Not So Smart To Sell Your Precious Metal Jewelry

by: Avery Goodman

A new CNN video is runnng on the CNN website and it's worth watching. It deals with the subject matter of the so-called "cash-for-gold" business. The idea is to get people to bring in gold, silver and platinum jewelry and household items to "take advantage" of rising precious metals prices. In exchange for their precious metal, customers, mostly women, receive crisp new dollar bills.

It seems to this author that, in all fairness, laws should be passed that require promoters to advise prospective metal sellers of the true history of paper money. Promoters should be required to disclose the fact that the dollar has lost 98.6% of its value against gold since the formation of the Federal Reserve in 1913. In similar schemes carried out in the U.K., promoters should be required to advise sellers that the Pound "Sterling" has lost 99.8% of its value against silver since 1526, when it was last exchangeable for one pound of sterling silver coins.

In any event, the business of giving cash in exchange for precious metals brought in by the less-than-financially-savvy population is booming. Average people have absolutely no idea of how damaging the money-printing policies of the Federal Reserve, Bank of England, ECB and other central banks will ultimately be to the dollar, Euro, pound, etc. Paper money central bank excretions have been around so long that simple people denominate the value of virtually all things in terms of it. That allows smart businessmen to earn big profits by buying precious metals from people who have little to no knowledge of their real value. These folks willingly and happily part with all kinds of precious metals for a relatively small paper price.

One of the most reliable determiners of future value for virtually every asset class is the so-called "Shoeshine Boy Indicator". This most reliable of indicators was devised by Joseph P. Kennedy who allegedly got out of the stock market in 1929, before the Crash because his shoeshine boy was starting to give him stock tips. It doesn't take a lot of thinking to apply that same reasoning to the precious metals market.

Just as the stock market crashed in 1929, soon after that conversation about stocks with the shoeshine boy, the precious metals market is likely to soar into the stratosphere to levels we cannot imagine, given that simple-minded women are so excited about rising metals prices that they are selling off old gold, platinum and silver jewelry and heirlooms. Just as wise investors sold stocks in 1929, wise investors now should be buying precious metal.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.