Is it a Gold Bubble When You can Cash in Gold at Sears and KMart?

by Darwin on May 17, 2010

If last week’s story on how you could now extract gold coins from an ATM in Dubai didn’t hint at a gold bubble, and tonight’s rant by Jim Cramer about 6 reasons to buy gold (now, that’s a timely call 2 years into the run!) how about when cash-for-gold stands start popping up in big-box retail stores?  Today, it was announced that at Sears and KMart stores, shoppers can send their gold or silver belonging to Pro Gold Network, a company that buys precious metals. Similar to other mail-order cash-for-gold services, they’ll make an offer and then the consumer can choose to accept or decline the offer and have their wares returned free of charge.

Gold Bubble or a New Normal?

On one hand, if you hearken back to seeing all the no-money-down mortgage pitches on late-night television with a housing crash not far behind, skeptics may be thinking this is a pre-cursor to the top of a gold bubble.  On the other hand, what if this portends a New Normal in currency whereby gold is just a newly prominent fixture of currency since all western economies are debasing their currencies by printing money indiscriminately?  Maybe what this means is that gold is going mainstream, right?  Whereas people who hoarded and bartered in gold used to be considered wacky gold-bugs, what if further into the future, gold represents a more mainstream form of currency?

Thinking of Selling Your Gold?

If you’re thinking about selling your gold, the first question you should ask yourself is why you’re doing so.  If it’s because it’s some junk necklaces laying around and you figure you might as well get a few hundred bucks out of that pile instead of leaving it there, then perhaps that makes sense now that it’s on your mind.  If it’s because you think you’re capitalizing on a peak or you can get a great deal through a particular service, you may want to reconsider.  In both cases though, gold may very well be worth double or half of what it’s worth now a year from today.  So, think about why you’re selling long and hard, especially if there’s any sentimental value attached to what you’re selling.

First of all, most of the mail-in services I’ve researched are either a) borderline scams or b) offer an unacceptably low return on the true value of the gold you’re turning in.  A better option from what I could garner is to take your jewelry to a couple local reputable jewelers, ask them to give you a bulk quote and just go with the highest offer.  This way you don’t have to contend with services claiming to have “lost” your package, giving you a hassle when you want your gold back and worse.  One of my sources of research was a Consumer Reports Article where they bought several gold pendants for $175 and the results for sale prices were pretty shocking.  Most of the cash-for-gold mail companies were offering only 11-29% of the meltdown value, whereas jewelry stores and pawn shops could offer substantially more at 35-70%.  What’s that about an internet/mail business with low overhead being more efficient and providing more value to consumers?  While it works for Amazon and online banks, it seems like the laws of commerce and economies of scale work in the opposite direction for these cash-for-gold outfits.  So beware!

Getting in on the Gold Rush?

If you’re a buyer of gold, you should familiarize yourself with the various methods of investing, as well as gold capital gains tax treatment since some ETF investments are taxed at a higher “collectibles” rate compared to various other ETFs, ETNs and mining companies.

While all this gold business may not seem very important to you now, it’s evident that gold is taking up an ever-increasing portion of the evening news and financial discussions.  Even if you’re sitting it out and you’re not a buyer or a seller, it’s probably worthwhile to learn a bit more about the dynamics between gold, the economy, fear in the stock/currencies markets and why everyone’s talking about it.  It seems like it’s here to stay.

What Are Your Thoughts on Gold?

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{ 2 trackbacks }

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May 22, 2010 at 3:39 pm
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September 26, 2013 at 2:01 pm

{ 9 comments… read them below or add one }

1 Earn Cash Now May 18, 2010 at 12:36 pm

This is just a new normal. I don’t think it is the gold bubble anymore. It used to be, but you are right, when big box stores start getting gold buying stands then you know it is normal. Next we will see cash for gold stands popping up inside of six flags or the MGM grand. Just hoping for people to need more money that they sell their gold.

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2 Budgeting in the Fun Stuff May 18, 2010 at 3:11 pm

I won’t be participating even if this isn’t just a new trend. I rather invest in mutual funds and prepare for the worst with a garden or stocked pantry than start trying to jump into the gold market.

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3 ctreit May 18, 2010 at 4:24 pm

Gold sure looks like a bubble. But you know how bubbles go. Where does it stop? I don’t think that “they” will ring a bell when gold hits its last high and then comes crashing down. There are a few other related question. What will cause a steep decline in gold and what are the repercussions? How will other commodities react? Where will oil trade? What consequences will this have on the shining stars in today’s world economy, i.e. commodity producers like Australia, Canada, Brazil, Russia, etc., most of which are the driving force behind economic growth right now?

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4 Matt May 19, 2010 at 7:51 am

Bubble? They are getting people to SELL their gold at Sears and Walmart, not buy. If anything, this keeps the price lower by putting more gold into the market. This is silly.

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5 Rainy-Day Saver May 19, 2010 at 11:30 am

I echo Matt’s sentiment. The consumers are getting cash for their gold — it’s the buyers who may be ‘stuck’ with it if the bubble bursts. I don’t believe that Americans are going to rush out to buy gold as an investment, especially at current prices.

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6 James May 21, 2010 at 6:10 pm

their are so many “gold companies” that will buy your gold it is crazy, it is big business.

i know they are making money are you making a profit when you sell your jewelry? if so heck why not, you don’t wear it anyways.

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7 Aury (Thunderdrake) May 24, 2010 at 10:21 pm

I’m similar to what the pawn shops offer; I tend to buy people’s gold and silver from them directly. Ultimately, when you purchase precious metals well below the spot price, immediately you’re getting a huge amount of value for it. It’s already valuable as is with the fiat paper system dropping in faith dramatically.

This bull market is like nothing else I’ve seen. But to those who want to sell, I strongly advise paying attention to the spot prices. They’re very easy to find.

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8 Matt August 1, 2010 at 11:50 pm

People have been selling their gold for decades. In the 80′s, gold was just as high as it is now with inflation factored in. I’m in Canada and we probably won’t have Sears buying gold up here, so I just wanted to tell everyone that I’ve had a good experience with Gold Experts. I think they’re at http://www.goldexperts.ca.

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9 rogersjewelry October 21, 2010 at 5:22 am

Rogers Jewelry provides a fantastic collection of fashion diamond jeweler and trendy watches at the best competitive prices including custom orders with huge discounts.

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