At the end of 2011, John Paulson the billionaire hedge-fund manager, wrote his clients and told them that now is the time to buy gold. He said that gold prices are going to soar (again) in the next year. He suggested, rightly so, that out-of-control government spending will again send inflation out of control. The Federal Reserve is also leaving interest rates at almost zero which will also help gold in the coming years as hedge investment.
Of course this is not breaking news for those of us in the gold buying business or for those that have been investing in gold.
But what does it mean for the scrap gold buying industry?
Well of course skyrocketing gold prices affects how we do business. We are going to be buying at a higher price, with clients more willing and eager to part with their scrap gold jewelry. And don’t we love customers that are happy about making money that in turn makes us money? I know I do. It is one of the perks to this industry.
However it should also affect how you retain payment from your refiner. Gold Party LLC has always held the position that a portion of your payouts from the refiner should be taken in gold bullion and coins. That is just a smart investment strategy. However with gold being bullish and the dollar being a big grumpy bear; you should obviously be asking for a much higher payout in gold bullion and coins then in cash if possible.
So what should that percentage be? Well obviously that is a a personal decision and comes with many factors. One big one being the need we have to keep a certain amount of cash on hand. But if you have been going on a 20/80 (gold to cash) it may be time to up that to closer to 50/50 if you are able.
So as a scrap gold buyer, what is your gold investment strategy? Do you have one? If you don’t, you really should.