Silver Values

Gold Jewelry Purity Calculations

We have seen a lot of talk about finding inexpensive gold jewelry to sell as “scrap gold”. And of course, we have also heard from people who are intereseted in selling their scrap gold for cash, and want to use the spot gold price as some indication of the value of their jewelry. The K or Karat system may seem confusing, but it is actually fairly simple, so let us give you a quick explanation of the value of gold jewelry as expressed in the spot price of gold.

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Why Do PMs Cost So Much More Than Spot?

I have seen this question all over the internet: Just why are the prices for precious metal bullion so much higher than the spot price? When the silver metal, palladium, cannot move over $200 an ounce, palladium bullion coins on EBay reflect twice that price. And you would be lucky to find platinum bullion for less than a 30% markup, and it is not uncommon to see a 100% markup. But even the more common staple PMs like gold and silver do not seem to reflect the spot prices in their sales or Buy it Now prices on the most popular online auction: EBay.

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Well, those of us who hold a little bit of precious metals as insurance against a total meltdown of the US dollar and stock market are probably a bit relieved to see the price (as stated in US dollars) of gold rebound a bit. As of this writing, it is a hair over $900, and I’m not sure we believed we would see that price again soon. Oh, I know lots of us will argue that we’d rather hold strong dollars and see gold looking cheap, but if we can’t have that, well we have something…..

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OK, this auction looks very fishy to me. Now you have all heard of the GOLD ETF where you buy shares of “paper gold”. But here is a guy on EBay who is setting up his own paper gold company. Paper Gold On EBay.

The auction says that you are bidding on a certificate of ownership for each ounce of old you purchase. They will store the actual gold until the time you sell it back to them. Right now, the auction is selling this ‘ownership’ at $940, but Kitco says an ounce of gold should be a hair over $800. And the seller says they will buy the shares back for $40 less than spot. So right away, your $940 ‘gold ownership’ investment will be worth a bit more than $760.

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Well, it is hard to find a safe place to invest in the stock market right now. Of course, the silver and gold bulls are hanging in their with smug grins on their faces. See, gold is a commodity. And no, they are not the best performing commodity over the last several months. However, precious metals are also sticking in the middle of the pack.

The thing about precious metals as a commodity is that they are easy to take delivery of. You cannot take delivery of  corn, wheat or oil, but you can take delivery of gold and silver! This means you are not speculating on something you cannot hold. This is one appeal of gold and silver investments.

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Stocks Not Doing So Good?

Well I know that my stocks are not doing very well, and that is across the board. My precious metals stash, consisting mostly of silver US coins, has been faring much better. In fact, the increase in my PM value over the last few years is just about the only thing that keeps me from total panic these days.

A company called USA silver wants to teach you how to profit from US Silver and Gold Coins too. You can enjoy a free initial consultation, and then decide if precious metals investment is for you.

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This is an interesting exercise to perform if you are concerned about the value of your gold or silver stash. Compare the price of an ounce of silver or gold in July of 2007 to the price it is today in June of 2008. Then do the same with a few of last year’s hot paper investments!

It is an old saw in precious metals trading. Sell in May and Go Away. That was the traditional wisdom, and I even saw it repeated during the dip a couple of weeks ago. However, if you are still holding your stash, you may want to rethink that traditional wisdom this year.

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Is the Dollar Better Now?  

We keep looking for signs that the value of our good old US dollar is finding support, and maybe even rising. In such a case, it might be time to put our silver and gold investment on the back burner again, and jump into more “normal” investments.

 In other words, maybe we should just keep a small percentage of our savings in PMs like silver and gold as a hedge for the future, and go about our business as usual. However, many experts tell us that despite the way the news and government downplay the facts, we are not anything like close to being back to business as usual.

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The Declining Value of Your Dollar

I think that one thing illustrates the declining value of money very well. Simply look back at a point of time, and consider the amount of money took to purchase ordinary things that we still use every day. Then take a look at the amount of silver in $1 of US silver coins that actually circulated in currency. We have mentioned before that $1 of US silver coins contains .715 of an ounce of silver. So, for use as a standard, we shall call that a “standard” dollar, even though a quick look at the US silver coins calculator shows that today, that .715 ounces is worth about $12.23 of the coins or paper money you probably have in your pocket.

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