Cash for Your Gold

Unless you've been deeply submerged in mind entertainment and haven't noticed, there seems to be a lot of ads for selling your 'old gold' jewelry for cash. Why do I even bring this up? Those that are 'buying' your old gold, are doing so to extract and meltdown the actual gold content in the old jewelry (14k to 18k), which amounts to 58 - 75% gold content. They're not going to pay anywhere near what the gold content would get on the open market, probably 50% of that. When they melt it down and create pure gold bars, they then profit up to 100% or more. Pretty good returns for those buyers. It would appear that gold demand is falling and supplies are rising with all of the selling by the public. I think the opposite is happening. Why? For instance, you can't buy a US minted gold coin from the US Mint now, because the demand has outstripped the supply of gold needed to produce them, and we've just only passed the half year mark. So what, you say? Cash or the 'great' American dollar has declined some 20% in the last two to three years ... inflation. You can't buy the same amount of stuff you could just a few years ago. Gold has increased 35% in dollar value in that same period. So, if you sell your stuff now, you're basically getting 25 - 30% of the worth of the gold content, if that much. That's a super bargain for those buying.

So, unless you need the cash, I personally would just hold on to the old stuff. Or, have some jeweler that you trust, melt it down for you and keep the gold in raw form. It will retain its value, not in terms of the dollar, but in what it can buy, regardless of the economy. Think about it. The value of things haven't really changed that much. The only thing that has changed is the value of the dollar. Inflation has decreased the buying power of dollars dramatically over the years.

Here's a true life example: In 1976, a person making $10,000 a year could buy a new well-equipped (with a/c & radio) Honda Accord for around $4000. (By the way, that was my first car purchase with my own money). Now, if my salary is $60,000 a year, I can buy a new well-equipped (albeit with XM radio and a/c) Honda Accord for six times the 1976 price @ $24,000. Try this with anything that you can remember, and convert the price and you'll see what I mean.

Now try it using gold prices of the time. In 1976, avg gold price was about $147 an ounce. It took about 27 oz. of gold to buy that Accord. Now, the avg gold price in 2009 so far, is approximately $900 an ounce. It takes about 26.67 oz. of gold to buy the current Accord. Things still are valued the same, it's just the dollar that screws everything up. Gold has held its own and is the only true money. The dollar is fiat currency, based on a promise .. it's an IOU. There's word on the streets that a new currency will take the place of the US dollar as the world currency. When the world dumps the dollar, all bets are off! Look out!

I'm getting too "long winded". You could say I've got 'too much time on my hands' ... there's a song in my head .. can you say 'Styx'?