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Saturday, April 5, 2014

A Tale of Three Barters

I recently participated in 3 different barters, and I thought I'd share some insights into each of these, because each has lessons to be learned.  Each has subtle nuances that should be noted.

A quickee excerpt from my upcoming (July-ish) book on alternative economies -
BARTER and trade have been around as long as there have been communities. You would produce a good or service and exchange that for another good or service. You might supply some labor on a farm for a portion of the crop. You might own a pub and give someone a meal and bedding for cleaning up the place at night. You've got a fish, someone else has a chicken, and you swap. 
This is barter at its essence: Two people each have something the other wants, they negotiate terms and make the trade.
Barter depends on a concept called the, "coincidence of wants". Two people must each want what the other one has, and at the same time. This quandary is what resulted in the creation of money. 
In this book, the words "buy" or "sell" mean to make an exchange utilizing any available asset.  The asset could be skills, tangible goods or food, gold and silver, or cash - or a combination of any or all of them.  You need to break the mind-set that when buying or selling, you must use cash.  You don't!
I fight like a crazed banshee to NOT spend cash during a barter session.  It's not always possible, but it should be a goal.  Timing is a key component in being able to conserve cash.  The more time you have to consummate a deal - by coming up with alternatives - the less cash will need to be spent.

First deal - A good friend of mine just butchered a couple of hogs.  Big, fat bastards!  While they were being slaughtered, he texted me, asking if I wanted some of the fat to render down.  I declined his offer.

One of the Fat Bastards
Well, he went and did it anyway.  He texted me a couple days later saying he had 20 pounds of this prime fat wrapped and frozen, and he would drop it off at my store.

I texted him back saying he'd now be the happy recipient of an adult beverage I created.

You may be thinking, "Dumb ass!  He was giving you the fat for free - why'd you give him anything?"  A couple of reasons.

After I first declined his offer, I kick myself in the butt.  I've been trying to put together a wild pig hunt for the past few months.  Wild hogs have very little fat when compared to raised hogs.  I was going to need some fat to add to the sausage I intend on making from some of the wild pig (he didn't know this, though - he was just being a good guy).

The second reason is maintaining relationships.  That's THE MOST important reason.  He put a lot of time, effort and money into raising those hogs, and I wanted to recognize that effort with something that I created (and which he happens to like - a lot!).

If you get into the habit of always being on the taking end of a relationship, that relationship dies.  Pretty soon, you've got no friends, and no one to trade with - except for strangers.

Second deal - I had been out looking for some pistol cartridges I was running low on, and was shocked how much the price had increased since my last purchase.  Holy crap!  Seriously, these bad boys were more expensive than some of my rifle cartridges!

I've got another good friend who re-loads his own cartridges.  He had previously taught me how to load some rifle cartridges (to be used on the aforementioned wild hog hunt), so I figured I'd hit him up to see if we could cut some kind of deal for the pistol cartridges.

He said he had the correct dies, but did not have some part needed to further automate the process.  Opportunity!  I told him I'd pay for all of the cartridge components (obviously), plus the automation part for his press, plus some of that magic elixir I used for the pork fat deal, plus some of the extra brass and primers (he has a family member who also uses this caliber).

I'll get to hone my re-loading skills (under his supervision!), and produce the ammo I need.  He'll get a new part for his presses, brass and primers to make more of the rounds, and some adult beverage to keep him warm on those chilly nights.

Oh, and he'll get the pleasure of my company while I crank out the rounds (he's a regular visitor here so I'm poking him in the ribs!).

We both score a win on the deal.  That's important, once again, in keeping friendships, relationships and trading partners healthy.

Third deal - I hit the "garage sale circuit" in my local vicinity at least 3 weekends every month.  I've got a number of flags I've set up online using and other tools to help filter the sales for the ones most likely to have what I'm looking for.  I always flag for 'jewelry', but it may be tools, or Mason jars or whatever I want but don't need right this second.

Anyways I go to this one sale with jewelry, and used one of the most important techniques I discuss in the book -
I cannot stress strongly enough importance of finding out the other side's motivation - either why they want what you have, or why they no longer need what they now have. This is the key to a successful trade/negotiation.
It's the old saw - "You have two eyes, two ears and one mouth.  Use them in that proportion."  Look and listen.  And learn.  If you're running your mouth, you're going to miss clues that may help you put together a deal.

So I go to this garage sale, and just start chatting up the seller - a guy in his early 50's.  In passing, I ask, "So, what are you going to buy with all the millions you're making at your sale?"  He chuckles, and says he is going to buy some silver.  Morgan silver dollars to be precise.

Ding!  Ding!  Ding!  We have a winner!

Part of my preps for going on these little treasure hunts is arriving with plenty of cash and precious metals.  I have a couple hundred dollars in 1's, 5's, 10's and 20's spread out over several pockets (so I don't plead poverty during a deal, then pull out a wad of cash that would choke a horse).  I then have a portable gun safe secured in the car with a few thousand dollars in cash just in case a significant deal presents itself.

I also bring a full tube each of American Silver Eagles, Silver Canadian Maple Leafs, regular silver rounds, $20 face amount in junk silver... and a tube of Morgan Silver Dollars.

So, I stored this Morgan Motivation information away while I look through his stuff and kept chatting him up.  Sure enough, he had 3 pieces of gold jewelry he was selling.  I did a couple of "poor man's field tests" (I'm not ready to disclose that technique just yet) on the jewelry, and felt pretty confident it was real, how much it weighed and its value at the current spot price of gold.

I asked him how much he wanted, and having watched every episode of Pawn Stars, he tossed it back at me with a, "How much will you give me?  No one else has met my price yet."

I asked him if he'd be interested in trading his jewelry for some Morgans.  He then gave me another important piece of information.  "Hell yes!  This crap is from an old boyfriend of my wife."

I now know he wants what I have, and couldn't give a damn about the jewelry.  The, "my price hasn't been met" was a ruse.  We dickered back and forth on how many coins, and what his dollar amount was on the jewelry.

Let's just say that I did very well on the deal.  But in his eyes, so did he.  He got exactly what he wanted - a great start on a collection with coins that were in good shape, and all over 115 years old (he wanted all pre-1900 minted coins).

The key here is that I listened to what he wanted.  We would have probably come to a deal for the jewelry even if it had been all-cash, but instead I was able to conserve my cash and trade with precious metals at a steep discount.

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Copyright 2014 Bison Risk Management Associates. All rights reserved. Please note that in addition to owning Bison Risk Management, Chief Instructor is also a partner in a precious metals business. You are encouraged to repost this information so long as it is credited to Bison Risk Management Associates.


capn,matt said...

i too enjoy the art of a barter. traded my wife's 2000 ford expedition with 209,000 miles for a horseshoe shaped concrete driveway. I ponied up an extra 1,300 for concrete. in the previous months i had not even had and inquire for the veh. listed at 5000 than 4, than 3,000. instead got a 9,000 concrete job done for our house!

Chief Instructor said...

Capn, I love stories like that. A nine grand job for $1300 out of pocket. Excellent!