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Rising Costs Of Precious Metals


#1

I’m wondering about the thoughts of others regarding the spiraling
costs of precious metals. I only deal in sterling silver, but as I
watch the cost of gold at $535.00 oz., sterling jumping to $9.04
yesterday, and I haven’t even looked at platinum, I’m wondering how
this is affecting those that deal in the more expensive precious
metals. I read an artical this morning written by a man by the name
of Harry D. Schultz on The Chicago Market Watch, who supposedly has
been a gold “tracker” for some 40 years.It was his belief that gold
will climb to $950.00 oz. “before the run is over”. If this is
so,what will happen to say sterling silver and platinum, and how
will this affect all silver and goldsmiths? Especially worrisom I
would think since many are struggling to survive now. I’m not trying
to create any more worries, just wondering if he knows what he’s
talking about and the thoughts of others on this matter.

John Barton


#2

John,

Yes it is possible that gold can hit $950.00 per ounce but the real
question is will it? I don’t think that Mr. Schultz or anyone else
knows for sure. If this was a guaranteed thing you would not even
know of Mr. Schultz until after the event since he would be spending
all his time amassing stock piles of gold and gold futures and not
spending his time trying to convince others that it will happen.

The precious metals had been at multi year lows for a long time and
are due for some speculation by investors. This will most likely for
a time keep these metals at these levels or higher. How high is any
ones guess and it is only a guess. Investors in India, China, Japan,
Europe as well as America drive the price of these commodities based
on demand and speculation. If a frenzy happens the price will
increase dramatically, if not than eventually they will all move on
to something else to invest in, hype and then dump on the
unsuspecting novice investors.

As I had mentioned in a comment recently, I was in the jewelry
business during the last run up. I was young and under financed but
it was the rise in precious metals that helped me instead of hurting
my business. Once these metals start getting into the news stories on
a regular basis, people will start becoming more aware of the rising
prices and for some unknown reason will start buying bullion, coins
and jewelry as investments. If history is any indicator, when
everyone starts talking about an investment that is when the smart
investors start getting out of the investment so watch for that sign.

As for Sterling and Platinum, yes they will most likely rise as well
but keep in mind that over the past few years they have risen
percentage wise more than gold so either they will slow a little or
gold may increase more. This is a time to get your business in order.
Take the time now at the beginning of the new year to lay out a plan
for the coming year for your business. Determine what materials you
will need and buy them when you will need them and not all at once.
If you speculate on a rising price and it falls you will be stuck
with over priced materials so only buy what you need when you need
it.

It will also be a good time to get all the items that have not sold
over the past year together along with your scrap and bench sweeps
and send them in to a refiner for cash, credit or metals.

There is also a great opportunity in taking trade ins as well as
using your clients materials to create a new piece for them.

As the old song went." Don’t worry, Be happy" should be your theme
if this market keeps going up

Happy New Year,
Greg DeMark
email: greg@demarkjewelry.com
Website: http://www.demarkjewelry.com
Custom Jewelry - Handmade Jewelry - Antique Jewelry


#3

John,

I quote to my customers the time involved and the cost of materials.
A few of them have given me old jewelry to use or to trade for new
work done by me.

If gasoline were gold, it would still be expensive.

Jerry


#4

While I think that the rising costs are to be watched closely, I’m
old enough to have been through it before, and if you pay close
attention to your inventory prices, you’ll be ok. I’m in the high end
market dealing mostly with high karat golds and platinum custom
pieces, and while I’m currently advising people to go with white gold
as opposed to platinum if they have budgetary concerns, I’m not
seeing any drop in sales as a result of the higher metal prices.

Mike Rogers


#5
I'm wondering about the thoughts of others regarding the spiraling
costs of precious metals. I only deal in sterling silver, but as I
watch the cost of gold at $535.00 oz., sterling jumping to $9.04
yesterday, and I haven't even looked at platinum, I'm wondering
how this is affecting those that deal in the more expensive
precious metals. I read an artical this morning written by a man by
the name of Harry D. Schultz on The Chicago Market Watch, who
supposedly has been a gold "tracker" for some 40 years.It was his
belief that gold will climb to $950.00 oz. "before the run is
over". If this is so,what will happen to say sterling silver and
platinum, and how will this affect all silver and goldsmiths?
Especially worrisom I would think since many are struggling to
survive now. I'm not trying to create any more worries, just
wondering if he knows what he's talking about and the thoughts of
others on this matt 

I started working in gold in 1970. I worked in a trade shop that
serviced 180 accounts in the Washington, DC area. As I recall, I
could purchase a foot long strip of 5x1.5mm flat 14k wire for about
$25. I believe that I paid about $4.50 for silver in high school. At
that time sale of bullion was restricted to those that needed it in
their business. We started to see a rise in price over the next
couple of years as the dollar was floated against other currencies
and the gold market was freed up to the general public. When gold was
finally freed, it topped out at $160-165, I don’t remember exactly.
Myself and some friends had made an investment. At that point, gold
started to tumble. I don’t remember the low, but it took a couple of
years to reach that point again when the Hunt brothers attempted to
corner the silver market. Gold reached $850. Silver got to just about
$50. This was a bubbly time and sure enough, it all collapsed. It has
been a long time since then. A whole new generation of investors is
now playing. Who could know what will happen?

During the last run, I started looking into a local precious metals
license. I think that there was an unusual number of burglaries and
a quick re evaluation to the current laws pertaining to the black
market in precious metals. I had a trade shop based in a chains
central store back then and although I was afraid of how this would
affect my business back then, I don’t think that there really was
one. I continued to grow my business and all was good. In the years
following other factors have come into play, bit the run up in metals
prices has had little effect. I think that it is much more important
to understand the labor market. I sell my labor. That is all that I
have, really. There is a little metal trading going on, but my
business is really just about my time.

As for what we should expect now, I expect no great change. Perhaps
increased sales. Perhaps just an ability to raise my prices. I
suspect that overseas manufacturers will have a greater problem as
the metalcost/labor ratio changes. It might improve the appearance of
US labor. That is surely what drives the bigbox stores and chains.

One note. The real, overall price of silver seems to be too cheap to
me. It sells now for little more that I paid for it when I was in
high school.

Bruce D. Holmgrain
JA Certified Master Benchjeweler
Goldwerx
http://www.goldwerx.com


#6

Hi All,

I have some pieces, all gold, that I made when the market was down
around 400/oz that didn’t sell, and I haven’t displayed them in a
while. What is the proper way to determine the selling price in lieu
of the current rise in the market?

Grace


#7

I was also in the jewelry trade during the last big runup in gold
prices, like Greg mentioned he was. The same conditions existed for
me, young and underfinanced, although I did manage to get my hands on
aprox 50 lbs of old wornout plated Speidel watchbands that I sent in
to a refinery, and I received a check for over $800. To this day, in
my store I still save every used watch band as well as all the gold
plated scrap that I come across that I take off in a replacement
deal. I have several boxes stored in the attic of my shed, awaiting
the next runup in gold prices. However, one difference between the
bands of then versus now, is that the bands at that time were mostly
goldfilled, whereas most bands today are plated, and the actual
amount of gold is a fraction that could be recovered from the bands
of that time period.It doesnt cost me a thing to keep them and can
always appreciate a little ‘vacation money’ from nowhere. As they
say, " One mans trash is another mans treasure".

Recently I read one commentary on Kitco, that suggested that gold
could go as high as $10,000-$30,000 per ounce during the next few
years. He gave his supporting theory, but still I wouldnt count on
that too much. As others have suggested in regards to purchasing the
materials that you need, simply buy what you need as you need it, and
you will be just fine. If attempt to run your business in an attempt
to beat the market, you’ll most certainly be left holding the
proverbial ‘bag of doodoo’. Even if its golden!

Ed in Kokomo


#8

Given the wild prices of the silver market, one must consider selling
those items for melt, that don’t move as fast as we like.

I would appreciate hearing your experiences about those who pay the
highest prices, and pay promptly.

Jon
Silver Artisans


#9

When the gold price rises it seems that more people get interested.
The 70s runup put an end to the “Sterling Era”. Some of you old
timers will remember that period when sterling was in and gold was
out. Pretty much coincided with what might be called the 2nd Arts &
Crafts Movement. Similar to the 1st one in many ways, part of the
rejection of all things precious that took place in the late 60s. I
mean gold really didn’t work well with a work shirt and jeans.

I started business in early 1978 and we called ourselves
silversmiths. Then gold started its run and it seemed like overnight
gold was in and silver was out. The next year we changed our name
to…goldsmiths. Gold went up, more people wanted it, sales
increased, what could be bad about that? There was a downside. People
were so sensitive to the ost of the material that they would come
into the shop and want to know the weight of every piece they were
interested in. Now, I was young, leftish and idealistic trying my
best to live the Arts & Crafts aesthetic, and I found such questions
insulting. But, indignation is not an effective sales tool. Finally I
hit on the answer. Rather than indignantly refusing to weigh one of
our handmade creations I hit upon another angle.

One day a smart-ass New Yorker (there are a lot of those) walked
into the shop and asked to see a pendant that had maybe five dwt. of
gold and maybe ten hours of labor in it.

“How much does it weigh”, he asked.

“I don’t know”, I replied. “I can tell you that it took two days to
make but don’t worry about the weight, the gold is free!”

The man stared at me wild eyed. “Whadaya mean the gold is free?”

“Thats right”, I said, “we don’t charge for the gold only for the
work we put into the piece.”

That changed the whole sense of the discussion. Don’t think I made a
sale but I did get a good bit of satisfaction. Try it!

Richard
www.rwwise.com
For Information and sample chapters from my new book:


#10

Hi

$ 560 until all the shows are over lets say feb 10th and then it
will stay around $525.00 for a while give and take 5% and will go up
in the next half of the year dont know how much for now

Gary Udhwani


#11

Grace,

What is the proper way to determine the selling price in lieu of
the current rise in the market? 

You need to base your selling price on your replacement cost. Weigh
the pieces and calculate the cost of gold to replace the piece in
today’s market. Don’t forget to factor in other cost increases that
have occurred since you originally made the pieces.

Joel

Joel Schwalb
@Joel_Schwalb
www.schwalbstudio.com


#12

My guess is that since the majority of gold is in use for jewelry
that as soon as the price gets too high the demand will fall
sharply. This will trigger a drop in prices as the speculators try to
dump their overpriced gold futures. As much as we love jewelry it is
a non- essential in our lives and when the price gets too high the
sales will fall. The big question is what is to high and how long
will it take to get there. While I can see $950 toz gold I just can’t
see $10,000 toz gold.

Hang on to your hats it is going to be a wild ride for a while I am
afraid

James Binnion
@James_Binnion
James Binnion Metal Arts


360-756-6550


#13

Gary,

$ 560 until all the shows are over lets say feb 10th and then it
will stay around $525.00 for a while give and take 5% and will go
up in the next half of the year dont know how much for no 

You must be really, really wealthy. I have to assume this because
you are so self assured about what price gold is going to be that you
must be investing everything you have in it in order to make even
more money on the market. At least that is what I would do if I was
absolutely certain that I knew exactly what the price of gold was
going to do. Perhaps a little caution in your statements would be
advised…as I tell my customers: “If I knew what the gold market
was going to do I’d be rich and I wouldn’t be standing here in front
of you trying to sell you something”.

Daniel R. Spirer, G.G.
Daniel R. Spirer Jewelers, LLC
1780 Massachusetts Ave.
Cambridge, MA 02140
@Daniel_R_Spirer
www.spirerjewelers.com


#14
Given the wild prices of the silver market, one must consider
selling those items for melt, that don't move as fast as we like. I
would appreciate hearing your experiences about those who pay the
highest prices, and pay promptly. 

Back when silver was at $50/oz. I walked into a local antique store
that was selling silver items by weight at the current market price.
I bought a beautiful small (4") sterling vase made by Tiffany
Studios, for about $70. It was a shame that much beautiful work was
melted back then.

Joel

Joel Schwalb
@Joel_Schwalb
www.schwalbstudio.com


#15
When the gold price rises it seems that more people get interested.
The 70s runup put an end to the "Sterling Era". Some of you old
timers will remember that period when sterling was in and gold was
out. Pretty much coincided with what might be called the 2nd Arts &
Crafts Movement. Similar to the 1st one in many ways, part of the
rejection of all things precious that took place in the late 60s. I
mean gold really didn't work well with a work shirt and jeans. 

The real gold demand is in what world where safe banking systems
don’t exist. India is the biggest market but see:

http://news.bbc.co.uk/1/hi/business/2195201.stm

It is pure speculation but another third world saving item was $100
US bills. There are a lot of counterfeit ones out there and they are
the old style. what influence is this ?

Silver is going along for the ride but the biggest use for silver was
imaging both photo and X-ray. This market is drying up fast. Leave it
to the professionals-- they will skin a lot of cats.

In a manufactured item business. sell at current price and only buy
what you need. The Hunt boys tried to corner the silver market and
almost did but lost anyway.

jesse


#16

You go Richard I like that I will use it some time free gold thats
should teach them a lesson

Gary


#17

Dear All,

Shades of 1980 once again. I just had a customer come in and placed
a deposit on a new ring order with three 100oz Englehard silver bars.
I gave him $850 per bar, and will take them to our Coin store
tomorrow morning and receive $865 per bar. Not a “killing” by any
means, but he received a fair return, I made enough profit to pay for
transporting them for resale, and the store will get a sizable sale
to show for the effort.

The idea, as I said before in a previous letter, is to turn it over
quickly and not try and second-guess the market. The goal is to
benefit from market fluctuations, and not get greedy.

Jon Michael Fuja


#18

Look at the gold / silver price relationship over a longer period of
history. Until the last 80 years or so the price of gold was
somewhere around 4 to 6 times the price of silver for over 1500
years. Yes, the price of gold was artificially set for a while at
$35, but that again was a very short time from historical
perspective. What that has to do with the current market is perhaps
zero but interesting none the less. We all need to remember that
there is a lot of gold held by governments (Fort Knox). Thus the gold
supply and thus price if largely at the whim of politicians!

Mark Chapman


#19

If you talk with your local coin dealer, who deals in precious meal
metals on a daily basis, he/she will tell you that gold and silver
prices are very closely tied to the economy. When investors are
queasy about the economy, they buy gold and silver, which represents
a tangible, rather than abstract value to them. My local dealer tells
me that when the economy sucks, his business is just great, thank
you. Lots of customers buying gold and silver, and many selling
theirs to the dealer to pay their bills, unfortunately.

Our government, through our media, seeks to reassure us that the
economy is “steadily improving”, that everything is just great. Could
it be that we don’t exactly feel that in our personal lives or
businesses? Obviously, neither do the investors. So the investors are
buying gold, and that, I believe, is forcing the prices upward. When
the economy really starts to improve, gold as an investment will not
look so hot as an investment, and investors will start investing in
other faster growth alternatives. Gold and silver should almost
certainly start coming down in price.

Jay Whaley