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To answer your question directly, I would generally say once you have enough hunters and you know you can rake in some nice coin. If this is the first island, gold isn't a problem and there's probably only one gate on the merchant side so I don't see it necessary. I would definitely 6 archers on one side is more than enough to bring you more coin than a merchant.
Merchants pull 7 gold per day with no real effort, require no investment/recruitment, and work during Winter. Unless your map is pathologically bad, try to never remove it until you are clearing the island.
I had a merchant that eventually was giving 1 gold back for the 1 gold I sent him out for.
If it's the later, greed behavior isn't completely straightforward and basic greed don't cause contact damage. It's onlly their leap attack that damages. Greed will never purposefully leap attack into merchants but if a merchant is in the path of a greed's leap attack they will drop coins. Similar to how if dawn hits and the remaining greed retreat and you quickly take a portal ahead of the retreating greed they will walk right past you without attacking. They will, however, pick up any coins you drop along their path.