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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