I don't worry too much about gold and silver prices, I am more concerned at this point in turns.
I will adjust my prices according to the market fluctuation, my profit margin always stays the same regardless of what the market is doing. I do this by hedging, and it can be done in the same way here as well.
Take the first initial purchase of material, lets say 1000 lbs of PC boards. The money you use to purchase these boards should be considered an investment, not an asset. That means it's money that goes down in your books in the investment column, just like equipment, etc. This is your hedge.
Now you can buy up to 1000 lbs of PC boards, at any given time because you can immediately sell up to 1000 boards right away. You don't have to worry or concern yourself about market fluctuations because you have "hedged".
I keep a quantity of silver on hand as a hedge, when I purchase material to process, I immediately assay the material so I know what the yield will be, and then promptly sell the same quantity in silver. In this way I never loose money and don't have to worry about market fluctuations.
Also consider this, as the prices drop, it will become easier to purchase larger quantities of material. If you purchase your hedge now, you will be perfectly placed for when the precious metals prices start to go up again.
I personally believe that the market manipulation we are currently seeing is because a large quantity of the Libya gold is hitting the market. If you look at the market, and compare it to specific events, you will see a pattern. After 911 when all the gold under the towers went missing, gold price fluctuated the year after in 2002. That was also the same year we went into Iraq, and oddly enough Iraq was one of the only countries not connected to the world banking system, and was hoarding gold as well. Now fast forward to Libya, it also was one of the few countries that was not connected to the world banking system, and also had a large hoard of Gold, Gaddafi only accepted payment for oil, in gold. So as in 2002 when prior gold prices dropped, then exploded, I believe the same thing is going to happen in the near future. I am in fact hedging on it so to speak.
Gold and silver for that matter, are very interesting metals when talking in terms of market fluctuation and the economy. They directly affect the electronics industry, which also happens to be a huge chunk of the retail sales numbers in the United States. So literally, in order for the US Economy to do well, we need cheap precious metals to be sold to China, so they can churn out the electronics our retail economy demands. So on a totally different note, the drop in the prices of precious metals in the short term, should help our economy. I personally think this is the reason all this gold has been dumped on the market recently, and then people started taking profit in the gold they purchased years prior, and then you have the people selling because they don't want to loose anymore.
In the long run, over a long period of time, gold prices have to increase and exceed what they have done in the past. So if you are hoarding gold, don't sell now, keep hoarding, follow the prices on the way down and accumulate as much as you can. There is only a finite amount of gold in the world, and even less silver.
Scott
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