Precious Metals Buyers Should Be Wary of Long Delivery Delays
Precious metals investors have plenty of good options when it comes to choosing a precious metals dealer. So putting up with dealers who either can’t tell you when they expect to deliver, or make commitments they don’t keep, isn’t necessary.
In fact, it can be downright dangerous.
Just ask the jilted customers of Tulving Company, a large “low cost” Southern California dealer that collapsed earlier this year. The company filed for bankruptcy in March, and customers with open orders for undelivered metal lost almost $20,000,000.
The filing caught most by surprise, but long delays in getting delivery signaled serious problems at the company in the year prior to its collapse. Complaints against Tulving had proliferated online -- a warning sign that many caught in the bankruptcy wish they’d seen or paid attention to.
Businesses can and do fail, but it rarely happens suddenly and without warning. They generally start missing commitments first.
With all the recent volatility in the precious metals markets, combined with a sustained slowdown in sales across the industry in the past two years, gold and silver dealers with poor internal controls and unsafe business practices are particularly vulnerable right now.
These days, savvy customers can often find disappointed customers sharing their experiences online with a simple Google search on the business name.
We strongly encourage readers to perform this simple bit of due diligence before placing orders. Complaints about extraordinarily long delivery delays are mounting at other prominent dealers at this very moment.
It is also vital for investors to know some facts about inventory and availability of the popular bullion products. There are legitimate reasons for short delays in a few products at certain points in time. For example, the dysfunctional U.S. Mint continues to struggle mightily with high demand for silver American Eagles. On a number of occasions in recent years, demand for that product outstripped the Mint’s ability to produce coins, and buyers were forced to wait for delivery.
The Royal Canadian Mint copes better with strong demand, but it too has been overwhelmed on a small handful of occasions. As have private mints and refiners.
But legitimate delivery delays have been far more the exception than the rule. And raw silver in the form of 1,000-ounce bars and silver grain used for melt stock has been consistently available without delays of any kind.
Most bullion investors understand that global inventories – particularly in physical silver – are relatively small and bear watching. However, they should not resign themselves to months-long delays or let dealers put the blame on shortages without a plausible explanation. The best dealers will provide a full explanation for a rare delivery delay in advance of taking your order.
Money Metals Exchange has quoted shipping delays on certain products of up to 2 weeks in very rare situations over the past 5 years. We can think of no legitimate reason for delays of one or two months or longer when it comes to the popular and widely traded bullion coins, rounds, and bars. In our view, any company that forces its customers to wait that long is either poorly managed or dangerously undercapitalized (or both).
We have said it before – investors need to demand great service and honest dealing from the firms buying and selling their metal. They should take a few minutes to investigate a dealer’s online reputation before ordering. They should expect the dealer to provide a firm estimate as to when the order will ship when the order is placed. If the dealer misses that estimate by weeks, it is time to find another source.