$1,500 Gold Inducing A Lot Of...Selling

We've yet to reach the point where the gold bull market has induced a buying frenzy. In fact, as reported by ABC News, the high price is calling forth a lot of selling. Items being sold include gold in teeth.

I've seen them pop the gold right out of their mouth," says Dave Crume, president of the National Pawnbrokers Association and executive vice president of Wichita, Kansas, pawnbroker A-OK Enterprises.

"It's a little awkward," he admits, "but I've see them take out a tooth." More often they bring in family heirlooms they don't want or jewelry they no longer wear. The gold-selling trend, which started picking up steam two years ago, has become only stronger now, as new ways have arisen for customers to unload their gold. It can be sold via mail, the Internet and Tupperware-like "gold parties," such as Premier Gold Parties, where a group of friends meet to sell their gold in a home setting.

It isn't just gold's price that's inducing the selling. With unemployment still high, selling the jewelry (or fillings) is a way to get ready money. Silver is also being sold much more than before.


Such sales will tend to damp gold's rise, but they're not indicative of a bubble - as yet, anyways. People going into hock to buy gold and silver would be.

Slideshow Of Five Most Popular Gold Coins

The names of the five coins will be familiar ones. Interestingly, the #1 coin in the International Business Times slideshow is the Krugerrand. In reverse order, the five are:

• The Canadian Maple Leaf gold coin (show erroneously pictures loonies: image from GoldMapleLeafs.com).
  
  
• The Chinese Gold Panda
  
  
• The U.S. Eagle


• The Austrian Philharmonic


• And, the Krugerrand.
  
  

The Krugerrand is not only the most popular, but also it's the only one made of 22 karat gold. The others are 24-karat pure.

Indian Gold Fund Investment Taking Off

As explained in a Commodity Online article, Indian investment in gold funds is booming.

This is evident fom the Rs 4000 cr [40 trillion rupees] generated by the country's first gold savings fund, Reliance Gold fund which opened for subscription on February 14 and closed on February 28. According to analysts this a record for any new fund offer (NFO).The fund house recieved over two lakh [200,000] applications in such a short period of time....

The runner of the fund is interviewed here.


Evidently, Indian buyers have an apprtite for gold that seems almost insatiable. Since Indian inflation is much higher than inflation is here, the country's prosperity has made for a virtuous circle for gold demand.

Veteran Jeweler: Caveat Vendor

A London, Ontario jeweler who's been in the business for thiry years is warning sellers to not send their gold to a mail-in company. From his own son's experience, they tend to lowball.

As a test, Johnston had his son mail in some gold earrings that he had bought from customers for $187.50.

The company mailed back a cheque for $51.93. When his son called the company to turn down the cheque, he received a second offer of $140 for the gold.

Colin Nash of Nash Jewelers said scrap jewelry is only worth a small fraction of its initial value so he offers customers a trade-in value on new jewelry as an alternative.

Evidently, anyone who wishes to sell his or her scrap jewelry to one of those places had better like haggling. For those who don't, and can't find a reputable buyer that's earned their trust, there's always eBay.


While I'm on the subject: I wonder if anyone, as a test, ever sent in a bullion coin to those mail-in companies to see what they would pay...

A Look At Toronto Gold Buyers

The look that Robyn Urback took at three Toronto cash-for-gold depots gives a bit of a seamy impression of the industry. Taking a 10-karat ring that she got as a birthday present several years ago, whose retail value she estimates at $200-$250 back then, she finds out that the initial offer is usually a lowball one. The highest offer she got was for $130, and that was just before she walked out of one of the stores.


Granted that these three stores don't make for a real sample, but it should be eye-opening. Evidently, walking is a useful negotiation tactic in those depots.

Washington State Bill May Require Gold Sellers To Be Fingerprinted

The bill, which would take a further bite out of financial privacy as well as crime, has been put to the legislature by Republican representative Katrina Asay. Its stated purpose is a crackdown on gold thieves.

"They've had a rash of home burglaries where all that's taken is jewelry," Asay said.

Individual buyers are currently not required to document who is selling them jewelry. Under Asay's bill, for all purchases over $100, a buyer would need to photocopy the seller's identification and take their fingerprints. The buyer would also have to hold onto the merchandise for 45 days.

Typically, gold is immediately melted down, making it untraceable and unrecoverable by police, said Asay.

One consequence of this bill will be to lower prices paid by gold buyers, perhaps not right after passage but definitely in the future. The time requirement doesn't bite that much in a bull market, but would hurt badly if a bear market (or major correction) ensues. All it'll take is one burn and there'll be an added time-insurance discount slapped on. Prudent gold buyers will price in that insurance discount right after the bill becomes law, if it does.

The time requirement and lack of thought behind it makes this bill interpretable as a "bull market bill."

Gold-To-Go Vending Machine Hits...Las Vegas

Where better for Las Vegas' first gold vending machine than the Golden Nugget Casino? The city can't claim to be the first one in America to host a Gold-To-Go machine; that honour belongs to Boca Raton, Florida. As is usual for casinos, the "spin on win" is applied liberally:

"It lets our guests who win a little money in the casino go right over to this machine and make a little money and invest it in a wise way," Golden Nugget CEO Tilman Fertitta said.

The machine only accepts cash as of now; no credit cards, or casino chips.

Nevertheless, vivà Las Vegas. They're ahead of the curve.