Gold maintains its lustre
August 24, 2011
FOR gold bulls, it has been a stampede now well into its 11th year.
Each day for more than a week, the gold price has hit another record high on an apparently unrelenting rush towards the $US2000-an-ounce mark.
The soaring price of the yellow metal has been a magnet for investors seeking a sanctuary from wild swings in other markets, such as shares and even the Australian dollar.
Real estate, long the first love of many Australian investors, has lost much of its allure as prices stagnate or slide in many capital cities. But for Michael Salib, there has never been a better time to trade gold during his 10 years in the business. ''Customers can see there is massive uncertainty in the marketplace at the moment,'' said Mr Salib, whose Cash for Gold Australia operates in Melbourne and Brisbane. ''Gold for them is the safest thing they can purchase because it's a physical metal they can actually store.''
Mr Salib said wealthier clients were switching money out of self-managed super funds to invest as much as $100,000 in gold.
Older people were more likely to be selling their jewellery these days while younger investors bought bullion as an investment in uncertain times, he said.
Despite regular fears that the gold bubble is about to pop, the precious metal has delivered investors strong and, lately, accelerating returns for a decade.
Gold last turned in a negative year in 2000 in US-dollar terms, when it closed out the year at $US272.25 an ounce. Yesterday in offshore trade the metal hit $US1913.50, closed in Australian trade at $US1892.45 then slipped a little in Europe last night.
That's more than a third higher than at the start of the year, and compares with a loss of about 13 per cent for the S&P/ASX 200 Index and about a 2 per cent gain for the Australian dollar.
'Families cash-in on soaring gold'
Gold has a nice ring to it while world's in a spin
August 04, 2011
GOLD fever is again gripping the nation - at least according to retailers.
One hundred and sixty years after Australia first found itself the throes of a gold rush, the yellow metal is firmly back in vogue as investors take cover from volatile global markets.
But the 21st century rush is to shopping centres, jewellers and gold trading parties, and - for the serious investor - into exchange-traded products.
Retailers say some retirees are using parts of their superannuation payouts to buy a "solid gold investment" they can stow away.
With the price of gold continuing its relentless record-breaking march, the internet is emerging as a key trading engine.
Richmond-based Cash For Gold boasts that its trade has quadrupled since it started internet sales in 2009 and then took its business into suburban homes with "gold parties".
The company also sells ingots and bullion at parties.
The Perth Mint now buys second-hand jewellery, although its main business continues to be refining and selling gold, along with "depository products" that enable consumers to invest in precious metals without keeping the physical product.
The mint states that every week it has dozens of self-managed superannuation investors pouring up to $10 million into both gold and silver, which has also enjoyed phenomenal price growth.
* Buying and selling of gold products and jewellery is booming on the internet and at ?gold parties?.
* Self-managed superannauation funds are among the biggest growth investors in gold.
Gold sees a resurgence
REBECCA NASH, REPORTER: It wasn't so long ago that the idea of the gold price pushing through the $1,000 mark seemed a far-off prospect, but the GFC has seen investors returning to the age-old security of the precious metal, sending its value skyrocketing.
Even those trading in recycled gold are in the midst of a boom, with turnover growing at a rapid pace and new players entering the market.
MICHAEL SALIB, MD, CASH FOR GOLD AUSTRALIA: We receive anything from wedding bands, bangles, bracelets, big 22 carat chains. The type of gold that we receive from people in some cases is bizarre - we get a full set of teeth, with one of the teeth that's gold.
REBECCA NASH: Michael Salib began buying unwanted gold in 2001.
MICHAEL SALIB: We test their gold and their unwanted jewellery in front of them. The prices that we advertise on our website is the prices they get paid in the office. It gets melted down and refined and put back in the open market. We sell it to gold manufacturers and jewellery shops that would like to buy an ounce or two.
REBECCA NASH: The business now includes Tupperware-like gold parties.
MICHAEL SALIB: The gold party is basically a group of ladies comes to one of their friend's house and bring their unwanted, broken, unused gold jewellery. We go there and test, assess and weigh the gold. Based on all that we make an offer to the ladies, individually of course. There is no obligation whatsoever. They can accept the offer or reject the offer.
REBECCA NASH: The greatest growth has come through the mail, with many visitors to the company's website choosing to post their unwanted jewellery.
MICHAEL SALIB: The mail pack has been great since the start and we receive a huge amount of mail daily. It represents 50 per cent of our revenues in the business.
Originally we were a small operation. Turnover was nothing great and when we started the internet business and the gold parties took off and the mail pack took off, the business went into massive overdrive and it became a multi-million dollar business. When the people see the price of gold is good they basically start selling their gold because they know they can capitalise on it and it's a good opportunity for them to make more money for their gold.
REBECCA NASH: It's a business model spawning many imitators keen to take advantage of the new gold rush.
MICHAEL SALIB: We have seen every second day a new business popping up on Google doing exactly the same type of business we are doing - some which really copied our website by the letter. The new trend of kiosks in the shopping centres are another copy of our business and they are basically finding the shopping centre a haven for people who don't do their homework and people who have no time to look on the internet to see what other companies are paying.
We can see the surprises on their faces every time we give them a price, they say, "thank goodness I came here. I nearly got less than half that in the shopping centres."
REBECCA NASH: Just like its customers, Cash4Gold's fortunes closely follow the fluctuating gold price.
MICHAEL SALIB: Holding on to the gold is a very risky business because it can go up or go down. Sometimes we're lucky enough that the gold goes up a fraction and sometimes we're unlucky and the gold goes down. Either way there's still a very small margin between the price that we buy the gold and the price that we sell the gold.
REBECCA NASH: But, according to Michael Salib, the future is golden.
MICHAEL SALIB: The price of gold doesn't fall away and it will not fall away. As everybody knows gold is the best currency in the world. Every currency collapses at a certain stage and gold is the only one that never collapses. It will definitely rise, and that's the normal trend for the gold.
The Sunday Age
New breed of gold buyers comes to the party to
cash in on a bling-led bonanza
The new gold rush: trader Michael Salib says some rivals are luring customers in to selling at well below the going rate. LAST week, as the European economy went down the toilet, Michael Salib of Cash for Gold Australia at Richmond bought $150,000 worth of second-hand gold rings and bangles. The two events are closely related.
Ever since the financial crisis cranked up, the price of gold has been climbing -sparking a ''war'' between new and old players trading in recycled gold, looking to cash in.
But as The Sunday Age has found, some traders say their rivals are offering prices well below the market rate. ''Some people are ripping off the public,''Mr Salib said.
In the past, those wanting to hock their unwanted gold took their chances at pawnshops. Now they are faced with aggressive marketing by big business. ''Everybody started jumping on the wagon, trying to get a piece of the action,'' said Mr Salib, whose company Cash for Gold Australia first opened in 1996. ''We've been seeing new businesses starting up online every week, and some of them have copied our own website word for word. Even the spelling mistakes.''
Two years ago, Mr Salib was spending $2000 on buying gold per week. ''The price of gold has doubled since then, and now every week we're spending over six figures,'' he said. Business went into overdrive when he took Cash for Gold Australia online and started promoting ''gold parties''- a variation on the Tupperware party, where your mates turn up with their unwanted bling, and a consultant spends the night weighing each piece and calculating its value against the daily US price for bullion.
The gold party idea has launched an entire online-based industry, with companies named Gold Parties and Gold Parties Australia. The most aggressive company on the market is Gold Buyers Australia, founded in May last year. In less than 12 months, the company has established more than 200 kiosk-style stores in shopping centres across Australia and, according to several gold-recycling organisations who spoke to TheSunday Age, its slick marketing campaignis paying dividends.
All the organisations, including some operating interstate, complained that Gold Buyers Australia was attracting customers with their high visibility - but paying them below the market value for their gold. The company also promotes parties on its website, and recently launched a television campaign aimed at young women running short of cash while shopping for clothes. The marketing stresses ''convenience'' and''safety'' rather than good value.
As of Friday, according to his website, Mr Salib was buying nine -carat gold pieces for $14.90 a gram. David Edmonds of Citigold jewellers in Brisbane was payingabout $13 a gram. Both men believed that Gold Buyers Australia was paying between $6 and $6.50 a gram.
''They've made a big deal about it being better than going to a pawnshop, but you'll get a better deal from [pawn broking retail chain] Cash Converters,'' Mr Salib said. A call to Cash Converters by a Sunday Age reporter posing as a customer found the company was paying $9 a gram.
These claims were put to Gold Buyers Australia by email, with a list of questions about how valuations are calculated. The answers, via a PR company but attributed to company director Wendy Stewart, were vague. Using old-fashioned acid scratch tests, consultants calculate ''an accurate wholesale/second-hand market price that we are prepared to stand by''.
And:''It is important to note that the price promoted on the stock exchange does not directly translate down to the purchase price of an item. There are many other variables that are taken into consideration.''
The PR company, DEC Communications, said Wendy Stewart would contact The Sunday Age to confirm what price Gold Buyers Australia was paying its customers. At the time of publication she had not made contact.
A spokesman for Consumer Affairs Victoria said: ''When dealing with vulnerable consumers, traders should advise them the price is less than the market price.
If traders don't disclose this information, they could be engaging in unconscionable conduct.''
Such conduct could also breach the Fair Trading Act 1999.
The West Australian Newspaper
Scrap gold traders cash in on hot bullion
AMANDA SAUNDERS, The West AustralianSeptember 21, 2009, 6:41 am
Business is booming for scrap gold traders as consumers rush to take advantage of soaring gold prices to offload unloved or unwanted gold items.
With gold trading above $US1000 an ounce and the importance of cash highlighted by the deepest global recession in more than 60 years, Australians are trading in everything from old engagement rings and broken lockets to coins and mismatching earrings.
And with industry forecaster GFMS chairman Philip Klapwijk tipping scrap gold sales, including used jewellery, to rise 22 per cent this year to a record 1485 tonnes, traders are not only reporting booming sales but eyeing expansion plans.
Cash For Gold Australia, which also launched an online division in March, sales have grown 70 per cent in August and September to about 3000 transactions a month, chief executive and owner Michael Salib said.
Perth Mint sales and marketing director Ron Currie said gold and silver bullion sales were on par with levels in September last year and still 300 per cent up on the same month of 2007. He said bullion sales slowed heavily in June and July but has tipped a record profit in the year to June of more than $30 million, a significant increase on the $3.7 million posted in 2007-08.