Wednesday, August 31, 2011

Precious Metals and running a Business after the Collapse

I read you site religiously everyday, bought your book, and also many
other items through your site. I have a question. I have a small
jewelry business, mostly items in the $20 to $50 range, using silver
and gold-filled. business has collapsed. I have a stock of raw
material and am trying to decide whether to buy more. I am convinced
silver is going to $300 at least, which will make buying more
prohibitive. Business in the shops I sell to has fallen off a cliff. I
know barter didn’t work out longterm in Argentina, but did it work for
a while?  and could jewelry items be used as a bribe to burearcrats
later to speed up things, or a trade item for some other purpose? or
should I just use up what i have and forget it. Or is inexpensive, but
PM jewelry too useless to be used as a item of exchange?  In other
words, would it be useful longer term in a SHTF scenario? I would
appreciate your thoughts on this matter.

Hi Druidhouse, thanks for your support.
I’m sure there are some, but I don’t know of a single jewelry store that went out of business after the 2001 collapse. Right away all of them set up signs of “I buy gold” and got into the business of precious metals, smelting jewelry gold. There was more than enough people in a fragile financial situation, and many of them ended up selling what gold jewelry they had.
If you haven’t gotten into this I, suggest you do. It’s one of the most lucrative sides of such business during a financial crisis and I know that this is also happening in USA. It may not be the line of work you are used to, but you have to understand that adaptation is key during times like these. There’s people that because of the crisis started new business they knew nothing about. In your case it shouldn’t be that great of a jump to start buying junk gold and silver and selling it to a smelter or having it smelt. You could even learn the process yourself if you know enough about it. All I can tell you is that all jewelry stores here have a big “I buy gold” signs and none of them has gone out of business.

Besides this, you should start looking into new strategies for your business. Before you even get started know that yours isn’t a bad situation. If you find the right angle I know you can make it work. My brother in law’s uncle, he started making silver jewelry in his 40’s not knowing the first thing about any of this. As I mentioned before, the price of gold made silver jewelry more attractive and he started selling to a handful of store and he’s still doing ok.
Maybe the stores you were dealing with haven’t adapted, how about looking for new ones? How about starting your own online store selling silver jewelry? Invest in a good website designer.  Evaluate the jewelry designs, are they trendy? Are they appealing to what people like these days? Do a bit of research and see what’s selling well. There’s a market for steel jewelry as well. I suppose these are mostly resellers but people do buy them. Again, I’d study your business, evaluate your marketing strategy and try offering new models and find new dealers.

About your PM, yes of course, prices will keep going up and when there’s shocks in the economy like the US rating, expect a jump in the price. Bribing is almost a cultural thing in South America, of course I don’t encourage any sort of illegal activity in first world country like USA. In South America? Sometimes you don’t have a choice. In case you ever travel down here and get into trouble, just for the record and since you asked, officials favor cash.
Barter did work for some time, but it was the last, desperate resort and everyone involved in it would have preferred cash. When there was no money, it was better than nothing, that why we had barter clubs after 2001. I’m not saying its not an option, it may as well be for some time, but you’ll want better means of doing business than bartering.
Don’t lose faith in your business. Change your strategy and find a way to make it work. It is possible and people have done it before here. Trendy fashionable designs, (study what people want), affordable prices, you seem to be aiming already at the $20-$50 gap and explore new marketing alternatives and dealers.
I hope this gives you a few ideas of how to make it work.
Take care and see you around.

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