+++ Precious Metals Trading - Price Mistakes and the Lessons from Mistakes +++

The day before yesterday I had my first working day after good three months. While the day went by without any special incidents, the error devil struck at the end, which had it in itself.

During the end-of-day price fixing and the surcharges for the night prices in the online store for precious metals, a calculation error crept in and I was able to bypass or simply ignored the warning message that appeared.

Instead of 56.70€ per gram of gold, suddenly 55.70€ per gram of gold was offered.

The consequence: The online store was glowing with orders until yesterday morning. Customers ordered in the truest sense of the word everything "which shines". 100g of gold were finally to be had at 100€ below the gold spot, other coins provided with similar markdowns and wrong prices.

While in day-to-day business such mistakes cannot happen due to 3-fold hedging and controls, my all-encompassing overwriting and leveraging of price dynamics made any control impossible.

What are the consequences of mistakes in transactions in precious metals?

(Attention: No complete legal advice!)

First of all, the Civil Code applies, according to paragraph §433 BGB, both sides (i.e. supplier and buyer) are considered to be in agreement as soon as there is agreement on the subject matter (here the price and e.g. the condition of the sales item) exists.

As a rule, this is also regulated by the terms and conditions of the online stores, according to which the prices displayed in the store are non-binding offers and do NOT result in an AUTOMATIC acceptance of the offer by clicking the buy button, unless otherwise described in the terms and conditions of the dealer.

Only by the correct wording of the terms and conditions and the correct wording of the order or confirmation of receipt the contract on the sale is then just another offer, namely starting from the customer.

Only after the online store has issued an order confirmation confirmation, the order and thus the contract is considered accepted and obligates BOTH sides to fulfillment. For the customer this means "pay", for the store "deliver".

In the table business (i.e. purchase at the counter, on site) for precious metals, there can of course also be errors. For example, the seller may confuse the buying and selling price. Admittedly: An extremely stupid mistake. Fortunately, not common and highly rare. But here, too, the rule is: communication.

In the best case, the seller notices it immediately and before the money and the goods are handed over. At this point to cancel or correct the transaction is no problem.

However, if the customer has already left the store, then you as a merchant are often powerless. The deal is closed.

Exceptions are known contact possibilities, if the customer is known or customer data are available. Here it depends on mutual cooperation in communication, sensitivity and understanding for each other. I recommend at this point also as a customer to show understanding for the other side, you certainly do not want to abuse trust. In such cases, dealers are often willing to sell up to your pain threshold, i.e. at the spot price. Then the dealer has gained nothing, but also lost nothing. And your karma account will be credited a few points.

It is completely different when buying shares:

Here, there is no error and price error in the true sense. However, technical problems such as display errors, settlement errors or transmission problems are possible. Here it depends on the origin of the error: If it is a broker error, the transaction can be settled unilaterally, i.e. usually cancelled or corrected by the broker. Here, as a rule, all brokers have regulated corresponding clauses in their general terms and conditions. In case of market volatility problems, such as due to data problems, it is quite common that the transaction is still valid.

If there are any discrepancies, the financial supervisory authority should be contacted in any case. Here everything else will be settled.

What happens now in the event of a price error?

Now it means for the dealer (and yesterday this was my position) to stay calm, but also to deal precisely and accurately with the error and its consequences.

So I quickly corrected the course to the now current price systemically and began to correct the prices and sums for over 50 orders.

In addition, all customers were transparently informed about the incorrect prices and their significance (namely, the sale below market price) in a new offer email.

With this, the retailer (me) submits a new, counter-offer, which the customers can accept with "Payment" to the specified account number or by reply "cancel" can.

How do customers (people) react to (price) errors?

Very different reactions can generally be observed in people to the mistakes of others. As in everyday life, there are sympathetic, understanding and good-natured people, but also assholes, idiots, cheats, bad-tempered and chronically under-ironed species in the customer area. Of course I would never say something like that. A mistake is always annoying, so not only for me as a dealer but also for the buyer. Who would not be happy about a bargain or a mistake, if you yourself benefit from it?

In my case, I can speak of luck not to have such people as customers. At least not on yesterday...

Understanding, a little displeasure and of course disappointment balanced each other out. There were a few customers who will pay, many have canceled.

In my opinion, an important component was the unconditional open and transparent communication. The precious metal business is predominantly a business of trust. Customers trust in the proper delivery of their valuable goods, the compliant and correct fineness and weight of the ordered goods, the proper handling of their data and finally of course the correct price...

To want to profit from the mistake of others absolutely, however, a bad habit and above all under branch colleagues a giant sourness. And so it came as it had to come...

Among the buyers was a long-established industry colleague. And he was the notable exception in the problem-free transaction. After disappointment and his request for cancellation (...because the goods would be too expensive for him to buy and he could not use them further...i.e. sell them) came in the afternoon the retourkutsche. He does not want to withdraw from the sales contract, because "a trade with business, that is, professional dealers, would be immediately valid...". Basically, the dealer with this statement (somewhat simply held, but what the heck....) is right. In fact, the trade would have to be executed if I (as a dealer) with the offer personally addressed to him would have approached.

This can be done by a letter, by mail or just by a message in his customer account.

Here applies: I make a binding offer, the customer says by purchase or written consent "yes I do" and the contract is concluded. Communicating a price error here must be very well thought out and legally watertight. A simple, mistyped or miscalculated argument is rarely possible.

In online trading, however, it is a general offer, which is secured by the terms and conditions only then comes into force when, as already written above, the order is confirmed by the dealer.

And: Last but not least, at least my affected terms and conditions regulate that the trade and the offer is directed exclusively to private individuals, which would also bring us to the BGB.

Notice: As industry colleagues, you should not try to beat each other up. But also here applies: The variety of human characters is immeasurable. And sometimes unbearable.

If you make mistakes yourself: Admit mistakes. Learn to deal with them, admit them and learn how to communicate them. Making mistakes is human nature. The faster we learn to accept this, the better and easier it is to live.

"You can't make an omelet without breaking eggs."

To err is human. The same is true for the rest and not least for investing.

How do you react to mistakes? And most importantly - have you ever "secretly" profited from a pricing error while investing?

Edith says:
@AlterMann Had pointed out to me the mistake that I wrote automated AGBs. Of course without "s", so corrected. Thanks.