Originally Posted by
unknownk
Middle men who buy under spot and sell at spot+ fixed rate make money no matter what gold is doing, they DO NOT SIT ON COMMODITIES.
While I can appreciate what it is you are trying to say, you are wrong about the people you are calling "middle men". I consider myself a middle man. I purchase scrap that I can process for it's gold content, and then retain as much as possible. Matter of fact, I hedge. I am protected against the price fluctuation of gold in this way.
As a business investment I might purchase 1000 ounces of silver for example. Each time I refine silver, I assay it so I know it's value, I then immediately sell enough silver to cover the cost of the material, and once refined, I simply replace the amount of silver from the amount I was able to refine. My profit is in any silver left that was not used to cover what I sold. Or maybe a better example would be explained in this way.
I have 1000 ounces, I pay $875 for material that that when assayed will prove to produce 80 ounces of silver. At today's prices, $875 worth of silver would be around 42.5 ounces. So right away I sell 50 ounces of silver, to pay for what the material cost me, and processing costs. When I refine the metal, I replace the 50 ounces out of the 80 ounces the material will produce, which leaves me with 30 ounces of silver as profit. I retain as much of this silver as possible, and only sell so much as I need to in order to make up any cash required for bills at the end of the month.
I retain not only the 1000 ounces of silver as my hedge, but I also retain as much of my silver I keep as profit as I am able to hold. I know of several other professional refiners who also do the same, although they might retain the value in other precious metals, they still retain as much as possible.
And so far as your example is concerned, when all money goes electronic, and the computer systems are down, try to buy a bag of cheetos at wal-mart with your plastic card, I'll be at my local farmers market exchanging some of my silver for fruit, veggies and other food stuff.
Also, I have never had to beg anyone to buy gold from me, matter of fact it gets a little annoying seeing all the gold buying places that are springing up all over the place. These places don't want you to know that you could get spot prices for your material fairly easy if you just knew how. Regardless of having a hard time or not selling your gold, why would you sell it? Why not directly exchange gold for goods and services? You might be surprised how many people will do exactly that. I purchase scrap on a fairly regular basis by exchanging precious metals for scrap. I even purchase a lot of my consumables by trading precious metals for goods, and even for services.
As an experiment, take a piece of gold sometime that has a hallmark and a known value with you when you make a purchase from a entity NOT a major corporation. Ask if they would be interested in trading gold for goods, and show them your gold. If you have never attempted to trade gold for goods or services, then you cannot say how difficult it would be. I find it pretty ****ed easy to do myself.
Scott
. 3 days ago I bought 1200 lbs of mixed boards at $2.50
I.m to small potatoes to be able to hold 6 Gaylords. still have to pay bills and eat and feed five others.
Gold Falls to Lowest Price Since August 2010
Bookmarks