I'm posting this here, although it should go under the "gold and jewellry" discussion. I just wasn't sure if you can see the posts on the older topics and reply to them...
I'm just looking to buy some gold on my savings (given that the price of gold is skyrocketing anyway). You suggested buying a bag of golden rings formerly, but also said that a necklace is easier to be split up if needed. I shopped around a little and compared the prices of jewellry to the global gold price. I found that the price of golden jewellry can cost even 5-6 times more, than the price of its gold content. Obviously it depends on the specific product. Simple rings, like wedding rings are cheaper, as are the jewellry made from bigger chunks of gold like bracelets. Necklaces seem to be quite expensive, however - taking only the gold content into account. Buying these toys and selling them later at the price of scrap gold is not the greatest idea. I also looked at buying scrap gold on the first place: I cheched out a refining/casting company to see how much they ask for jewellry gold. It is available in even 9 carat wires, which I think would be the most appropriate for this purpose (them come in any profile you want; you can have them in a thin enough diameter to make it possible to be rolled up, and later cut off the promptly required amount with simple pliers). 9 ct gold is the purity used most commonly here in New Zealand for manufacturing jewellry, so it would be just the thing I'm after. On the phone they quoted a quite reasonable price for the gold wire (less than a 20 percent cost for refinement). However when I went to buy some, it turned out that it is GST exclusive (Goods and Services Tax, or VAT in Britain; I don't know what it's called in Argentina; you know the shit...) Adding the GST on top of it makes it a much less nice offer: it comes to about a 36 percent of extra cost altogether - we have a 12.5% GST rate.
A guy at the refinery company suggested buying internationally recognised gold coins instead (I just told him I'm after some form of investment); the coins are pure gold and they are not GST taxable; also everybody knows what they are. This takes us back to the original problem you already talked about: good quality coins are hard to sell (?) at their actual value after the SHTF (well; even in peaceful times...), and you can't chop them up as you like.
What do you think about all this? (I have some savings to devote some money to secure it, but paying 36% is too painful for me; I'm not a rich guy).
However, I'm also convinced that in the not too distant future the world will be facing a global economic crash. I know you said you wouldn't worry too much about peak oil, because your country has enough crude. Even then, I don't think ANYONE is able to measure the consequences of it (don't be sure your country will be the one enjoying the remainder of its oil...). I'm sure Argentina is a tough place to live in, but what you guys have been experiencing for the last couple of years is just the beginning... Even though I live in a well-off country like New Zealand, I wasn't born here: I'm from a country going through a breath-takingly similar curve to that of Argentina (first being the richest country of the region, then free trade came along, the devastation of local enonomy, diminishing mid-class, unemployment, deepening poverty, famine). Thus I know what hard times are like, and try not to underestimate the End Of The WHOLE WORLD.
So. I know the 36 percent is nothing if we consider a potential 500-600% inflation rate, but still it feels painful to cough up when everything seems so peaceful... What do you think?
Btw. I'm a big fan of you; this blog is really invaluable. I especially respect you for putting peace and freedom above the cheap work due to the misery of others (I'm referring to your post about your aunt... :)
I wish you all the best! Sorry about my verbal diarrhea... ;)
August 7, 2008 12:40 AM
Hey Joe, thanks for the compliments.
Hope it’s ok I posted this here in case others have a similar doubts.
I understand New Zealand is a beautiful place. I have a friend living there, works as a “consierge”(?spelling) at a Hyatt hotel.
He says he fit well there ( he’s a very nice, outgoing kind of guy) and he says he gets greats tips for his ability to get things done. (also acquires tickets, reservations, “good company”, he’s the guy) It’s a nice skill to have, I guess.:)
Joe, nothing I say should be taken as written on stone, it’s mostly advice, things I do myself, but also things that work given the right context. You still have to come up with your own conclusions.
In places such as your country, of course, jewelry will have an added cost because of the craftsmanship involved.
Over here it’s pretty different. The “art” involved adds little cost to jewelry, unless you are talking about a real intricate item with n undeniable artistic value, because artisans make little money and have to charge little for their work, at least in most cases.
Things like chains and weeding rings ( mostly 18 k here) are bought and sold calculating its gold content plus a relatively small premium.
That’s why I said that I’d get a small amount of wedding bands if I could go back in time to pre 2001 times.
In shanty towns and improvised markets, people often buy and sell, (mostly sell) this kind of jewelry. People pulling a gold ring from their finger and selling it is something common around here, specially right after the crisis, and even now several years later.
You’ll rarely ever see a gold coin among the more common folk.
I understand that in America you can sometimes find wedding bands in pawn shops for little money, but, if this isn’t your case, then definitely DO NOT pay for jewelry gold when you have to pay so much for it’s artistic value.
The smaller gold coin or bar (there are some 1g peaces, very small) or better yet silver, would be more appropriate.
One other thing. Don’t confuse buying gold for a form of investment. It really isn’t. It’s more of a form of protecting your savings, which still is a good thing.
An investment generates money for you. May it be a small investment pool or portfolio, an apartment you rent, a cab you bought and hire someone else to drive it, or a 25% share in a small drug store down the street. It makes money for you.
About peak oil and the end of the world, I try not to worry much about it.
Other than having food stocked, having investments that generate money for you, having a home and plan B in some other country, I’m not going to run up the hills and set camp there waiting for the end of the world. :)
Mostly I’d worry about adapting appropriately to the changes on our current world.
Even among survivalists and prepers, I often find people that got robbed because they left their car, even their house! with unlocked doors.
Today, you get robbed.
Tomorrow, you make that same mistake and you’ll pay it with your life.
Sucks to sound all melodramatic but it’s the true. A mistake like that in a place like Argentina has cost the life of more than a few.
It’s not about being paranoid or anything, it’s about being cautious, and doing what we as a specie are designed to do:
Adapt to the new reality our world has become.
Everything is more expensive?
You need to make more money, find a way to get that done.
Things aren’t that safe any more?
You need to move somewhere else safer and have means to defend yourself and so on.
You can still enjoy the heck out of life and do these things at the same time.:)