I was listening to the radio on the way into work the other morning, and heard something that bothered me.
The morning hosts were extolling the virtues of a paying client, which is exactly what you would expect them to do. This client, a jeweler, had just held a “sell your scrap gold” event this past weekend, and the owner was on the phone talking up the success.
Yeah, I’ve ranted about the Old Gold Game before, but this had a twist.
The jeweler made this statement, paraphrased to the best of my recollection:
JEWELER: “Believe it or not, there was another sell-your-gold event in town this weekend, being run by some out-of-town outfit. We actually sent one of our people into the other sale just to check on their prices, and we discovered we were paying 30-percent higher than the competition.”
DJ: “Wow! 30-percent higher?”
JEWELER: “That’s right, 30-percent more.”
DJ: “Gosh, that just proves the value of staying local!”
Now, I’m not going to get into the argument about whether shopping local really helps all that much. No, the issue for me is the whopper of a lie we’re expected to believe.
Put yourself in the shoes of that jeweler for a moment. Let’s say you’re paying $520 per ounce for scrap gold, then you find out your competition is buying it for only $400 per ounce. Tell me…
HOW LONG WILL YOU CONTINUE TO SELL AT $520???
Do you honestly believe they continued supporting a price imbalance of that degree, with no adjustment whatsoever? That they didn’t ratchet down their payoff to $420? Remember, this is a highly speculative market, and there are more than enough players that no one is going to corner it. The money is made at the margins – so why would they continue paying $520/ounce when they know people are selling for $400?
(I don’t know the going rate for gold, but the numbers $400 and $520 are based on a 30-percent difference. As of this writing, gold bullion is trading for somewhere in the neighborhood of $975 per ounce, so my figures are likely in the ballpark. If I am actually low, then the marginal difference is even higher!)
Here’s my original rant on this, while it was fresh on my mind.
It’s CONCEIVABLE that maybe somehow kinda they were telling the truth in a twisted way — I always look for the loophole – where, like, the competition was paying, say, $952 oz (commodity price) for some trashy bad taste old gold jewelry weighing one ounce . . and they were, like, paying $1300 for the same weight of gold . . .that was part of a collectible Morgan Dollar . . . . (I’ve looked into these things, and there’s usually one anecdotal case like that they can use if someone takes them to court . . .”I didn’t say “consistently” paying 30 percent more! . . .I just said “paying” 30 percent more! as in ‘One time!” . . .” ) . ..
But still. Yeah. It’s a lie. Was it a talk show that got any callers, and if so, did they have comments? I wouldn’t think these guys have too much street cred. Except maybe w/the green crowd . .
I have always wondered if gold is such a good investment, why do they need to advertise it so much? Just feels like they’re pumping up the price, setting everyone up for a fall. No one ever seems to learn from the past.
I have always wondered if gold is such a good investment, why do they need to advertise it so much? Just feels like they’re pumping up the price, setting everyone up for a fall. No one ever seems to learn from the past.