Recycling Your Old Jewelry: Green Profits
There has been a lot of buzz lately about the economic and environmental advantages of recycling jewelry that you no longer enjoy or which is too badly damaged to be repaired. So, we thought it might be useful to discuss the realities of recycling.
Recycling, in the strict context of this article, involves melting down an old piece of jewelry and then reusing the gold (silver, platinum) to make something new, thereby eliminating the need to mine more (gold) for the new piece. It is the exception rather than the norm for a jeweler or designer to actually melt scrap him or herself.
In most instances, jewelry to be melted is accumulated until there is enough quantity to send to a refiner - a company that is in the business of ‘refining’ (melting and purifying) precious metals in relatively large lots. ‘Scrap’ from many different sources are processed together, so you never get back ‘your’ gold.
The refiner reduces the ’scrap’ to the pure metal and either pays the jeweler the market value based on the estimated weight of pure (gold, etc.) in the batch, less a refining fee, or returns an equivalent amount of gold (etc.).
In a less strict sense, ‘recycling’ would include selling your unwanted jewelry for cash on eBay, selling it or ‘trading it in’ to a jewelry store or designer for cash or in exchange for something new…similar to trading in your old car when buying a new one. (Giving it as a gift could also ‘qualify’ if it was in lieu of buying a new piece).
Financial Considerations
Before you do anything with that old jewelry, there are a number of things you should determine: ” What do I have?”
- Are those ‘white’ stones diamonds…or zircons, or glass?; are the blue stones sapphires, etc.?
- If the stones are real (precious or semi-precious), what type, size, quantity, and quality are they?
- Is the jewelry made of silver, or gold, or platinum?; the Marking and Stamping Act of 1906 requires quality marks (purity stamps), and trademarks (the registered mark of the maker), as a ‘guarantee’ of authenticity for virtually all gold and silver jewelry made and sold in the United States
- If it’s gold, what karat is it?
- Is it repairable and how much will that cost?
10Kt (10 parts out of 24, usually marked ‘10K’), 14Kt (marked ‘585′ or ‘14K’), or 18Kt (marked ‘750′ or ‘18K’), and some designers use even higher karat gold; (pure gold is 24K, and is almost never used for jewelry because of its softness, except in some oriental jewelry made for the Asian market as a way of ‘carrying one’s wealth’).
If it’s silver, it should be marked ‘925′ or ’sterling’ (92.5% silver) or ‘Fine’ (pure); if it’s platinum, it will usually be marked ‘900′ or ‘950′ (depending on the percentage of platinum vs. alloy).
Was it designed/made by a famous maker?; in some instances, this can mean a world of difference in market value (e.g. David Webb, Cartier, Boucheron, Suzanne Belperron, etc.); the makers name and/or trademark is usually stamped on the jewelry, and can be researched online or in any good library, as well as in the jewelry sales records of major auction houses.
Your Best Sources for Answers to Most of These Questions Are
Your original bill of sale, which should tell you the metal its made of, what types of stones the piece contains, and the total weight of each type; and
[Try] a well-established fine jeweler, preferably in a small-to-medium sized town or city - reputation being everything in the jewelry business, you are less likely to be taken advantage of in a small community than might be the case in a large metropolitan area where anonymity is still possible.
If you are in a big city and don’t have a jewelry store that you regularly deal with, ask friends for recommendations or contact the Better Business Bureau. Also, try to speak directly with the owner. He or she may be more likely than an employee to value developing a new customer beyond a quick, single transaction.
What is my jewelry worth?
Once you have determined what you have, you should try to find out what it’s actually worth ‘at retail’. Assuming your jewelry is in sale-able condition, take a look on eBay before making any decision. Check out the auction results for items similar to yours so that you’ll have an idea of how much people are actually paying. At the very least, you’ll be in a better position to negotiate if you do decide to ‘recycle’ with a designer or jewelry store.
Once You’ve Decided to Recycle
As an individual, the only practical way to recycle (other than on eBay or similar), is to ’sell’ or ‘trade-in’ your old jewelry for cash or for a new item of jewelry, with a designer or jewelry store. However, it’s important for you to remember that these people are in business to make a profit.
When you Buy, you are paying not only based on the market value of the precious metal and stones, but also for design and for labor, which includes such things as casting the metal, setting the stones (which, for small stones, can be as or more expensive than the stones themselves), cleaning, soldering, polishing, and so on - all, plus a markup for overhead and profit for the maker AND for the retailer.
When you Sell to a designer or jewelry store, on the other hand, you’re only likely to get ’scrap’ value unless your piece is in really good condition and still in fashion, or you are ‘trading up’ for something much more expensive. In a nutshell, this means that the price of the stones and/or gold (silver, platinum) will need to have gone up dramatically from where they were when you bought, in order to recoup anything close to what you spent originally. You will avoid feeling insulted and disappointed if your expectations are realistic.
Oh, and if you’re only getting ’scrap’ value, don’t include the stones if they are not damaged, especially if they’re small. (I can probably buy equivalent stones from my gem dealers for a fraction of what you paid for them as part of your jewelry, so why should I pay you more)? They can probably be removed from the ’scrap’ quite easily and you can incorporate them into a new design now or in the future.
The bottom line is, if you have a piece of jewelry that you no longer wear, it certainly makes financial sense to either sell it, trade it in, or repair it.
Environmental Considerations
This is a no-brainer: though certainly simplistic, the more damaged or simply unused jewelry that we bring out of the drawer or safe deposit box and recycle, by whatever method, the fewer the new pieces that will be made and/or the less mining that will be necessary to meet the demands of the market.
Not only does mining require major energy input (not that jewelry manufacturing and precious metal refining don’t also consume energy, though dramatically less on a per unit basis), but mining for precious metals is among the dirtiest and most polluting types of mining. The impact we have individually is, of course, minuscule.
Cumulatively, however, it can be quite significant and since it also makes financial sense, there is precious (no pun intended) little excuse not to do it. The day is approaching, at frightening speed, when recycling everything imaginable will not be an option…but an imperative!
Pure Silver Coins: An Investor’s Delight
Be it a declining dollar, fears of inflation, collector’s ambition, or pure curiosity, pure silver coins offer an opportunity. To the investor it’s alternative to paper investments, and to the collector it’s ascetic and rare qualities. Either collector or investor pure silver coins are a selection for both. And, these coins are readily available from dealers, on the Internet, and at-or-in auctions.
As a pure silver coin, the coin needs to have 90-99% of silver. Indeed, many countries, such as U.S.A., United Kingdom, Mexico, China, and Australia produce an ounce of pure silver.
Examples of these silver coins are U.S. silver eagles, to the Canadian silver maple leaf, Chinese Panda, British sovereign and the variety issued by the Australian Mints.
More for the collector, but even coins featuring famous people are available from the late Princess Diana, Marylyn Monroe; even John Wane has a silver coin minted after him.
A quick search on the net will net you hundreds of varying types and styles and mintages but all with the same theme of purse silver but in different sizes from one troy ounce up to one-kilo coins.
If you do decide to seek out and buy pure silver coin sets, then be sure to buy from a reputable dealer–or the mint directly, if possible. Ensure the quality of the coin is near proof, proof or brilliant un-circulated. Also ensuring the coin is sealed in the original container and has a certificate to go with it will help maintain the value of the coin.
Indeed, it can be heaps of fun collecting a pure silver coin or set of coins or profitable for investors. Regardless of investor or collector these pure silver coins will shine into the future.
Silver Coin Value
Silver coin value depends on the investor or the collector. For the collector, the rarity, grade, and demand of the coin give its value. But for an investor, a silver coin value depends on supply, content, grade, and demand; or, simply put, an investor wants to know how many coins were minted and how many are left, the percentage of silver, the quality of the coin, and the popularity of the coin.
Obviously, the investor is looking at some of the same factors as the collector, but the collector usually doesn’t use the silver content as a measure of value. To the collector, grade and rarity are much more important than any other factor. The collector will be buying the coin for her collection, not necessarily for profit’s sake–like the investor will.
For the investor, the amount of substitutes increase the value of the coin. That’s why the investor cares about the silver content more than the rarity. The silver content means, if the investor wanted, the coin could be melted down and have the silver cast into a new form of silver. For this example, a 1,000 ounce silver bar could be created from the coins. The coins have a different use, a substitute, showing the investor a second measure of value.
However, regardless of investor or collector, valuing a silver coin can be simplified to four factors: rarity, grade, supply, demand, and content.
With rarity giving coins huge price tags, many investors can be confused by believing rarity automatically means value. And speaking as an investor, rarity does not mean value. However, highly sophisticated investors will find value within rare coins. So, unless your a highly skilled investor, rare coins should be viewed solely as a collector’s item. Not an investment.
But in-defense of the collector, rare coins do fetch the highest prices. Indeed, these high prices are due to the limited number of coins: limited from the original minting or limited in circulation. For example both are rare coins a Quarter originally minted only 100, and a Dime originally minted thousands yet only 100 remain. These coins are rare because of the supply; they’re rare because of a limited number on the market and will fetch higher prices.
Similar to rarity, grade also determines the value of silver coins because high quality coins are far fewer than plain junk silver coins. Unlike junk silver, higher graded coins represent coins with higher quality. As junk silver is for investors, high graded coins are for collectors. Basically, collectors are looking for rare coins, and highly graded coins are rare.
Think of graded coins a subcategory of rare coins. Or think about a rare coin, then think about the same rare coin but with a scratch. Each coin is rare, but the first coin is much more rare without the scratch. The scratch would grade the coin lower, thus less rare. As such, the closer the coin is to un-circulated the higher grade the coin will have. Higher grade means rare means collectors will bid up the price.
Switching gears to demand, even coins face popularity contests, (at least its not as pointless as class president). More for collectors, popularity contests for coins stem from a historical significance, or ascetic beauty. Certain coins are demanded because of a special place in history, or because a coin has a beautiful design.
Now that we’ve covered most of a collector’s valuation, we’ll dive into what else an investor uses to value a silver coin. An investor will use rarity, grading and demand to determine value, but far more important is the silver content of the coin. Certain coins will have a certain percentage of silver the coin is made of.
For example the American Silver Eagle is 99.9% silver, while the 1964 Washington Quarter is 40% silver. Obviously, the silver eagle is more valuable to the investor than the quarter.
Which brings us to the conclusion, investors and collectors have different goals. Profit and a collection. And these goals give each person different factors for determining the value of a coin.
Religion, Money, Politics: A Cycle Feeding Itself
Money, religion, and politics flow inside an elliptical cycle with each further feeding the cycle. When money grows, that money causes more politics, and more religion. As politics grow, so do money and religion. Likewise, when religion grows, so, do politics and money. And, when any of them grow, the magnitude of the cycle increases: it’s a snow ball effect.
As such is the case, consider Google, Jerry Falwell, and Ron Paul. With money, Google has become political and religious. And, as Jerry Falwell became more religious, Falwell grew political and wealthy. While Ron Paul draws political support, he also becomes more religious, which in turn brings more money. The cycle feeds itself.
A company Google is, but, Google has also become more than just a company. It has formed its own religious morals, and political ideals–each growing further as more money enters Google’s pocket. Consider its puritanical fanaticism, a company motto of “don’t do evil.” That motto was written by the founder Larry Page in a letter for a regulatory filings for its stock market listing.
Yet, Google’s initial public offering was August 19th, 2004, but was founded on September 7th, 1998. So all-of-a-sudden Google is on the brink of making billions with its IPO, then its founder suddenly announces with a letter its religious morals: “don’t do evil”?
Google’s religious zeal has been described as “the company of missionaries” by a visitor to the company’s “Googleplex” in Silicon Valley. Indeed, Paul Saffo at Silicon Valley’s Institute for the Future says that “Google is a religion posing as a company.”
In this religion, the god of Google is “The Algorithm.” To see the authoritarian presence of Google’s imperious god, look at webmasters chanting and praying for “Page Rank.” This is Google’s system of ranking websites, and henceforth has been decided, by Google’s god, to be the ultimate judge of content quality.
Indeed, money has fueled Google to become religious. And now, money has fueled Google to become political by attempting to force the FCC into playing Google’s game. Recently Google bid in the FCC’s wireless spectrum auction, but not without adding Google’s rules for “open applications, open devices, open services, and open networks.” The political nature of Google thinks it can dictate the rules.
Just as Google’s money has fueled Google into religion and politics, so too did religion fuel Jerry Falwell into politics and wealth. Falwell, an American fundamentalist Christian pastor, founded Thomas Road Baptist Church, Liberty University, and co-founded the Moral Majority.
Falwell needs no introduction to his religious life; he pastored a mega-church in Lynchburg, VA–a church with 1 million square feet of floor space, and seats for 6,000. Along with his sermons at his mega-church, Falwell’s message was broadcast on radio and television to thousands. Using his new growth in religious power, Falwell moved to politics.
As for his political life, Falwell was co-founder of the Moral Majority, one of the largest political lobby groups for evangelical Christians in the United States. This tells how religion soon flows into politics. Using his lobby group, Falwell campaigned on issues he thought “maintained the Christian concept of moral law”, such as banning gay marriage.
Falwell built Liberty University, the conservative Christian school, where Falwell instructed students to ignore the teachings of 1970, Falwell saying, “I was taught in Bible college, religion and politics don’t mix.” And just as he instructed, Falwell’s school has Presidential contenders making pilgrimages.
Liberty is home to The Jerry Falwell Museum. It is not a museum simply named after Falwell, but in fact, a museum of Jerry Falwell. Much like building a library housing historical material praising yourself, Jerry Falwell’s museum is the egotism of politics that make Falwell a political being.
Although no actual monetary figures are available on Jerry Falwell, we can estimate his wealth by those familiar with Lynchburg, VA. The home of Falwell’s church. Students in Lynchburg attending Randolph College, formerly Randolph Macon Woman’s College, describe Jerry Falwell’s house as “huge, with an iron gate and personal [security] guard.” And others have seen Falwell’s limousine. Yes, Jerry Falwell’s growth in religion lead to wealth and politics.
I have yet to provide an example of a politician whose political life fueled growth in wealth and religion. And, I’m sure there are several. But for this example, Ron Paul leads the pack. Ron Paul a contender for the Presidential race has become quite the political figure. Using the Internet’s word-of-mouth power, Paul has gained surprising support for his libertarian ideals.
Although Ron Paul remains the underdog, Paul has managed to go from zero to 2% in the polls. Officially, Ron Paul is a Republican, and has been elected to congress 10 times. This iconoclastic figure advocates limited government, foe to the Federal Reserve and anything not explicitly endorsed by the Constitution. And perhaps, Dr. Paul might be the most antiwar candidate.
Earlier this year, the candidate took 9.1% of the votes in an Iowan Republican straw poll. Jackie Calmes, a journalist for The Wall Street Journal, wrote “Mr. Paul had one of the smaller, most isolated locations, but his tent was among the most crowded despite scorching heat.” Later, in another poll, Paul went on to win by 33% in a Fox News Debate poll.
Yet, Paul’s political life doesn’t complete the picture without the religious followers of Ron Paul. As a cultish group of followers, many on-line supporters dub Ron Paul as “the Saviour of America,” or “the only one.” Such strong religious devotion to a candidate hasn’t been seen since President Reagan. For many, Ron Paul is religion.
And as Paul’s politic fuels his religious followers, it has meant money in the sums of $3 million making him fourth among eight Republicans. Just recently, the candidate raised $1.2 million in just seven days. Indeed, his political life has fueled the Ron Paul religion and with that: true, hard cash.
So, regardless of personal beliefs about either money, or religion, or politics, growth in one fuels growth into the elliptical dynamic of money, politics, and religion. It is this dynamic flow that naturally forms bonds with one another leading to natural association with the other two. When you have money, or religion, or politics, you will soon have the other two. It’s a fundamental bond between them.
Junk Silver Ratings: The Top Five Places to Find Junk Silver
Coins may be call “junk silver,” but far from a junkie investment. Junk silver is a term thrown-on the coins by coin collectors because most of these coins won’t have a collector’s value. But junk silver has value in the eyes of silver investors. So, where do you find your next silver investment in junk silver? Here are a few ideas to start with. Rated from number one to five, we’ve listed five places to find junk silver as an investment.
1. eBay – rated number one because junk silver in thousands of varieties abound on eBay. If you’re looking for $5 dollars or $1,000 dollars of junk silver almost any amount can be found on eBay. In addition to the amount of junk silver, eBay also provides information on the credibility of each seller. As an investor buying your next asset, finding an honest seller could mean the difference between profit or loss.
If you do decide to use eBay, it’s easier to find junk silver if you search for more specific junk silver. For example searching eBay for “junk silver” will turn up fewer results than searching for terms like: pre-1964 U.S. Circulated Quarters, or Batch of Silver 1964 Nickels. Also be aware of the sellers rating, the seller’s information can be found to the right of a listing under the heading: “Meet the Seller.” These ratings will provide you with the honesty and credibility of the seller.
2. Lynn Coins – is rated right below eBay only because of the slightly less amount of options. You can find bags of junk silver from $129-$2,175. Although the options are limited, buyers won’t have to spend much time searching. Unlike eBay’s thousands of choices, at Lynn Coins there are 10 choices.
Even though the website looks a little out-of-date and somewhat unprofessional, Lynn Coins is a PayPal verified site—which means the sale has more security than third-party systems you might not know. Also, according to PayPal, Lynn Coins has been in business for seven years, and Lynn Coins has processed “3,406 buyers.”
3. C.C. Silver & Gold Inc. – this company offers a more professional approach. And for investors with a large purchase of $1,000 or more, C.C. is a better option than eBay. Unlike CMI, C.C. seems to have more coin choices as well, as of now C.C.’s website is showing options for Morgan Dollars, Peace Dollars, and 90% Silver coins with U.S. Half-dollars, Quarters, and Dimes all dated before 1964.
While browsing the selection, I noticed non-users will be confused at the process of purchasing what she is looking for. I had a hard time knowing what pull-down option to choose. So, if you don’t use the Internet well, CMI might be a better option.
4. CMI Gold & Silver – Offers junk silver bags to investors worried about professional businesses. Just take a look at the spotless design of CMI’s website. Now there’s a professional website. Anyways, a professional website does not necessarily increase the returns of an investor, and in this case CMI does offer junk silver at the same premium of silver bullion.
One of the downfalls of CMI is the lack of an on-line store. CMI wants buyers to call CMI as to “help you make the right decision for your precious metal investment.” However, professional CMI’s website, requiring investors to call CMI is rather inconvenient. For the Internet users, CMI is not for you; however, for some CMI is the place.
5. Monex Deposit Company – Along with the professional image CMI casts, Monex casts the same. Or it might be egotism, either way Monex says it “[has] led the industry in silver coin investing programs.” But that claim is hard to verify. Again, Internet shoppers will be disappointed because Monex wants you to call an account representative before you can make a purchase.
To concluded this article in rather simple terms, if you love the Internet use eBay, Lynn Coins, or C.C. Silver & Gold Inc., but if not use CMI or Monex. Likewise, if you have a limited amount of money, less than $500, use eBay, or Lynn Coins, but if you have more than $500 go to C.C. Silver & Gold Inc, CMI, or Monex.
It’s Recession Stupid: 5 Reasons Why a Recession is Next
Even thought the Fed acted quickly and lowered the interest rate, the economy is heading for a recession caused by fundamental problems in the economy. Even with a series of rate cuts, the economy will be dealing with the fallout from these problems well into next year.
- Lowered interest rates 50 basis points down to 4.75% means pushing the chance of inflation near new highs
- Home foreclosures soar 36 percent in August leading to a drop in home values causing further drops in consumer spending
- The credit market continues to dry as liquidity freezes leading to a further shortage of commercial paper
- Economist increase the chance of recession from 25% to 35% or a 1 in 3 odds of recession meaning confidence is failing
- Wholesale prices tumble 1.4% in August, while core prices were up 0.2% an indication of deflation causing business confidence to fail as well
- Oil prices surge to new highs touching $81 dollars a barrel making consumers cut spending
Housing is the main consern for the economy right now. With foreclosures soaring, the housing crunch will get much worst before getting better. So, the U.S. economy still has difficult seas to navigate in the months to come.
“The recession in housing shows no sign of ending, undercutting the momentum of the economy,” says Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc. “We are likely to see consumer spending slow down.” And because consumer spending accounts for more than two-thirds of U.S. economic activity, it is extremely important to growth.
Earlier this month the Labor Department reported the first monthly loss of jobs in four years. In August, employers eliminated 4,000 jobs signaling a new trend in the weakness of the economy.
Furthermore, the recent rate cut will take months to translate into economic growth, and we’re at a time when we don’t have months. A half-point rate change won’t effect banks extending credit, consumer spending, investments, and exports because banks are still fearing defaults. Thus the fear spills over into consumer spending, investing, and exports.
As recent as six-weeks ago, the central bank indicated inflation remains a “predominant concern.”
The Investor Allure of Exchange Traded Funds (ETFs)
It’s no secret: ETFs are hot. And with Wall Street pushing ETFs as the newest investment vehicle for all, it’s hard not to ignore the idea of using an ETF. It’s the low costs, liquidity, lower taxes, transparency, and specialization offered by ETFs that is making investors switch to ETFs.
Basically these ETFs are a liquid, low cost mutual fund, holding a pool of stocks within a specialized sector of the economy. For an example of such a specialized fund, think about an ETF of silver mining companies. This fund would be a holding–based on a certain percentage–of each major metal mining company. However, when compared to a classic mutual fund, the cost advantages of ETFs are huge.
Unlike ETFs, the costs run in the billions for mutual funds to hire analysis, accountants, and marketing firms. And a few of those billions could be money in your account. So, an ETF is an alluring alternative to a mutual fund. It’s the strong point of an ETF: lower fees and costs mean more money flowing to investors.
Also unlike mutual funds, ETFs can be more liquid. Many investors see mutual funds as a place to park money for a period of time, thus theses mutual funds aren’t nearly traded as ETFs. Because ETFs are bought and sold just like stocks, ETFs create trading opportunities that mutual funds just don’t offer. It’s this liquidity that draws many investors to ETFs over the traditional mutual fund.
What investor doesn’t like lower taxes? Exactly. These lower taxes provided by ETFs are also a big attraction for investors. Because ETFs don’t have trigger-happy managers running the ETF, the investor doesn’t have additional taxes to worry about. So far, taxes for ETFs are capital gains tax if you sell and some funds–but not all–have dividends.
It’s also the transparency drawing many investors into these funds because at any time you can see exactly what the fund is comprised of. The fund will usually have a set percentage in each investment. This kind of transparency is hardly found in either mutual funds or on Wall Street—that’s why investors are running to ETFs: complete transparency.
ETFs provide investors specialized segment of an industry. In this case well stick to precious metals. The iShare Silver ETF (SLV) holds a certain amount of bullion and prices closely follow the price of silver. On the other hand, streetTRACKS Gold Shares (GLD) is a fund of gold mining companies. Still, both funds are investments into the precious metals market.
On a side note, investors interested in leveraging returns will be glad to know that ETFs can be bought on margin, and options are available on ETFs. As cliché as this saying is, it is important to remember leverage is a double-edge sword: cutting out huge returns, as well as, cutting out the ignorant investors.
While ETFs are pushed by Wall Street and as other investors brag about her double digit returns, prudent investors remember: some investments–just aren’t made for everyone. So the dive into ETFs will depend on your investing personality and investment goals. So be sure to follow some sound advice: Eight Rules for Exchange Traded Funds.
Some investors will want the ease of investing in a specialized sector without having to sit down and pick the companies within that specialized sector. While other investors will want to research for hours and pick the best company within that sector, it depends on the investor weather ETFs are the right investment.
The Seven (Potentially) Deadly Sins of Silver Investors
The Seven Deadly Sins committed by silver investors destroy wealth, leaving investors discouraged and broke. These seven (potencially) deadly sins are: overindulgence, haste, sloth, irrational exuberance, ignorance, pride, and dogmatism. Although the seven sins are committed by beginners more often, experienced investors can commit any of theses sins as well.
1. Overindulgence – many silver investors are carried away by the hype of investing in silver. And these investors go out and buy up too much silver at one time. Remember, regardless of the market outlook, or the future of society, more than 10% of your entire investment portfolio is too much. An ideal portfolio allocation is around 7%-11%. If you are just beginning in silver: start small. Here’s another tip for beginners, it’s a good idea to start in physical silver investments such as coins, and bars, before investing in more leveraged silver investments. Get some real metal holdings to build your foundation of wealth before making other metal investments.
2. Haste – Similar to the last sin, silver investors should pace themselves when making an investment in silver. A prudent investor would spread out her investment into multiple purchases–known as dollar cost averaging. Dollar cost averaging works by averaging out the entire portfolio; for example, if the price of silver is at $13, Joe buys a little. Then next month the price fell to $12, and Joe buys a little more. Joe’s average investment is now only $12.50. Instead of if Joe bought all he could at $13, he’d be at a loss. Pace your investments to use dollar cost averaging to your advantage.
3. Sloth – With this sin, investors are lazy with proper storage. Many silver investors think the original investment is the end. However, the investor now has to properly store her investment, or risk losing. It’s your silver, so keep it that way. Keep the bulk of your investment in a safe place; this includes a personal safe, a bank safe deposit box, or a public storage facility. Whatever you use, make sure proper storage happens.
4. Irrational Exuberance – The number one rule of investing is “don’t lose money.” As such, large doses of speculation can cause an investor to lose huge sums of money. Speculation is speculation. Not investing. But depending on your goals and tolerance for risk, very moderate levels of speculation can increase the return on investments for your portfolio. If you do decide speculation is right for you, then options and futures contracts are excellent speculation tools.
5. Ignorance – You will greatly increase the rewards on your investments as you continue to study the market. Begin by reading the fundamental factors that drive silver and gold prices. Fundamentals such as supply and demand, currency moves, and the overall economy. When you are an informed investor, your investment returns increase.
6. Pride – Many silver investors could be burned because of an unreasonable level of self-respect–pride is another word for that. Just remember as much as you may be proud of your investment in silver, not everything you buy should be considered an investment. Rare coins, and silver art are not investments, as such an investor shouldn’t count these as investments. Only silver bullion, or silver coins whose value follows the spot price of silver can be counted as a silver investment. For example, a 1964 Quarter sold as junk silver is an investment, but a 1964 Quarter sold as a collectible is a collectible—not a silver investment.
7. Dogmatism – when you read online at forums or blogs about silver investments, you’ll see many people stubbornly pushing an investment as the only investment. This narrow view of the silver market can kill your investment returns. Just remember the silver ETF, junk silver, mining stocks, futures, mutual funds, index funds, options, and bullion are all ways to invest in the silver market. And, the way you invest should depend on your investing goals. What works for a different investor, may not work for you.
Mining the Sea with New Technology
With new technology, the age-old hunt for gold, copper and other precious minerals is shifting to a new frontier: the ocean floor.
And having metal commodities in high demand, mining companies are looking to the sea. Mining companies have long known the world’s oceans and seas cover vast troves of metals. Yet, unlike oil-and-gas companies, which have operated offshore for decades, miners lacked the technology to haul metals to the surface.
As, the global boom in commodity prices has encouraged mining companies to take another look at undersea mining. With Nautilus Minerals Inc. leading the effort. Nautilus’ Canadian outfit backed by some of the biggest names in mining, include large shareholders such as U.K.-based Anglo American PLC along with Barrick Gold Corp. of Canada–one of the world’s largest gold miners.
Nautilus is using complex underwater robotic vehicles to search mineral deposits 1,500 meters or more below the surface in waters off the coast of Papua New Guinea near Indonesia.
So far, Nautilus has focused its efforts on deposits left over from “black smokers,” or chimney-shaped structures formed after underground magma pushes mineral-laden fluids through cracks in the sea floor. As the heated liquid comes into contact with cold salt water, the liquids minerals fuse into deposits of gold, silver, copper and other metallic elements.
Once the best under-water mines are identified, Nautilus plans to use remote-operated vehicles that will move slowly across the ocean floor. The vehicles grind up 400 metric tons of rock an hour and siphon the ground rock into a pipe to be pumped to the surface.
Yet another start-up, London-based Neptune Minerals PLC, has launched its own deep-sea-minerals project off the coast of New Zealand, and other offshore ventures may follow.
A few mining companies have extracted diamonds and other minerals from shallow waters along shorelines, mining experts say the latest efforts would be the first to mine significant quantities from deep waters. Miner’s common goal is a future in which underwater robots and other equipment search the ocean floors, cracking open new sources of minerals.
Chief executive officer of Nautilus, David Heydon says, “We’re doing this to start a whole new industry, just like the [offshore] oil-and-gas industry [did].”
Some mining-industry veterans remain skeptical and worry that the latest aquatic adventures could reflect an expanding market bubble. With investors pouring millions into high-risk projects could fail if raw-material prices fall, and with new technology fueling new supplies could bring prices down.
Because the practice of underwater mining is new and unproven, it isn’t clear what price levels would be needed for offshore mining to remain profitable. A similar, $500 million effort by other major resource companies to raise manganese from the ocean floor in the 1970s collapsed amid technical difficulties.
Deep-sea mining also faces criticism from environmental activists, who question whether it’s worth the ecological cost to tear up areas rich in aquatic life.
“I’ve got major concerns” about the Nautilus project, says Techa Beaumont, an analyst at the Mineral Policy Institute, an Australia-based mining-watchdog group. She says she attended a sustainable-development forum in Papua New Guinea recently at which numerous local residents raised complaints about the project. “There’s no real accountability beyond them saying it’s all going to be great,” she says of Nautilus.
Mr. Heydon acknowledges that deep-sea mining will cause some environmental damage, but he argues the impact will be less than with larger, on-land operations. Consumers have to get resources from somewhere, and taking minerals from the sea could mean less interference with local populations at above ground mines, he says.
Mr. Heydon, who grew up in Australia and became a geologist before moving into other fields. In part from reading magazines, Mr. Heydon long knew about black smokers, but the industry had never successfully developed the technology to mine underwater. After Heydon failed to launch an airline customer-relations business during the dot-com boom, Mr. Heydon teamed up with Nautilus–a fledgling outfit that had hoped to mine offshore deposits since the 1990s. “People said we will mine the sea floor someday, and I just said, ‘What’s stopping us today?’ ” recalls Mr. Heydon, who joined after the company was founded.
Using his own credit card to help pay for engineering studies, Mr. Heydon says he began meeting with oil companies, equipment suppliers and other experts who understood the technology behind working in deep waters. He recalls one episode where he waited in the lobby of an Italian offshore-engineering company and overheard executives referring to his idea as “crazy.” “We’ll have him out of here in five minutes,” he remembers them saying.
Amid these difficulties, Mr. Heydon persisted. Nautilus negotiated with the governments of Papua New Guinea, Fiji, Tonga and the Solomon Islands to secure exploration rights to an offshore area the size of the U.K. Nautilus also listed on the Toronto Stock Exchange and the Alternative Investment Market of the London Stock Exchange; to date, the offerings have raised $295 million through stock sales.
Working from a command ship some 50 kilometers off the Papua New Guinea coast, Nautilus uses a number of underwater-exploration tools to determine which areas would be most profitable. They include a so-called autonomous underwater vehicle, or AUV, that looks like a torpedo fitted with a computer and propeller system that can be programmed to guide the vehicle to specific areas to collect data. When it finishes, staff members send a signal from above that triggers the AUV to surface so its data can be retrieved.
For sites that need closer scrutiny, Nautilus sends down a more-powerful remotely operated vehicle, or ROV, which is connected to the ship by a cable and includes cameras and “hands” that can be manipulated by staff on the ship to pick up and move rocks. The ROV can even drill into the sea floor to collect samples. When particularly enticing objects are found, the objects are placed in a container and carried to the surface.
Nautilus says it has identified enough minerals to mine 150,000 metric tons of copper per year and 400,000 ounces of gold, with production beginning in 2010.
However, bringing the minerals to the surface poses a bigger challenge; on land, mining companies use excavators, trucks and other tools to dig up rock and haul it to a processing center.
Nautilus says it is working with existing ROV makers to develop new ones it says will be able to perform similar tasks underwater. The vehicles would crawl along the ocean floor, grinding up rocks as they go. Then, the material would be sucked to the surface by a 30-centimeter pipe and transferred by barge to a processing plant onshore.
Mr. Heydon estimates the underwater rock is 8% to 10% copper, compared with 1% or less at comparable sites onshore, meaning vehicles would need to dig up a smaller fraction of the dirt than would on land. And this lower volume of activity would be crucial to making Nautilus profitable–if production commences.
Of course, all that could depend on where commodity prices go. Although copper–up dramatically from 2002 levels–copper has fallen about 10% from its recent peak in May. Copper would be the key revenue source at Nautilus’s first project, now trading above $7,300 per metric ton on the London Metal Exchange.
Technology such as this pose a threat for the profitability of precious metal investors. If new technilogical advancements such as underwater mining became hugely profitable, huge supplies could flood the current metals market shooting prices down. However, the Nautilus project will most likely remain unprofitable for awhile.
Rich Dad’s Hypocrisy
Most everyone knows Robert Kiyosaki; yes, the author of the best-selling book Rich Dad, Poor Dad. And for those who know him seem to either love him or hate him. Yet as many people hate him, Yahoo still runs his column. Ignorance isn’t hard to sell.
Recently, Kiyosaki wrote an article about silver, but a lame article filled with generalities and hypocrisy. Kiyosaki’s hypocritical views are a reoccurring theme in his writing–and why not? Say whatever sells more copies of Rich Dad, Poor Dad. Even if Kiyosaki’s hypocrisy costs his dedicated readers the small amount of money his readers still have.
Kiyosaki claims to be a “silverbug,” but who isn’t a silverbug when your trying to sell them some book? Kiyosaki claimed to he began investing in silver as “a 10-year-old boy,” one of his famous childhood stories. His stories from childhood are his favorite selling strategy; his books are filled with entertaining stories.
Each story he tells gives no information; it’s only for entertainment. His ability to entertain the reader shows the main reason anyone reads his work: it’s fun. His articles and books amuse, but void of any substantial educational value.
Which leads to the main idea, Kiyosaki does nothing more than sell low quality writing. He himself doesn’t believe what he writes. As if to sell a book, Kiyosaki writes and says anything. And when he says anything for a sale, he has a hard time keeping what’s true–and what he said a-year-ago.
Take for example, his most recent entertainment at Yahoo Finance. He says, “[silver] is about to become the most spectacular investment in recent history.” And I agree, silver is the consumable industrial product, silver supply is down, and silver is a safe haven–increasing the returns an investment portfolio can make.
What I disagree with, he’s constantly flip-flopping, pushing poor financial advice. How can he say in Rich Dad, Poor Dad, an investment is only an asset if the asset puts money in your pocket, and then turn around and give ‘advice’ about investing in silver? Oh, that’s right, hypocrites can.
I agree silver is a great investment, and silver is a great asset to own. A recent study shows precious metals can increase gains by adding a small percentage of silver. But investing in silver does not meet his definition of an asset because his definition of an asset is putting money in the investors pocket–silver does not fit that definition.
I’m a silver investor, and a silverbug, but I still recognize silver doesn’t provide income–silver investing hedges against inflation. Never have I seen my silver bullion write me a check.
Silver remains a good investment for most people, and Kiyosaki will, most likely, say anything just to sell his next piece of entertainment.
I agree with a Yahoo Finance reader said about Kiyosaki’s column, “Hopefully Yahoo [will] . . . remove the least popular product from their shelves.”
