Here’s a story that ran in the Palm Beach Post last week about “gold parties’ where people sell their old, unwanted gold. The Palm Beach Post writer interviewed me for the story. I didn’t see it, but it was picked up for syndication and now I’ll be talking about it on CNBC’s On The Money today probably around 1:30.
Here are the notes I just sent CNBC …
The trend of investors putting their money in gold is growing. One of my gold dealer friends says as fast as bullion comes in, it flies out the door. Here’s a good graphic for you – holdings of gold by the various ETFs around the world (see attached).
Pretty wild, huh? That’s one of the major forces driving gold today. If you use this chart on your show, credit sharelynx.com.
I believe people should wait for a dip, and gold WILL dip. In fact, I think it’s dipping right now. A pullback to between $850 and $800 would not surprise me. Remember, dealers are getting hefty premiums on bullion right now, so you’ll have to figure that in to your cost. Likewise, if you’re buying from a reputable website (because no one in their right mind would buy from a website they don’t know anything about), you’ll have to figure in mailing costs.
2) The growing trend of selling their gold for cash will continue as long as gold stays above $800 an ounce (the selling will probably dry up below that level — I could be wrong). The price you get varies widely.
- Independent buyers who sell directly to a refinery can pay the most — up to 70% of the melt price of gold. However, it has to be someone trustworthy, and that usually means someone who has been in the business a while and has built up a reputation.
- Gold dealers will pay you about 50% of the melt price. They have fixed costs (rent, etc) that they have to cover.
- Pawn shops will pay you the next level — a good one will pay 40% to 50% of the melt price.
In my experience, the firms that advertise on TV will pay you the least percentage. There may be exceptions I don’t know about. But A) they have to pay for those TV ads and B) since you’ve already mailed them the gold, they figure you’ve given up your bargaining power. I’ve heard of people getting as little as 10 cents on the dollar from the TV-advertised mail-in firms (average is about 33%, or 33 cents on the dollar).
#3) You should know exactly how much gold you have. Some companies don’t even tell you how they based what they give you and if you don’t know weight you have no idea what kind of a deal your getting. But it’s hard for people to know exactly how much gold they have because most gold jewelry is not 24 karat (pure) gold. That’s because pure gold scratches and dents easily and is more expensive, so jewelers combine it with other metals. But if you know you have 18 karat gold, that’s 75% pure gold. If your 18 karat gold necklace weighs an ounce, and gold is trading at $900 an ounce, that’s 900 x .75 or $675 worth of gold at the melt (spot) price. If someone says they’re giving you 70% of the spot price, they should pay you $675 x .70 = $472.50.
Lesson there: Bring your own calculator and do your own math. If you have the time, have your gold jewelry appraised at more than one place and write down what pieces are 18 karat, what pieces are 22 karat, 14 karat, etc, and their weights.
IN OTHER NEWS
China’s Exports Plunge Again, But Car Sales Rise Chinese trade figures highlighted again the region’s dependence on Western consumers. Exports in February plunged 25.7 percent from a year earlier, worse than January’s 17.5 percent decline, according to customs data. That adds pressure on Beijing to move quickly to carry out a multibilliondollar stimulus package aimed at pumping up the world’s third-largest economy
Oil Below $46 After US Report Cuts Demand Forecast The department’s Energy Information Administration said Tuesday it lowered its forecast for global oil demand for this year by 200,000 barrels a day from last month and now projects a decline of almost 1.4 million barrel a day in 2009. Its projection for global oil consumption this year is now 3 million barrels a day below its forecast from September.
Gold Rises in London Trading After Selloff Revives Demand; Silver Gains Gold rose for the first day this week in London as some investors and manufacturers bought the metal after its slump to a one-month low. Silver also advanced.
Soybean Inventories in U.S. Will Decline to 5-Year Low as Exports Increase U.S. soybean inventories before the 2009 harvest will be 12 percent smaller than forecast a month ago and the lowest in five years because of rising export demand, the government said.
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