little guys like me at 1% a month. Then, Heritage eliminated the long terms and gave 45 days at the most. For the larger dealers, they negotiated terms, usually at 60 days. Many dealers use the float to sell coins and create cash flow. Since the turnaround for many grading services was two to three weeks for standard submissions, this worked OK. However, if the grades or sales were not achieved, this created cash flow problems for some. Now we have a declining market, especially with US gold, whereby dealers must use more and more of their own capital to support inventory. If you can't sell for a profit, what good are auction terms?

 

Renegotiated terms are for dealers who are in cash flow trouble, usually a very small percentage. However, if some dealers are caught with huge inventories which don't move, a dealer will renegotiate auction terms favorable to the auction house. This works once or twice, but more than that, and it's a signal the dealer may be in serious financial trouble. Usually, the dealer figures out his miscalculations and remedies the situation quickly.

 

For 60 days, many larger dealers accept these terms readily. Most of the mid size dealers fall into this category.

 

For immediate payoffs or 14 day terms, usually it's the smaller dealer and collector who pay off the invoice right away or are flush with cash and do not want to pay an interest rate. This makes a large percentage of the buyers in an auction for coins invoices under $10K.

 

 

TRUTH